Gates Shakes Up Philanthropy

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Bill Gates, co-founder of the Bill and Melinda Gates Foundation, has had a busy few months. Stirring up debate on all the big issues, from food sustainability to US education reforms, and overseeing the successful eradication of polio in India. Is there anything that this man cannot do?

In his 2012 Annual Letter, released last month, Gates argues his case for better development — greater funding commitments, more innovation and coordination between public and private donors.

With billions of dollars, celebrity status and undeniable good will, Gates is in a unique position to influence the conversation on sustainable development, and that he does. Last week he openly criticised international donors on their agricultural programs at a gathering of food security leaders in Rome, and is now in a position where he is making formal recommendations to G20 world leaders.

Gates’ campaigning has effectively pushed philanthropy onto the agenda for the worlds richest, with William Buffet, George Soros and Ted Turner establishing philanthropic foundations, just to name a few. This new posse of international players collaborate and leverage their resources to achieve specific goals, and are shaking up the aid sector.

This influx of philanthropic funding could not have been better timed. International grant making by US philanthropic foundations has doubled since 1998, and has been one of the most stable and resilient funding mechanisms for international development throughout the global recession. Philanthropists have identified a leadership vacuum in development during a time of growing government austerity and uncertainty around the effectiveness of bilateral aid programs.

With that said, philanthropic resources cannot compete with government aid budgets. In 2008, the US$26.8 billion given by USAID to developing countries dwarfed the US$4.3 billion of philanthropic funding. These new aid actors have had to utilise strategies that give them bigger bang for their buck, and it is these aspects of philanthropy that are injecting the development scene with new ideas and influence, not just the aid itself.

Philanthropists concentrate their resources through vertical funding, which focuses on specific projects that have measurable results. Gates’ Global Health Program is an example of this, where grants are delivered to partners for the sole purpose of supporting the foundations priority areas in developing countries, such as malaria and HIV/AIDS.

This approach to global health funding marks a move away from the traditional government models. Although new ideas are welcome, the global community should have some reservations about embracing the new funding models pioneered by Gates.

Gates has given around $650 million of tied funding to the Global Fund for AIDS, TB and Malaria, making it the foundation’s main private sector beneficiary. This sort of sector leadership and dominance has stimulated significant flow on investment. International donors funding for malaria control has increased more than 15-fold since 1997, and during the same period, the rate of malaria has been cut by 50 per cent in highly burdened African countries.

Impressive — but there have been unintended consequences.

Los Angeles Times investigations have shown that targeted vertical funding can distort recipient countries health care priorities, effectively overshadowing other health priorities. The Gates Foundation has created of a bias for medical developments in these areas and not others.

How is this possible? Imagine the situation in Rwanda for example, where around 3 per cent of adults are infected with HIV/AIDS. Isn’t it odd then that a whopping 50 per cent of the health budget delivered predominately by the Global Fund, was designated for HIV/AIDS. The result is that with a large portion of the health budget tipped to one side, developing country staff are being diverted from basic healthcare, and are given incentives to work in the priority areas where philanthropic funding is concentrated. Gates Foundation grant recipient the Global Fund, provides salary increases for clinicians who provide antiretroviral drug therapy for HIV/AIDS patients.

The results?

A population more vulnerable to common killers, with more children exposed to birth sepsis and asphyxia, as staff in these areas have gone elsewhere for better pay and a human resources crisis that is detracting from primary and integrated healthcare.

A 2006 report commissioned by the Global Fund and the World Bank claimed that health delivery systems are now weaker and more fragmented than they were 10 years ago — this has been exacerbated as major organisations are receiving large injections of funding to promote universal access to priority areas. An estimated $3 per death related to chronic disease is spent annually, while $1,030 is spent per HIV/AIDS related death. This imbalance doesn’t adequately represent the fact that 60 per cent of deaths worldwide are attributed to these non-communicable diseases.

The World Health Organisation hasn’t been immune to the influence of the Gates Foundation either. Given that the Gates Foundation’s annual global health budget is larger than the WHO’s entire annual budget, its influence in its priority areas is huge. The WHO is the recipient of the largest vertical funding for the specific purpose of malaria research, provided by the Gates Foundation.

Former WHO chief of malaria, Dr Kochi, claimed that although with the best intentions, the Gates’ resources and dominance in malaria research was distorting research priorities and the policy making process on world health.

And as for accountability and transparency, it’s a double-edged sword. Operating outside bilateral and multilateral aid structures, and rivalling these organisation’s budgets in priority areas, there’s more room for flexibility, risk taking and innovation at the Gates Foundation. Philanthropists are able to fund initiatives deemed too risky for public funds, which may ultimately be used to inform public policy and government spending.

However, with growing scrutiny around government aid and demands for more accountability and transparency, is anyone reviewing these foundations and their operations? The absence of external performance mechanisms places very little pressure on philanthropists to operate transparently and publicly account for their role in international development. The US National Committee For Responsive Philanthropy is effectively the only independent foundation watchdog.

The controversial US public school reform funding by the Gates Foundation has received much public backlash from teachers, unions and members of the community, with claims that this policy shift is imposing undemocratic control mechanisms, top down mandates and inappropriate business models of replication and accountability. Yet Gates has continued to push for leverage of private money to pursue these reforms.

Given that the reach and influence of philanthropy in development assistance is growing, it is necessary to add a grain of salt to acknowledgements of the success and achievements of this funding. What is at stake is simply too important.

New Matilda

New Matilda is independent journalism at its finest. The site has been publishing intelligent coverage of Australian and international politics, media and culture since 2004.

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