In his widely viewed Ted talk - "The way we think about charity is dead wrong", Dan Palotta makes the point that although business and social business will go a long way toward tackling poverty, there will still be a minority, the 10% whose needs can only be addressed by charity
Social business needs markets, whereas these people need compassion and love, he asserts. and we've made little impact on poverty in the last 40 years.
What he won't know is that exactly the same arguments were made in support of social business. In the core argument of the 1996 paper delivered to the White House pointed out, from 1971 money became paper notes written solely against the 'good faith and credit' of US citizens.
14. Manipulation of numbers, represented by currency/money, allows writing “new” money as needed. There is no tangible asset, or anchor. There are only numbers, managed by whomever might maneuver into position to do so. Economics came to be based on numbers, rather than real human beings.
15. On that basis, capitalism trumped people and therefore trumped democracy. Democracy is about people, who since Descartes are considered necessarily real, rather than numbers which are not necessarily real. An imaginary construct, numbers, rule a real construct, people. That arrangement allows for disposal of real human beings, in the name of the imaginary construct.
16. Capitalism nevertheless remains the most powerful economic system ever devised. The problem is not with the construct. The problem is with the output of the construct, wherein imaginary constructs – numbers, and currencies represented symbolically by numbers – are left to control real human beings to the material benefit of relatively few people and to the exclusion of many others. Classical capitalism has reached equilibrium in this regard. However, and consequently, many and growing numbers of human beings are excluded in the realm of finite resources hoarded by those most adept with manipulating numbers/currencies.
The P-CED white paper drew attention to the limitations of charity and program related investments
"This business model entails doing exactly the same things by which any business is set up and conducted in the free-market system of economics. The only difference is this: that at least fifty percent of profits go to stimulate a given local economy, instead of going to private hands. In effect, the business would operate in much the same manner as a charitable, non-profit organization whose proceeds go to local, national, and international charities. Non-profits, however, are typically very restricted in the type of business they can conduct. In the United States, all non-profits must constantly pay heed that they are not violating those restrictions, lest they suffer the wrath of the Internal Revenue Service. For-profits, on the other hand, have a relatively free hand when it comes to doing business. The only restrictions are the normal terms and conditions of free-enterprise. If a corporation wants to donate to its local community, it can do so, be it one percent, five percent, fifty or even seventy percent. There is no one to protest or dictate otherwise, except a board of directors and stockholders. This is not a small consideration, since most boards and stockholders would object. But, if an a priori arrangement has been made with said stockholders and directors such that this direction of profits is entirely the point, then no objection can emerge. Indeed, the corporate charter can require that these monies be directed into community development funds, such as a permanent, irrevocable trust fund. The trust fund, in turn, would be under the oversight of a board of directors made up of corporate employees and community leaders. "
Once established as a software business operating in England our focus turned toward the cause of institutionalised children in Eastern Europe. As a business we were free to operate in any legal market and apply profit to any cause of our chosing and our choice was where many NGOs would or could not go. Raising the issue of Death Camps for Children is an example.
Concluding the case for a social business development strategy in which placing these children in loving family homes was the primary objective, we'd argued:
'This is a long-term permanently sustainable program, the basis for "people-centered" economic development. Core focus is always on people and their needs, with neediest people having first priority – as contrasted with the eternal chase for financial profit and numbers where people, social benefit, and human well-being are often and routinely overlooked or ignored altogether. This is in keeping with the fundamental objectives of Marshall Plan: policy aimed at hunger, poverty, desperation and chaos. This is a bottom-up approach, starting with Ukraine's poorest and most desperate citizens, rather than a "top-down" approach that might not ever benefit them. They cannot wait, particularly children. Impedance by anyone or any group of people constitutes precisely what the original Marshall Plan was dedicated to opposing. Those who suffer most, and those in greatest need, must be helped first -- not secondarily, along the way or by the way. '
As founder Terry Hallman had reasoned long before
“Substitute personal greed with compassion, and the balance sheets will still work out just fine. Profit/loss statements take on a whole new dimension and meaning. Greed and capitalism are not one and the same thing. “Social” capitalism, social enterprise, is perfectly doable. This is the most effective sustainable strategy available for alleviating widespread human suffering stemming from poverty and all that comes with it — up to and including terrorism.”
In 2009 P-CED became a partner in the Charter for Compassion.
After Terry Hallman lost his life in 2011, I went back to the 1996 paper to explore its influences which included Carl Rogers, Eric Fromm, Rollo May, Marilyn Ferguson and others to reveal his case for applying love and compassion to business
The major focus of Dan Palotta's fundraising efforts have been in the HIV/AIDS prevention and in Ukraine we'd seen an epidemic develop among street children in particular. Millions of dollars donated to the cause of prevention were failing to address the problem, as we noted in the 2006 social business strategy paper
"We see a staggering array of social problems arising directly from poverty, including but not limited to tens of thousands of children in orphanages or other state care; crime; disrespect for civil government because government cannot be felt or seen as civil for anyone left to suffer in poverty; young people prostituting themselves on the street; drug abuse to alleviate the aches and pains of the suffering that arises from poverty and misery; HIV/AIDS spreading like a plague amidst prostitution, unprotected sex, and drug abuse; more children being born into this mix and ending up in state care at further cost to the state; criminals coming from poverty backgrounds, ending up as bandits, returning to communities after prison, with few options except further criminal activity. These are all part and parcel of the vicious negative cycle of poverty, and this threatens to destroy Ukraine, if Ukraine is defined in terms of people rather than mere geographic boundaries."
