Impacting investing: trends, issues and capabilities
Have I really funded an air to ground missile?
How many times have I heard that one? The other favourite argument is: what about local corruption and the associated costs? Of course there can be a strong element of truth in both arguments. But where do they stand in relation to the basic principle of helping to improve people’s lives?
Wouldn’t it be a perfect world if governments spent money in a way that I approved of! Nobody understands how to spend money better than me. Should this country’s government have gone to war with Iraq when so much public opinion was so against it? Couldn’t we have saved a few small billions on bailing out the banks, and used the money to address some of the desperate issues facing society? It seems people happily accept some strange and often huge government spending patterns safe in the knowledge that water will run cheaply from their taps.
The other problem with this kind of argument is the idea that if we stopped funding water projects, governments in emerging economies would have to stop spending on the military and focus on development. To be honest, I don’t understand why developing countries spend money on defence – although I am not sure why we do in the West either – and it’s true that Costa Rica, for example, saw massive improvements in literacy and healthcare after redirecting funding from military spending. Governments of developing countries that have been blocked from Western aid such as North Korea, still spend vast amounts of money on their militaries rather than helping people; so blocking aid won’t necessarily change spending habits anyway.
Yet, do I still invest in charities in the UK and overseas? Of course I do. Why? Because of the human need for relief from thirst, hunger, suffering and exclusion. If a close relative was suffering, and you could afford to do something about it, would you wait for the state to act first? Would you let them continue to suffer if the state fell short? The same principle applies when it comes to alleviating the suffering of those we don’t know.
For me it’s really simple. If you get an opportunity to prevent someone from suffering then do it, regardless of your opinion of what the government should or shouldn’t be doing. In fact, in this case – where a mere $10,000 will alleviate the suffering of 1,000 people – it’s a ‘no brainer’. What an amazing privilege. For the price of a small car, these people can have better lives. And who knows – as conditions improve, as access to education increases, maybe they can help to challenge corruption and military spending, as we’ve seen in Costa Rica.
No, you haven’t funded an air to ground missile: you’ve changed a thousand people’s lives for the better. Well done you.
London, 13th May 2013
I am very pleased to provide you with information about the new further education and training courses at the Centre for Social Investment (CSI), Heidelberg University. We provide tailor-made executive training for professionals in the charitable sector, as well as those working in the public sector or in private enterprises dealing with social impact.
The Executive Training “Social Investment and Impact” puts the approaches developed at CSI into practice through lectures, case studies and group discussions about social impact and impact measurement. This course provides participants with a broader understanding of the topic as well as an overview of possible instruments to measure social impact.
For more information see https://www.csi.uni-heidelberg.de/lehre/expert_angebote_e.htm
With kind regards,
Dr. Tobias Vahlpahl
Programme Director at CSI
CSI - Centre for Social Investment, Universität Heidelberg
What is holding India’s millionaires and billionaires from opening their wallets to NGOs? According to a new Bain & Company survey of 180 wealthy individuals and leaders of more than 40 NGOs, two-thirds of donors claim that NGOs can improve their impact on the lives of beneficiaries and that achieving this goal would prompt 26% of donors to increase their philanthropic contributions.
Bain’s survey also reveals a deep communication gap between NGOs and donors, with more than 60% of donors claiming to not receive regular communications from NGOs. Conversely, donors who do receive communications frequently, report that the majority of NGOs do not convey information regarding the impact of their efforts, and instead focus on the processes followed and activities performed.
However, requiring NGOs to rethink how they measure and communicate impact remains challenging. Though a primary wish cited by sophisticated donors, NGOs agree that measuring impact is important, 40% of those surveyed find such efforts difficult, and a similar proportion cite the cost of evaluation as a deterrent. This is particularly concerning to NGOs in harder to measure sectors, such as gender justice, drug rehabilitation and Dalit empowerment, who feel the measurement challenge most acutely.
Arpan Sheth, Bain partner and co-author of the third annual India Philanthropy report, emphasises that, in order to create and communicate better impact, NGOs and donors must first agree to measurement metrics and frequency of communications. To help accomplish this, Sheth outlines the roles and responsibilities that key stakeholders, including donors, NGOs and foundations can play to help amplify the impact of philanthropic contributions.
The report can be downloaded here: www.bain.com/publications/articles/india-philanthropy-report-2013.aspx
Manager, Global Public Relations, Bain & Company, Inc.