Can private philanthropic giants succeed where the aid industry has failed?

Can the entrepreneurial zeal, innovation and super-size budgets of private foundations succeed where a sclerotic and undisciplined international aid industry has failed? Or is the “New Philanthropy” simply executive arrogance, vanity and naïveté rushing in where even the "aid experts" have failed?

Economist Jeffery Sachs believes the world’s 2015 millennium development goal (MDG) targets could be met with a budget of US$150 billion a year. “Our governments are not acting. People are dying,” he claims. Rather than looking to the G8, Sachs points to the Forbes Rich List as the best potential source of the cash. Just 5 percent, Sachs says, of the income of the world’s 950 dollar billionaires would easily raise the funds.

Others demur. “The problems we face in reducing poverty and disease and other issues are not about money,” warns Randolph Kent ... King’s College, University of London. “Indeed, there is a strong danger that if more money is thrown at the problems we will see an increase of problems and not the solutions.”

The hyper-rich and their supporters do not see it that way. Bono, the Irish rock star and activist, has said: “Our generation has a unique opportunity to make history. We have the money, we have the knowledge, we know the people who can help Africa. We can make it happen with people like Bill Gates.”

The Bill and Melinda Gates Foundation has spent $13.6 billion since 2000 on domestic and international projects. Its assets will top $60 billion when the contribution of investor Warren Buffett is included. In a style that has been called “venture philanthropy,” the Gates Foundation tackles some of the toughest global problems, especially in health, taking a hands-on, innovation-friendly approach.

In one of its latest initiatives, in October 2007 the foundation launched a $100 million, five-year programme providing small grants to "nurture unorthodox approaches to global health". Inaugurated in Cape Town, South Africa, the Grand Challenges Explorations programme will target scientists in Africa and Asia, offering research grants of $100,000.

The foundation has massively boosted key aspects of medical research and intervention, especially in areas considered to be unprofitable by the medical and pharmaceutical private sector.

... new types of relationships between the private and charitable sector are developing.

“Venture philanthropists", such as the UK’s Impetus Trust, are bringing venture capital techniques to the voluntary sector by working with charities to improve their management and performance. The US-based Acumen Fund invests in pro-poor business but expects monetary success as well as promoting worthy products and causes through enterprise.

But Nobel Prize winner and micro-credit pioneer Muhammad Yunus is sceptical: "If someone makes $100 profit and donates $5 to a good cause, and possibly only to save on taxes, that doesn't impress me very much.”

“I am more interested in what global philanthropy looks like, not just the individual giving of a few Anglo-American billionaires,” concurs Kent of London University. “While it may be true that the aid sector hasn’t yet successfully addressed some of the major global problems, there is no evidence the billionaires will be any more successful. I am not convinced that they have any greater advantage in terms of assessment or accountability than the traditional mechanisms available. It’s all too early to judge but I would be surprised if you find that they come up with radical solutions to old problems,” concluded Kent.

IRIN