Since the proposal was delivered to government in 2006, the annual number of new cases increased from 16.078 to 20,743 in spite of the injection of hundreds odf millions of dollars in grants and donations. Ukraine's Anti AIDS charity is run by the wife of a leading oligarch who Kyiv Post describes as one of Ukraine's Scrooges.
In 2009 the Kyiv Post reported on the overlooked success story of placing children in families which had been far less visible than Sir Elton John's adoption efforts. Sir Elton has more recently launched an initiative which goes closer to the root of the problem.
Clearly the way forward is not to invest in "the causes we love" but to create healthy sustainable livelyhoods such that those in poverty , the 10% who traditional development approaches fail to reach, do not need to abandon their children to the state.in the first place. .
Dan Pallotta makes the case for greater investment to attract and retain the best talent. Yet with al that has been brought to bear, hundreds of millions of dollars, including contibutions from the UK Big Lottery we see little evidence of impact. Social business talent , on the other hand is simply shut out.
By 2007 the proposals for increased carer allowances, 400+ rehab centres and national scaling of family type homes had been adoped as gpvernment policy, yet there was no investment to be found.
As the BBC reports , the majority infected with HIV still have no access to treatment. Will tripling of existing funding reach them? Another article puts the figure of those being treated at 41% with another $301.7 million in funding expected.
Requests for financial support were trivial in comparison when we called on USAID and the Council on Foreign Relations in 2008.
"I need grants sufficient to provide the beginning of foundation funding. With that, and with the publicity and communications machinery we have in place via P-CED, Maidan, KHPG, ForUa, and U-CAN among others, we can get this done. Immediately, I/we need $25,000 to go ahead and fully activate PN rescue and recovery operations, which is in turn part of a larger network ready-to-go as soon as funding is available. No one person knows all network nodes, but nodes and persons understand each other is around, focused on the same objectives and ready to move forward. I find myself in default position of lead organizer due to two main factors. One is the catalyst effect of the Death Camps series in 2006, which put me at epicenter. Two is my US citizenship. Whacking me would make a much more difficult mess than whacking a Ukrainian citizen, not least due to the nature of the work I’m doing in childcare reform and poverty relief according to and protected by Ukraine’s own laws – most especially the human rights section (section two) of Ukraine’s own Constitution. If I get whacked, there is only one organization in Ukraine with motive and hutzpa to take that chance: “UkrCosaNostra.” That would be the folks who stand to lose lucrative black cash flows. To counter publicly, it has been suggested that their activities are sufficiently grand and reprehensible as to bypass Ukrainian machinations altogether in favor of international law via European Court of Human Rights, and possibly even the Hague for crimes against humanity. Much of the opposition noise in Ukraine’s Verkhovna Rada at the moment is mafia hired hands scrambling to protect various organized crime rackets and income. Transparency, free media, and anti-corruption efforts of any kind are their worst enemies. We are merely emblematic of their worst fears."
A few days ago USAID signed a Memorandum of Understanding to support social business. Something which apparently they had no understanding of 5 years ago. ,
The Charitable-Industrial Complex
I found a great deal of resonance with what Peter Buffet was saying a few days ago in the New York Times:
"I’m really not calling for an end to capitalism; I’m calling for humanism."
Humanists like Erich Fromm, Rollo May and Carl Rogers were among the influences which led to People-Centered economics. This statement from our manifesto makes it plain enough:
“Economics, and indeed human civilization, can only be measured and calibrated in terms of human beings. Everything in economics has to be adjusted for people, first, and abandoning the illusory numerical analyses that inevitably put numbers ahead of people, capitalism ahead of democracy, and degradation ahead of compassion.”
I've written above of 'young people prostituting themselves on the streets' and 'the vicious negative cycle of poverty' quoting a paragraph from our 2006 strategy paper. Peter Buffet asks:
"Is progress really Wi-Fi on every street corner? No. It’s when no 13-year-old girl on the planet gets sold for sex. But as long as most folks are patting themselves on the back for charitable acts, we’ve got a perpetual poverty machine. "
Ironically perhaps, it was the profit from affordable broadband component of this strategy that was to underwrite the cost of childcare reforms, placing all children in loving family homes. This may be idealist to some, but the argument for love is both humanist and strategic when it comes to tackling AIDS.
Micro lending, of the moral collateral form has a role as part of the toolkit rather than a panacea. A business which invests profit for social ends can align with a micro credit union for reduced cost of borrowing and mutual strength.
It won't be those seduced by the comforts of better financial rewards who'll be putting their lives on the line to expose corruption and human rights abuses It will be those who are compelled to act, regardless of financial compensation or personal risk.
In 2010 Bill Gates and Warren Buffet announced the Giving Pledge. A year earlier the subject of philantrocapitalism featured large at the Davos Philanthropic Roundtable, also know as the Ukranian Lunch. You've probably guessed that the same oligarch I refer to above, was the host.
"The key speakers at the event were the dignitaries who have significantly contributed to the development of a new model of philanthropy: 42nd President of the United States Bill Clinton; former
Prime-Minister Of Great Britain Tony Blair; businessman and philanthropist Richard Branson; Laureate of 2006 Nobel Peace Prize Muhammad Yunus; actor and founder of the One Foundation Jet Li, founder of the Bill and Melinda Gates Foundation Bill Gates and also Victor Pinchuk, the Roundtable organiser, public leader and businessman. Matthew Bishop, Chief Business Editor of The Economist and co-author of the book "Philanthrocapitalism: How the Rich Can Save the World" acted as a moderator of the discussion."
Take note of former UK Prime Minister Tony Blair who will subsequently recieve a donation from the same oligarch for his 'Faith Foundation' As prime minister it was he who made social enterprise goverrment policy.
And that gentle reader, is the merry-go-round we're on.