Letting the Humanitarian Sector Lead

Harvard Business Review: Stop Giving Donors What You Think They Want


The Harvard Business Review reposted an excellent article from Dan Pallota's blog, in which he pointed out the importance of letting organizations in the non-profit sector decide their operational procedures. The relationship between these organizations and their donors is markedly different from that of profit-making companies and public consumers. Nonetheless, given that donations are scarce resources that provide little positive impact to the lives of the donors themselves, third sector organizations have had to adopt the "competitive market perspective" with regards to funding. So we see that in order to appease these donors, many of them have gone so far as to alter their operations or even shed their core values based on what they believe donors would want. Although increased external stakeholdership and monitoring technically increases a company efficiency, for the third sector, this results in the lowering of the organization's true potential and the loss of welfare to their target clientele.


In most private companies in the market whose investors and stakeholders also play an influential role in deciding the corporations' targets and operations, final decisions are made from a small spectrum of options, largely from an economic point of view e.g. profit maximization, increased market share etc. In the event of uncertainty with regards to what investors might want, top-level executives can seek refuge by taking these considerations into mind when choosing the next steps. However, things are rarely this clear-cut in the non-profit sector, with three key differences.


Firstly, although donors have a say in non-profit organizations' missions, targets and procedures, their money does not return them dividends like private shares do. They are therefore more irked by high staff salaries and short-term operational failures, especially since it fosters the feeling of "investment wastage".


Secondly, the goal of a profit-maximizing corporation is market survival, and that is achieved by prioritizing long term economic goals such as long-run profits, which can be benchmarked and calculated. Non-profits however place emphasis on moral goals such as maximizing client welfare, results that are very much intangible and open to debate.


Finally, the majority of private investors are either employees from the companies themselves, industry experts, or people who did the transaction via knowledgeable middle-men. In other words, they are informed investors, who know about the industry and how it goes. Non-profits have to labor to provide industry information to their donors, many of whom have little to no relevant experience.


Instead of competing for donors' attention and short-term funding by succumbing to their assumed desires, nonprofits should stop thinking about how to cut overheads and instead focus on results. A successful nonprofit is one who attracts funding by showing donors what it needs to achieve its goals, even if it means publicly announcing hard truths when requests are not met. Donors on the other hand, should consider the positive impact of a nonprofit before making a decision to fund it or not, eventually weeding out the inefficient and ineffective ones.

Egypt's Economic Apartheid

Waiting in line for bread in Cairo. Picture courtesy of the Wall Street Journal.

Wall Street Journal: Egypt's Economic Apartheid

The protests in Egypt have been grabbing the headlines over recent weeks, and the strategic importance as well as cultural influence of the country towards the Middle East and Africa have led academics, journalists and government officials to speculate on the root cause behind these protests. The authoritarian leaders in the region will be especially keen to pinpoint the root causes that culminated in the street protests that ousted Tunisian President Zine el Abidine Ben Ali, and which look set to kick out President Hosni Mubarak as well.

Demonstrators interviewed by reporters have repeatedly made calls for democratic rule, freedom of speech and the ouster of corrupted officials. This is not a root cause, but a verbalization of globally recognized language and keywords to gain support from all angles. It is also the language of opposition that is clearly defiant and contrary towards Mubarak's unambiguously authoritarian leadership.

Journalists and activists have been quick to point out the widespread use of Twitter and Facebook to communicate ideas and emotions, in addition to the oft-cited power of traditional media publications. This is not a root cause either, but simply (leaderless or else easily blamed) platforms that have provided means for the local populace to gather together and shape experiences and possibly, consensus on next-action steps.

Think tanks have taken on a more socio-economic perspective, citing internal causes such as high unemployment rates among youths, status marginalization and abuse from local security forces. Although such propositions are certainly more accurate than the above two ideas in terms of pinpointing root causes behind the protests, they are vague, lack depth, and are based on models that can be almost immediately replicated on almost any social movement outside of the Western world.

In the above-featured news article written by Hernando de Soto for the Wall Street Journal, the author has gone one step deeper in search for a more specific, locally-based reason behind the protests. Recollecting data from a policy report more than six years ago, he noted that the lack of legal recognition behind property ownership has spurred extralegal entrepreneurship, developing an economic class whose capital is "dead" i.e. "property that cannot be leveraged as collateral for loans, to obtain investment capital, or as security for long-term contractual deals". I would add that this creates anxiety among investors, and limit expansion not just for economic reasons but most certainly psychological as well.

