Celebrating the arrival of America’s philanthrocapaitalists

Portland’s Rob Watkinson explores how some of the world’s richest individuals are redefining the architecture of aid and development.

One in three of the world’s hungry live in Africa, the only continent which does not grow enough food to feed its own people. Yet Africa is also a land of enormous agricultural potential.  Bringing up productivity on its farms to close the global average would enable it not only to provide plenty of food for its own citizens but produce a healthy surplus to export.

So it is hardly a surprise that the drive to transform Africa’s agriculture is, at last, beginning to get the attention and resources it needs. What may be a surprise is that it is a private foundation which is spearheading these efforts. Through the Agricultural Development Initiative of the Bill & Melinda Gates Foundation more than $1.8 billion has been committed to almost every aspect of farming  in Africa and south Asia from improving soil and water management to gathering better data for effective policymaking.

In terms of scope and scale, the Agricultural Development Initiative is arguably the most comprehensive and impressive intervention of any single body focused on agriculture. Working with a whole range of partners including the Alliance for a Green Revolution in Africa, the goal is nothing less than reducing hunger and poverty for millions of poor families.

This would be impressive enough. But the Gates Foundation is making an even more ambitious effort to tackle global healthcare challenges. Through the GAVI Alliance, for example, it has committed $2.5 billion to support the immunisation of hundreds of millions of children worldwide and enabling, at much reduced prices, the bulk purchase of vaccines for the developing world.

If Andrew Carnegie and John D Rockefeller transformed philanthropy at the beginning of the last century, Bill Gates is doing the same for our age. Like them, Gates is fabulously wealthy. Like his US predecessors, too, he believes – in Carnegie’s words – that a man who dies rich, dies disgraced.

But the Gates Foundation is, by no means, alone in redefining philanthropy.  There are a series of largely American ‘philanthrocapitalists’ intent on harnessing the power of the market and new technologies to achieve social change.  They think big and they have extraordinary financial resources at their disposal.

With total assets of $37 billion and an annual operating budget of $3 billion – around the same as Italy, a G8 member, spends on development aid – the Gates Foundation is, in modern times, in a league of its own. But consider also the Open Society Institute, founded by George Soros ‘to build vibrant and tolerant democracies who governments are accountable to their citizens’ and with total assets of over $1.1 billion. Or Omidyar Network, the philanthropic investment firm established by eBay founder Pierre Omidyar, that is dedicated to ‘harnessing the power of markets to creates opportunities for people to improve their lives’.  Since inception in 2004, ON has already invested $545 million in a range of for-profit and not-for-profit ventures.

There is no doubt that these major organisations established by some of the world’s richest people are redefining the architecture of aid and development. And not everyone sees them as unalloyed good news with fears that about their unaccountability or that they are distorting priorities. But here are three reasons to celebrate the arrival of the philanthrocapitalists.

First, official sources of funding for international development are being, and are likely to continue to be, squeezed by the global economic situation. Donor aid to developing countries fell by 3% in 2011 to $133.5 billion, the first fall in over a decade, according to the OECD. With the exception of a handful of countries, including the United Kingdom, most rich donor nations are not on track to achieve the goal of increasing overseas aid to 0.7 of gross national income by 2015.

Philanthropic giving, on the other hand, is on the increase.  According to the latest Index of Global Philanthropy and Remittances from the Hudson Institute, total global philanthropy in 2010 (the latest available data) stood at $56 billion, a gain of $3 billion from 2009. US sources contributed no less than $39 billion. As international development moves ‘beyond aid’, the role of the philanthrocapitalist will become increasingly important and significant.

Second, the philanthrocapitalists are breaking new ground and opening up whole new approaches to development. As entrepreneurs themselves, they are less risk averse and they understand the power of the market.  With the freedom to invest in unconventional ways, where ‘official’ development agencies may fear to tread, and a passion for harnessing the power of technology to deliver social change, they are behind a range of new and exciting initiatives and platforms

Take, for example, Omidyar Network’s support for Ushahidi, a crowd-sourcing platform that was created in Kenya in 2008 to facilitate citizen-led reporting of the post-election violence.  The platform enables information submitted through email, SMS and the web from multiple locations to be visualized on a map or timeline.  Through a major grant from Omidyar Network, Ushahidi has new established new verification technology and opened a hub office in Nairobi.  Its technology has been used around the world, from monitoring elections in the Congo, India, and Mexico to tracking the availability of medical supplies in Kenya, Uganda, Malawi, and Zambia.

Third, through returning significant portions of their wealth and using for-profit investments to deliver positive social change, the philanthrocapitalists are helping to demonstrate that capitalism itself can be philanthropic.  In the wake of the global economic crash, precipitated in part by greed on the part of the world’s wealthiest, it reminds us that capitalism needs to service people not just profit. And the high-profile of the philanthrocapitalists themselves and the organisations they support are helping to highlight the effectiveness of more conventional forms of aid.  When development budgets are under attack from those who believe the money is wasted or worse, this must be good for donors and the recipients of aid alike.