Friday, July 30, 2010

How Philanthopy, NGO's and BOGO's Might Be Hurting and Helping Africa

We have been touting here various "Buy One Give One" "BOGO" business giving models, as great examples of innovative business philanthropy-business blended with social mission. So when I came across a recent post by R.Todd Johnson:Reflections on Ethiopia,Is Philanthropy Killing Africa?  suggesting that BOGO businesses, like NGO's, are hurting Africa by destroying  local small businesses and squashing entrepreneurism, I needed to investigate the impact of these philanthropic ventures to perhaps defend and justify their purpose.

But first, to support Todd Johnson's view, and I believe he really brings up some good points, I recently heard a story from a friend of mine, a successful entrepreneur, who went down to Bolivia to help revitalize an ailing weaving industry that has been destroyed by donated clothing delivered to these poor regions. He saw indigenous people in the remote areas in the Andes walking around wearing Stanford sweatshirts. One wonders what else has been squashed here.

Yes, there is a point here, but does it always apply? On the philanthropic side, there is this view that people can't even learn to fish, so to speak, while they are sick, hungry, cold, and uneducated. On the impact side, there is plenty evidence that indicates a failure in the delivery and benefits of aid and handouts, not just in Africa, but at a more local level.

This whole question of whether aid is essential to the development of countries, or whether it is killing it, has been debated in much higher circles than I can ever reach. Paul Solman the economics reporter on PBS's Lehrer News Hour did a story: Authors Analyze, Criticize Foreign Aid Agencies in New Books, where he took on this subject with a point and counterpoint between two very highly respected economists and authors, Jeffrey Sachs of Columbia University, and William Easterly of NYU. Although each side used very convincing arguments backed by their research to defend their position while criticising the other, Paul Solman concludes that they both agree on one thing-accountability is essential. I urge anyone interested in understanding the complexity of this issue to read their books and research.

Todd Johnson compared BOGO businesses with NGO's  and used the slightly obscured example of one such company TOMS Shoes that donates shoes to children in Africa as an example of a "well intentioned" but "hurting to a long term sustainable solution"- because, as he puts it:
"First, as long as rural Africans have an opportunity to potentially receive free shoes donated by a U.S. shoe company, why would they want to pay for shoes? Second, as long as rural Africans are unwilling to pay for shoes, how can local African shoemakers hope to have a flourishing local business?"
First of all, the comparison between a business and a NGO makes no sense. Because these businesses have been formed with a double or triple bottom line purpose, they are accountable to their stakeholders: the founders, partners, investors, customers. And with the increasing use of social media and marketing, their impact  becomes, by necessity, more transparent than an NGO's. This changes the game, as the stakeholders can insist that their buy one, give one purchase and donation does no harm.

I first wrote about TOMS shoes well over a year ago, when it was a fledgling social enterprise. So now it seemed it was good time to check on their accountability. Toms Shoes, it turns out, addresses this very question 

From TOMS Shoes:
“Do no harm”. Even in very poor countries, some local shops sell shoes. We work with our partners to ensure that the children receiving our shoes truly could not afford to purchase them on their own, to minimize the negative impact on the local shoe-selling economy. We also work with our partners to make sure children are not experiencing negative stigma as a result of wearing our shoes – sometimes wearing shoes in a community where shoes are rare can actually make a child stand out in a bad way!

Many times children can't attend school barefoot because shoes are a required part of their uniform. If they don't have shoes, they don't go to school. If they don't receive an education, they don't have the opportunity to realize their potential."

Then there is Socks for Happy People, which we profiled here several months ago. For every pair that is bought they give a pair socks to Mongolian street children who often have to endure temperatures as low as -40°C.. AND these donated socks have been made locally in Mongolia from Mongolian camel hair. And they have a wider social mission too: "that of providing inspiration and education to entrepreneurs and consumers".
Why would they want to kill the very thing they are hoping to inspire?

I just recently learned about BOGO light, the solar powered flashlights where one light is donated to an affiliate non-profit for every light purchased. Mark Bent, the founder of BOGO lights had lived and worked in Africa for many years where he saw the urgency in providing sustainable light sources. Aside from these flashlights being very environmental for everyone who owns one, they have a major impact on health, safety and education of women and children, especially in these developing countries. More than likely he also saw the urgency of providing Africans the means to develop their own businesses.

Can giving a child in a impoverished country a solar powered flashlight so they can study at night really "kill Africa"?  Mark Bent, who deeply loves Africa, probably doesn't think so.

And I don't either- until you show me some real analysis.

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