Corrupted politicians will vote against any policy action to create an open legal system as it goes directly against the interest of land owners, many of whom wield great influence in the government. With this assumption, it would not be difficult to imagine why it has been the police who have been the most hostile towards the demonstrators. Such laws have given much flexibility and control to the government, who in the drive to develop the local economy, has been acting as a gatekeeper (and bribe collector too) in deciding which corporations enter, stay, or get expelled.

Legal recognition means that tenants can hold landowners to their written contracts, reducing tenants' anxieties and giving them assurance behind the needed fixed capital for business planning and projection purposes. Eliminating poverty in many countries through entrepreneur-based self-sufficiency requires such basic laws. The presence of such laws and rules allow for strong investment planning, labor management, resource control, and eventually expansion and economic profits. On the flip side however, we see the ghost of Karl Marx lingering behind the shadows, as it is also such laws and rules that firmly entrench the underclass in developed economies, ever since the gradual elimination of any language to oppose property laws that do not also undermine contemporary democratic values.

Launch of the New Vision For Agriculture

Watch live streaming video from worldeconomicforum01 at livestream.com

I posed yet another question at the World Economic Forum via Livestream to the panel comprising of the Tanzanian President and some company representatives who are launching an initiative to help agriculture in the East African nation. The question, and the subsequent answers from the panel, can be found in 24:20 onwards.

Admittedly it was a blunt question put forward, but I asked it in order to ensure that the foreign companies who invested in African nations (Tanzania in this case) do not attempt to dominate any food surplus in lieu of their charitable efforts towards development. The market should dictate prices, and I believe that priority should be given to aid neighboring countries who are still working out their own development plans. This was also asked in view the the global food crisis plaguing the region today.

China in Africa: A New Development Partner

Watch live streaming video from worldeconomicforum01 at livestream.com

I posed a question via Livestream to the African representative at the World Economic Forum on the future of gas and renewable energy in the continent. His response can be found on 26:15 onwards.

Natural Gas vs. Renewables

The Economist Debates: Natural Gas or Renewables?

Anyone interested to know about the future of energy and climate change mitigation must follow the elements of this debate hosted by The Economist. Likewise, the fight to eliminate poverty hinges on the energy security of every nation, more specifically the resultant impact of energy prices on third-world countries.

The big question that everyone wants answered: What comes after oil? There is immense pressure on giant economies from China, who invested a massive US$51.1bn in renewables last year, to pick up pace on their own investments and R&D. The possibility of implementing a global carbon tax, as well as the general urgency for positive climate change, has pushed governments and energy corporations to diversify their energy sources.

The debate however, is flawed. There is no argument that renewables surely produce less carbon emissions than natural gas, but basic economics of scale will ensure that natural gas will take over as the top energy resource over the next two to three decades. Even with government subsidies and incentives, it would take huge technological breakthrough to overcome the cost-effectiveness of using gas.

Despite being cited countless times as a positive example, China is very much an outlying case for two strong reasons: Firstly, as an ascending world power, China would want to develop energy self-reliance. Given its resources and manpower it has the potential to do so, and once achieved, will allow the superpower to throw its weight around the region. Secondly, by leading in terms of renewable energy infrastructure manufacturing and investment, it provides jobs for its population, pulling millions of Chinese people out of poverty and eventually monopolizing the sector.

For most other countries however, there are insurmountable barriers to direct investment into renewables. Politicians from developing countries have but one goal, and that is to ensure that energy production matches the growth of their economies. When compared to the cost of coal, gas is more competitive than oil and will be a better choice, especially since it fills the nation's coffers and provide bandwidth to provide other basic needs such as education and clean water. In addition, many developed countries such as Singapore have little resources to seriously utilize any form of renewable energy.


Renewables may eventually reach the necessary cost-efficiency to compete at a level with fossil fuels, but as market forces will have it, the day will not come anytime soon. The defense strategy of most countries presently includes a diversification of energy sources, and security requires decoupling from intermittent, unpredictable sources such as wind and sunlight, or niche resources such as biofuels. Besides investing in nuclear plants, hoarding fossil fuels is still the only way to provide such security.


With regards to this particular debate however, both sides will probably pick sure-to-win stances that are not direct opposites, with the defending side insisting on the economies of scale behind gas and the challenger side insisting that renewables produce less carbon emissions than gas. It is in such a flawed debate that should lead one to question the importance of the politico-geographical context and the military defense strategy behind energy diversification.

