President's Blog

As many of you know, Episcopal Relief & Development prides itself on assuring its donors that we have one of the lowest indirect (fundraising and administrative) costs rates in the industry.  We work hard to keep our ratios in line.

However, an article in the Fall 2009 issue of the Stanford Social Innovation Review, entitled “The Nonprofit Starvation Cycle”, calls this strategy into question.  It cites a Bridgespan Group study, asks some probing questions, and concludes that “A vicious cycle is leaving nonprofits so hungry for decent infrastructure that they can barely function as organizations—let along serve their beneficiaries.”  The author calls on funders to take the lead in breaking this cycle.  To read the entire article, click here.

One funder has done just that.  The Boston Foundation recently announced that “More of its grantmaking dollars will be shifted over the next two years to provide organizations with general operating support. As a result, fewer purely programmatic grants will be made in the future.”  You can read about it here.  (In the interest of full disclosure my sister is on the staff of The Boston Foundation.  I assure you I had nothing to do with the change in their policy.)

Maybe we shouldn’t be focused so much on indirect costs rates.  We’d be a stronger, more effective organization if we didn’t.  Making that case to donors is tough, though.  What do you think?

Lately, a number of folks have contacted me for advice about micro-finance organizations that offer sponsorship opportunities.  There are a number of organizations that have websites where you, the donor, can make loans to a specific person whose story and photograph are prominently displayed.

Among the questions people have are: Should I donate to these organizations?  Why doesn’t Episcopal Relief & Development offer similar opportunities?  Are they reputable?

I have a firm policy of not commenting on other organizations and how they conduct their work.  That’s not my place as president of Episcopal Relief & Development.

However, I do have a series of questions that people should think through when considering supporting these organizations.  Among those questions are:

• Is the organization doing micro-finance programming itself, or is it marketing other organizations’ micro-finance programs, or passing your money along?
• Is the organization a not-for-profit or a for-profit enterprise?
• Is there a reason that some potential micro-finance beneficiaries are chosen and not others?  What are the criteria?
• Is the micro-finance initiative part of a long-term integrated development strategy for the communities where the loans are being made? 

Depending on how you feel about the answers to these questions, you should make a decision that works for you.

For our part, Episcopal Relief & Development is not a micro-finance agency as such.  We are committed to an integrated development approach, which means using micro-finance as a tool in our programs focused on health, food and disaster mitigation.

For example, after the 2004 Indian Ocean tsunami, our partners in Sri Lanka used micro-finance strategies to get boat building operations up and running to supply boats to the fishermen who lost their equipment.  This had the advantage of getting people back to work quickly and restoring dignity and livelihoods.

The appeal of sites that offer the donor an apparently direct relationship with the beneficiary is very understandable.  However, my personal reaction to those sites is similar to my reaction to child sponsorships

 http://www.er-d.org/blog/index.php/2009/05/29/reflecting-on-child-sponsorships/

I think there’s a very high risk of commoditizing poverty and poor people so that we, the donors, feel good.  That’s the main reason that we don’t offer direct sponsorship of microfinance beneficiaries.

The most recent issues of National Geographic (June 2009) and Foreign Affairs (May/June 2009) have excellent articles on the global food crisis and hunger.

The National Geographic article does an excellent job laying out the challenges of feeding a world where “For most of the past decade, the world has been consuming more food than it has been producing.” The author goes on to remark that in 2007 there were only 61 days of food available in stockpiles at the current rate of food consumption.

The Foreign Affairs article contains some excellent recommendations for the Obama Administration on how to restructure U.S. food aid policy, including recommendations on trade policy and aid. The article concludes with the extremely persuasive argument starvation and food crises can lead to political instability, as was the case in Haiti last year.

No pun intended, but there’s a lot of food for thought in these articles. What do you think about the points the authors are making?

Child sponsorships are a very popular and effective fundraising strategy for agencies working in the developing world. When I am suffering from insomnia, I find myself riveted by some of the infomercials hawking child sponsorships.

At Episcopal Relief & Development we don’t do direct sponsorships, although it could be a lucrative marketing tool for us. We’ve made this decision for a couple of reasons, even though we are probably leaving money on the table.

First, and most important, we feel that we should be focused on communities, not individuals. There are some communities where some children are sponsored and some are not and this can create all kinds of unintended consequences—for example having sponsored and non-sponsored children being treated differently by teachers and parents in the same home or classroom. Sometimes those who are being sponsored are judged to be more “worthy.” Our view is that it is better to work with local community leaders to determine the needs for all the children and then work to meet as many of those needs as equitably as possible.

Second, there is a troubling ethical question raised through sponsorships. It can lead to the commoditization of poor children and therefore potentially de-humanizes them. Faith-based poverty alleviation needs to avoid this.

Third, sponsorships are not sustainable and set up relationships of dependence. What happens when the individual sponsoring a child loses interest?

Fourth, who benefits from sponsorships? If we’re really honest, what is our prime motivation? Do we want to do good or do we want to feel good? Can we do both? Which do we want more?

These are tough questions. Nick Kristof of the New York Times has written thoughtfully about child sponsorship programs. Click here to read his article:

What do you think about this issue?

In all the recent coverage of the pirate activity off the coast of Somalia, an interesting detail struck me. The U.S. ship that the pirates attacked was carrying food aid from the United States to Africa. Did anyone else notice this?

Episcopal Relief & Development does not purchase and ship food commodities as part of its development work.

Our philosophy is to invest in supporting the development of local supply and demand and thus hopefully create a virtuous and self-sustaining cycle of economic development.

Last year CARE published a courageous and excellent white paper on US Food Aid Policy. It can be a bit heavy going, but the basic point is that

“Recent analysis has shown that under some circumstances food aid can harm local production and markets, undermining long-term food security. Studies have also shown that food aid is often not the most efficient use of resources for alleviating poverty.”

Care has decided drastically cut back and in some cases eliminate programs that deliver food commodities from the U.S. to Africa.

What do you think of CARE’s decision?