The Unknown Citizen

Looking back on the history of charity, what we often witness is that
the frequent rush of capital out the door produces few intended
consequences, but rather adverse, damaging effects. The story is
always the same despite all the good intentions of many contemporary
philanthropists. Seeking to lift the poor out of poverty, enthusiastic
engineers and consultants bring millions of dollars packaged as
giveaway aid to developing countries to construct new infrastructure.
Fast-forward 10 years, and you will discover abandoned mills, flooded
croplands-turned-swamps and overall lower standards of living.

Since 1960, the World Bank has spent roughly $1 trillion on giveaway
programs in the developing world, but most of these countries are no
better off today than before. More startling is the $200 billion,
according to research, that has been squandered by corruption. After
almost five decades, it’s clear that most long-term recipients of aid
are still not achieving sustainable development.

Market-based approaches have the potential to nurture when charitable
dollars run out, and they are integral to solving the big problem of
poverty. Business is a powerful way to bring control and precision to
philanthropic solutions that could instill a greater feeling of
independence and choice among people too often regarded as invisible.
In many ways the developing world needs more “patient” capital above
anything else to stimulate its would-be capitalists. Patient
investments have all the discipline of venture capital—demanding a
profit, and therefore precision in how it is deployed—but has a more
socially-conscious bottom line. Rather than the 35 percent return that
venture capitalists typically expect, venture philanthropists look for
the 5 to 10 percent range over an even longer payback period, buoying
portfolios’ return on investment with measurable social impacts.

The Tanzanian manufacturer A to Z Textile Mills is an exemplary
paradigm of what happens when you combine philanthrocapitalism, talent
and innovation. After an initial investment of $325,000, A to Z has
grown to become one of Tanzania’s largest employers, producing over 20
million mosquito nets per year and employing more than 7,000 women.
More incredible are the social benefits from this enterprise. Not only
does it directly lift 7,000 families out of poverty, A to Z also fills
the critical need for affordable nets, one of the most effective means
of preventing the transmission of malaria, for the nearly one million
people in Africa who die every year from the affliction.

As Martin Luther King Jr. said, “Power without love is reckless and
abusive (but) love without power is sentimental and anemic.” We need
to coalesce the power, rigor and discipline of the marketplace with
the compassion innately embodied in charity programs to serve the
underprivileged. In essence, the present philanthropy needs to
transcend itself beyond a traditional mindset for charity in order to
enable those on the receiving end to engage themselves in market
activities. Only through the combination of the praxes of business and
philanthropy can those in need be empowered.