Both Oars In Time to let the cat out of the bag

Jan 13, 2012

Over 2.5 billion U.S. dollars were collected by International Non-governmental Organizations (INGOs), large faith based non-profits, and smaller ad hoc groups on behalf of the Haitian people directly following the January 2010 earthquake. The preponderance of this money was given to mega INGOs: the International Red Cross (IRC) along with its national affiliates amassed $1.046 billion, while UNICEF, Doctors Without Borders (MSF), and Oxfam received $299, $135 and $98 million respectively.

These billions were donated by teenagers texting $10, by parishioners throwing $20 into collection baskets, co-workers putting change into jars and generous corporations writing million dollar checks. The money was given with the best of intentions, but in blind faith as well. It was spontaneously given without any pre-conditions and it went immediately into the coffers of the organizations to which it was entrusted.

Clearly, there is a need for immediate, massive relief after a disaster as large as Haiti’s earthquake. But, looking back from where Haiti is today, it seems necessary to ask a difficult question, no matter how unsettling. Should these mega INGOs have been given so much money, so quickly, with so little control?

Since the 1960s, these types of entities have been growing in number and size. INGOs enjoy difficult-to-scrutinize reputations based on relief work done under harsh conditions. They claim to go where no one else can go and do what no other group can do. However, they also show up in flocks where many smaller groups have been working successfully for years. They use pro-active PR to position themselves in the spot-light, often bringing along celebrities to heighten their profile.

The first thing that is lost when these organizations enter a country is subsidiarity. In Haiti, it was quickly apparent that the organizations holding the funds – neither the Haitian government nor organizations already on the ground before the earthquake, nor the people in need – would decide how the bulk of the money would be distributed and used. The INGOs were the experts. They had the cash. They would make the decisions.

Ignoring subsidiarity, which respects that decisions are best made by those closest to the situation, is costly, especially with underdeveloped countries. It often stalls recovery and impedes an already struggling country from gaining new capacities. In a nutshell, it makes the aid given ephemeral and all but guarantees that the mega INGOs will be back again for the next disaster – or never leave. 

Next to go is frugality. These organizations all proudly report very low up-front administrative costs. They promise that 91 cents or more of every dollar they receive goes into the field. What they do not report is how the administrative costs add up downstream. For example, a recent report on the IRC says that they have been giving out local grants – aka contracting smaller organizations to do the actual work. Since grant recipients are permitted to take up to 17.5% for administrative costs and contracts often turn into sub-contracts, the amount going directly into the field can dwindle to less than 60 cents of each dollar.

The third thing to go is solidarity. Expats working for large INGOs tend to congregate in the best homes and hotels. The bills for this housing can run several thousand dollars a month. INGO employees live on per diems that are several times the local minimum wage, allowing them to stow their actual salaries in accounts back home. Subsequently, any impoverished country that has been a recipient of a major relief effort has also had its housing and food costs hiked and has been split into two economies.

While wasting dollars is bad, worse is the mega-INGOs’ inability to switch from emergency relief to systemic development. Focused so much on the individual, these organizations prove to be incapable of or resistant to putting resources behind building the infrastructure and social institutions that a country needs to advance. Yet, they hold all the money.

It is said that it is better to light a single candle than curse the darkness.

Therefore, I will offer an alternative to feeding the massive mega-INGO relief industry.  Invest in small, strategically positioned long-term organizations staffed by mission-minded people who are willing to live in solidarity with those they intend to assist and disciplined enough to focus the bulk of their resources on education, economic development and reinforcement of the rule of law.