Because this article is an early reflection on the tsunami relief effort, you may find, by the time of its appearing in print, that some of the numbers will have changed. They are accurate, as far as we have been able to determine, at the date this is written.
The response to the terrorist attacks on the World Trade Center and the Pentagon on September 11, 2001 was a seminal moment for nonprofits and philanthropy. Equally pivotal is the response to the earthquake and tsunami centered off the island of Sumatra in Indonesia that leveled much of several Southeast Asian nations—perhaps more so, in fact, because of the scale of the tragedy. About 3,000 people died in September 11th violence, compared to more than 168,000 deaths and upwards of 5,000,000 people displaced along the boundaries of the Indian Ocean as of this writing; and these numbers could easily escalate.
Unlike September 11th, the horrors of the tsunami haven’t been accompanied by reports of the kinds of nonprofit charity problems that enveloped the September 11th Fund, the Red Cross, and other organizations. Notwithstanding the muted problems of nonprofit service delivery, this is a time to remember the lessons of September 11th and be open to new lessons that the tsunami response underscores.
The Red Cross Lesson
In the wake of September 11th, the Red Cross made a significant policy change meant to inform potential donors when their contributions might be used for purposes other than the specific disaster in question. Red Cross policy had long been to bank excess donations for future disaster relief activities, because the front-end emergency response role of the Red Cross after time has to give way to other kinds of charitable responses to disasters. This time around, the American branch of Médecins Sans Frontières (MSF; in English, Doctors Without Borders) spurred an uproar by asking donors three days after the tsunami to permit the organization to use contributions for other emergencies, having raised enough for its Southeast Asian operations. Although MSF directed people to other organizations to make donations related to the tsunami, some commentators squawked that this would make potential donors think that the need for charitable resources was over. But maybe we should take it for what it really means—that MSF and other charities are trying to be more transparent and honest about their operations and needs. It’s charity growing up.
The Administrative Expenses Lesson
Notable is the lack of vituperative criticism about the necessary administrative costs in delivering disaster relief assistance. Press commentary has cited reviews by nonprofit rating groups such as the BBB Wise Giving Alliance, Charity Navigator, and the American Institute of Philanthropy (AIP) for understanding issues of nonprofit efficiency, and other articles have highlighted what charities such as the Red Cross are doing to minimize the costs of delivering assistance. For the most part, people seem to grasp that getting assistance to people in need, particularly those in remote areas, requires expenditures in support of relief, and the relief agencies have done a much better job of demonstrating transparency and accountability this time around than they did in response to September 11th charitable fundraising. Only a few nonprofits have claimed that 100% of donations go to direct relief, notably Baltimore-based Lutheran World Relief and New York’s Church World Service. But even the 100%-ers acknowledged that they are paying for administrative costs from other sources. AIP’s Dan Borochoff characterized this as a “shell game” that essentially misleads donors.
The conversation has moved, with the United States Fund for UNICEF conceding a 7% overhead and others claiming rates below 10%, but even there, the administrative costs debate has to improve. It’s unclear from many reports whether the charities are talking about their ongoing administrative overheads; the administrative costs in delivering the assistance to Southeast Asia; or simply, in the case of many local charities, the processing costs for collecting and distributing proceeds to disaster relief organizations. Urban Institute researchers report that 18% of nonprofits raising $5 million or more reported zero in fundraising costs in 2000, and overall a “substantial proportion” of organizations inaccurately reported their fundraising and administrative expenditures. Disaster or no disaster, the sector has to elevate the administrative costs debate yet one more level.
Substituting Charity for Government
Maybe administrative costs didn’t catch on as a hot issue this time because some of the nation’s television media was more exercised with defending the nation against UN Under-Secretary for Humanitarian Affairs Jan Egeland’s charge of stinginess. President Bush took an embarrassingly long time to show any personal interest or concern for the victims and survivors of the greatest natural disaster of modern times, unmotivated to cut short his Crawford, Texas respite, compared to Germany’s Gerhard Schroeder who made a beeline back from holiday to his office to take charge of that nation’s response. The official U.S. government commitment was at first, unbelievably, $15 million; then it crept up to $35 million, defended by Secretary of State Colin Powell as slow because the nation was taking stock of the dimension of the need. Ultimately, as of this writing, the U.S. government aid commitment has reached $350 million. That pales against the commitments of other smaller and less wealthy nations, including Australia’s $810 million; Germany’s $664 million; Japan’s $500 million; Norway’s $183 million; $103 million from France; Canada’s $67 million; Britain’s $95 million; Sweden’s $74 million; Spain’s $68 million; Denmark’s $55 million; $32 million from the Netherlands; plus $132 million in cash plus over $1.2 billion in loans from the European Union itself (distinct from its member nations’ pledges) and $575 million pledged by the World Bank and the Asian Bank of Development.
UN General Secretary Kofi Annan pleaded for a quick billion dollars, expressing the well founded fears that the pledges of $4 billion in government aid from around the world would not be realized. Remember the earthquake in Iran’s city of Bam in 2003, with more than 25,000 confirmed deaths? Nations pledged over $1 billion in relief, but most reports suggest that the amount actually delivered was more in the range of $17 million. Also, substantial portions of the aid amounts are loans, not grants; for example, half of the Australian commitment is a loan, so the tsunami relief will in some ways add to the indebtedness of these nations. Like a portion of American aid for the reconstruction of war ravaged Iraq, which flows through corporations such as Halliburton and Bechtel (see Iraq, Inc.: A Profitable Occupation, by CorpWatch’s Pratap Chatterjee), a substantial chunk of the tsunami-pledged $350 million may go to pay American corporate contractors to rebuild Southeast Asian nations. The generosity of the west may not be quite as generous as the press plays it up to be.