Climate-Change Litigation and the Forgotten Indigenous People

A flood-affected region is seen in Pakistan. Photo courtesy of AFP.

AFP: Climate change: Dogs of law are off the leash

Richard Ingham of the AFP wrote a headline-grabbing article outlining the growing potential of climate-change litigation, i.e. lawsuits against polluting nations and corporations. In his article, he noted that this is still very much a new legal area, with many gray areas and most significantly, a "causation" problem. Basic questions would include: Who is behind it, and to what extend? What criteria should be included in the creation of a globally-accepted measuring system to calculate and verify damages? How can we take into consideration the fact that often carbon dioxide emissions are results of actions that would be labeled as "necessary evils" for welfare production?

In addition, as exciting a prospect this might be in advancing towards positive climate change (be in through creating awareness or providing compensation), it would be vital to note that law firms are still profit-driven organizations. Many of them are drawn to the potential profits that can be made from the eventual payouts, and in so doing, would be pretty much selective of clients.

Ironically, the ones most in need of legal intervention are also those who can least afford it. Indigenous people, especially those lagging far behind in economic development and suffering from politico-judicial injustice, are often the most desperate for some form of protection from big logging or mining corporations. Many third-world countries like Indonesia, for example, have numerous cases depicting the lack of social justice and democratic decision-making. Indigenous communities once bounded by religious and economic ties to the resources provided by their land are evicted by force without proper compensation.

However, these same third-world politicians and corporate leaders (that many have demonized too quickly) have also listed many benefits to the bigger population and national economy through this very claiming of resources. Jobs can be created, resources can be utilized efficiently, and potential monies can be further invested in noble causes such as education and public works.

What climate-change litigation can truly bring about is the legal appointment of spokesperson(s) for the indigenous people who need a representative voice that understands their situation and who is also familiar with local judicial proceedings. The lawyer must assist in the setting up of an agreement that involves the democratic decision-making of the indigenous community involved, but also ensure that the dilemmas of the politicians and corporate leaders are taken into consideration. A general example will include the recognition of land and resource ownership by the indigenous people, developmental benefits in exchange for resources according to pace of utilization, and rules that ensure that the resources are constantly being zoned off and/or replenished through efforts by the corporations involved.

There is indeed a place for climate-change litigation, but legal firms must not solely focus on the victims created as a result of mankind-related climate disasters but more importantly on the voiceless victims created by actions that further perpetuate the climate problem. However, as long as legal firms are driven by profit alone, climate-change litigation look set to be little more than lengthy debates between influential groups in first-world countries.

Equality, a True Soul Food

The New York Times: Equality, a True Soul Food

The detrimental health effects of inequality on Americans, as noted by Nick Kristof, apply to nearly all urban populations in the world. The American dream as a cultural value has become the mainstream influence underlining all social structures from early education and family norms to corporate ladders and political administrations.

Nick's article has strong traces of Merton's sociological thought and influence. The creation of unlimited aspirations combined with differential access to fulfill them can lead to the establishing of unconventional hierarchies of power and system dropouts who eventually pull out of society totally. However, the majority of people who choose to remain in the system (or in some cases have no choice) manifest social pathologies indicative of stress levels and other psychological trauma.

In the past, most civilizations rest on monarchies and other religion-centric hierarchies, which limits aspirations (as well as imagination). The tenets of capitalism and economic globalization however, have their roots in democracy, meritocracy and equal worth, and these frameworks are now beyond the control of any one human being. Inequality challenges those tenets whilst in the contemporary context of capitalism and economic globalization, and social pathologies appear as reactions, although not necessarily corrective measures.

The toll on health is more than simply the elimination of the "unfit" in a global "strongest will survive" challenge. No human being works alone, and inequality breaks down more than just the human body but the social body as well. Persistent social inequality prevents any remedies except those invoking Old Marxist overtones. However, urban social inequality is much more complex today. No longer is it based simply on quantifiable class factors such as real estate, educational level and meritocracy. Nor can it be simply glossed over with intangible, fluid factors such as social status and prestige.

Pushing down levels of social inequality in urban areas must take be factored at an international level. Governments can only do so much by implementing policies and laws; religious institutes can only provide a limited amount of counseling and spiritual solace; families and communities are limited by the output (and burden) of each member.

The solution to social inequality must start from a conscious choice from those with much to reach out to those with the least in the very surroundings where we live and breathe in. And often, it starts with an understanding among those with much to know that there is already so much that we can give.