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04/26
2012

Exploring the roles for philanthropy between soccer balls and coffee beans

In my last blog we looked at Tony Blair’s view on philanthropy’s role in repairing the fraying social contract. The former prime minister cited philanthropy as risk capital and the means by which one can disrupt instead of maintain the status quo. Blair sees philanthropy as creative and adventurous – an opportunity to venture where government dare not go, but also an opportunity to inspire and push government to change itself.

This week I had the opportunity to engage the veteran foreign correspondent and author Stephen Kinzer and the Rwandan ambassador to the U.S. in a related conversation on the  roles of government and philanthropy in developing countries – a discussion that sounded  very different than Mr. Blair’s perspective and that turned again and again towards the role of business.

In reflecting on the relationship between philanthropy and government,  Kinzer brought us back to the not so distant days when consensus was that governments were the only credible provider of developmental aid, and business was inherently evil and only there to exploit vulnerable countries. Fast forwarding to today, Kinzer notes that there is a widespread sense that state development aid has been a failure – and that we must look at private philanthropy’s role in a) making this failure more apparent and b) responding to this failure by stepping in with alternative approaches and solutions.

Kinzer went on to dismantle both aspects of this “government good; business bad” philosophy while suggesting roles for philanthropic intervention:

1] To Kinzer, governments, whether indigenous or foreign, work, and need to work, on a grand scale. “Governments think huge. Too huge at times.”  Especially in places like post conflict Rwanda, governments often struggle to achieve demonstrable progress at a community level. Private philanthropy, on the other hand, can and does focus, working on a scale where wins are realistic, visible, and replicable.

2] To Kinzer, the concept that business can only exploit has been turned on its head. Through his research and experience, he believes entrepreneurship holds the greatest potential for raising a country out of poverty. He compared it to the past achievements and also limitations of microfinance.  But while microfinance has proven to pull the very poor into the ranks of the poor, entrepreneurship holds the potential for greater and sustained prosperity. Private philanthropy –and especially impact investing – has and will play a critical role in enabling and supporting the entrepreneurial engine capable of profound change.

Ambassador James Kimonyo, emphasized that foreign investment – whether government or private; philanthropic or profit driven – must respond to the priorities of a country.  In essence the government says “If you want to invest in Rwanda, here are the priorities as set forth by our people.”  While the conversation was framed around philanthropy, the Ambassador kept coming back to business – and not philanthropy – as the most powerful approach for those looking to improve and support Rwanda.

The Ambassador illustrated this bias and the government’s efforts to leverage philanthropic intentions to deliver on government priorities through an anecdote of a powerful American CEO who worked with the Ambassador to ultimately establish a coffee roasting facility which has significantly increased the revenue of countless Rwandan farmers who can now sell their roasted coffee beans for significantly higher profits on the international market.

The starting point for that investment: a conversation about donating soccer balls.

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