Notwithstanding questions of the veracity and content of the relief pledges, the generosity of some tiny nations clearly put the wealthy countries to shame, if calculated on per capita or percent of Gross Domestic Product measures. The Bush Administration and conservative TV pundits answered charges of stinginess with the hint of higher future levels of government aid, with indications of the costs of U.S. military assistance in aid delivery, and, remarkably, with suggestions that the charitable donations of Americans should also be added to the measurement of nations’ comparative disaster relief generosity. In other words, add charitable giving to government spending to come up with an accurate total commitment to disaster relief. None of this nation’s nonprofit leaders rose up to decry this statement of a core Bush Administration precept—that charitable giving and nonprofit spending can and should supplant governmental commitment. The American charitable generosity defense of the Bush Administration’s halting commitment to aid is objectionable at a minimum for the ethnocentrism that ignores charitable giving in other nations, most of which offer paltry charitable giving tax incentives compared to the U.S. The longer lasting fear should be when the Bush Administration unfurls its next waves of federal cutbacks in social programs with the defense that this nation’s robust, ever growing $240 billion in charitable giving ought to pick up the slack.
Throughout most of the world, the operational term is NGO, nongovernmental organization. NGOs deliver a diverse range of disaster relief responses, frequently paid by government agencies and more recently the United Nations to deliver assistance. Secretary-General Kofi Annan’s new emergency “flash appeal” for $1 billion in rapid assistance was accompanied by a UN document identifying the specific roles of NGOs as the UN’s delivery system. Known for delivering for packages of food to World War II refugees, CARE (an acronym originally for Cooperative for American Remittances to Europe) is now a part of the American vernacular because of 100 million CARE packages. Their visibility in the tsunami relief response raises questions of accountability that make the U.S. nonprofit accountability debate seem almost trivial. In the nations impacted by the tsunami, NGO accountability issues include factors such as their roles as agents of democratic process, the power beneficiaries can and should have over agency programs and the dynamics between NGOs and their host and funder countries. A conservative backlash against NGOs based on narrow, U.S.-style accountability issues has recently expanded to attacks on NGO activism, their propensity to challenge social inequities, and their willingness in some cases to question the strategies and motivations of donor countries. When and if the NGO delivery system calls into question some of the western generosity to the areas of tsunami devastation, the response of the U.S. nonprofit sector will defend, one hopes, the advocacy and activism of international NGOs, including when they tell off their American corporate and government revenue sources.
Faulty Public Relations
The long-standing anti-Islamic Christian Coalition, run by Pat Robertson and cited in the past for its anti-Islamic sounding commentary, has endorsed tsunami relief in part because of its potential for presenting America, and presumably Christians, in a positive light aiding Muslims. Lots of the American vindication of the federal commitment of $350 million and the quarter of a billion dollars raised in charitable donations is their positive effect in the Islamic world, showing that we care about Muslim nations and people.
The tsunami response is charity, not philanthropy. Leaving aside the various motivations behind government aid responses and the variety of their delivery mechanisms, the charitable response to the tsunami is a reaction to the immediate needs of the millions harmed and displaced. The challenge will be long term, as Colin Powell has recently noted. Will America and its western colleagues deliver on their pledges and stick with the relief responses beyond the initial weeks and months of emergency needs? Or will the fly-by response of this nation’s reaction to critical needs in Rwanda and Burundi, Darfur in the Sudan, and elsewhere be followed by a response to the nations hit by the tsunami that fades as American public attention drifts?
American donors would be helpful in the long run not simply if they maintained their charitable giving upsurge to Southeast Asia since the tsunami, but if they pressured their governments for more significant relief, such as debt relief for affected nations. Japan, Britain, and Belgium have already announced moratoriums in debt repayments, the G7 nations (including the U.S.) have announced a voluntary debt repayment moratorium, and Canada is among the nations actively talking debt forgiveness. Remember that the cumulative debt of the Southeast Asian nations affected by the tsunami is an estimated $358 billion. Outgoing World Bank president James Wolfenson made the obvious point that debt forgiveness was better than temporary debt moratoriums, but the U.S. has historically been reluctant to write off Third World debt. No surprise, the Bush Administration expressed no enthusiasm for a debt moratorium for tsunami-impacted nations, though the issue will be discussed in the coming weeks at meetings of the Paris Club of creditor nations.
More to the point, the U.S. reputation in Southeast Asia will be difficult to improve while the nation maintains its presence in Iraq. It hardly escapes attention that the supply and delivery capacity of the U.S. military devoted to tsunami relief is barely an iota of the capacity that this nation devotes to the expenditures for the Iraq war would cover the U.S. tsunami pledge and then some. The public relations impact of billions spent for war that could be redirected and devoted to humanitarian relief is difficult to ignore, both for the nations impacted by the tsunami and for the nonprofit sector concerned about social justice.
So what are the major lessons to be learned? Perhaps one is that our efforts as nonprofits/nongovernmental organizations do not occur in a vacuum. Understanding the politics that surround a large-scale relief effort is part of our job because if we neglect to understand the politics of charity and philanthropy, we may inadvertently undermine core tenets of how we want our nonprofit organizations to behave and perform. Another is the incontrovertible evidence that the nonprofit sector can and does learn from its failures and shortcomings, that September 11th did provide valuable instruction that many NGOs are demonstrating in their delivery of tsunami aid and assistance. A third but hardly final lesson is that charity and philanthropy, however positive the motivations of the donors and deliverers in responding to human need, whether in Lower Manhattan or in Aceh in Indonesia, do not undo the underlying tensions between industrialized nations and the “global South.” Individual and collective acts of kindness, of charity by American donors, are important in and of themselves, but do not erase the inequities of globalization.
About the Author
Rick Cohen is the executive director of the National Committee for Responsive Philanthropy (www.ncrp.org).