Why do we so often give aid in ways that do not support the local economy?
Posted on June 18, 2009 at 5:46 pm
At a dinner party last night the topic of good and bad international assistance came up. A fellow diner had a friend that ran an orphanage in South America and she helped out whenever possible. I carefully brought up the topic of my last posting, that many of the children in orphanages are not actually orphans, but are brought by families too poor to feed and clothe them. My dinner companion agreed that this was also the case in this particular orphanage.
The woman then went on to say that she helped out by purchasing boxes of office and school supplies for the orphanage. She would shop at Staples when they have their sales in the fall and then ship it to the orphanage. I pointed out that it is far better to buy goods in the local area than to ship them overseas – also the topic of an earlier posting.
The woman vehemently defended her position stating that it was much cheaper to buy the supplies at Staples than buying them in country, and an airline shipped the supplies for free. Although I question whether buying office supplies in the states is cheaper than buying them in the local community, in the end that’s not the point.
She’d already stated that the children are in the orphanage because their parents don’t have the money to feed and clothe them. And yet, by purchasing supplies in the states and shipping them, she is not helping the local economy. Buying the supplies locally would mean that the people selling them would get a little profit, they would then order more from the factory, which would make a small profit, they would pay their staff, who could then feed and clothe their children.
Although the amount of school and office supplies purchased by this one orphanage will not turn around the local economy, it would still help. With the high number of aid agencies following this practice the roll up effect of all these free supplies is likely very substantial.
I didn’t dare broach the topic of the orphanage using volunteers from other countries. Although the desire to help is wonderful, the cost of a plane ticket could pay a local person a full-time salary for many months. A round trip ticket from the states to Thailand is about 750 USD, this is enough to hire a manual laborer for five months. When I point this out I’m often told that the people that pay hundreds of dollars to fly somewhere to volunteer are not willing to instead, donate that same amount of money. I understand this, but I find it sad that the needs and desires of the donors are more important than the needs of the people they are trying to help.
If every aid agency were to purchase goods locally and hire local staff instead of bringing in volunteers, far more money would go into the local economy. This would mean that more parents would have jobs and be able to feed and clothe their own children. Instead, we continue to ship in donated goods, send over volunteers, and build orphanages.
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Related postings:
Does funding orphanages create orphans
6 questions you should ask before shipping aid overseas
Hamburgers for Hindus
« Does funding orphanages create orphans? • Interesting news articles »
Well said. Thanks for sharing your knowledge and experience.
Great post! I’m not aware of any credible aid agency or practicioner who/that sees orphanages as anything other than a monumentally bad idea. Sadly, the aid industry is largely unregulated and anyone with enough cash and enough persistence to get local permissions can implement an ill-conceived project somewhere.
My two greatest aid-work annoyances: inappropriate application of GIK (e.g. stuff from Staples); and inappropriate use of volunteers.
Another example, Operation Smile could support many more cleft palate surgeries if they supported local oral surgeons to perform the surgeries.
I agree, great post! I hadn’t really thought of the effects of buying donated supplies locally versus abroad.
Your point about where the money goes is one I’ve debated with myself for a while. I think that’s called “liberal’s guilt.” You spend all this money on plane tickets, suitcases, and vaccinations, when the money could just be donated. But this is also a problem you’ve mentioned before, and a problem that reccurs. How do you know the money is going to where it needs to go? How do you know the organization is legitimate?
Yes, 750 USD could be used for someone’s salary; however, the donor could have an enriching experience. In philanthropic work, people want to donate time and money. But isn’t it just as important that the donor cares and grows and benefits from understanding who receives the donation and why it’s important? Is it a sad trade-off that people would rather donate their time and energy to work and learn from these organizations? The donor’s satisfaction and education are just as important.
Thanks to everyone for sharing their thoughts, and to Nirvana for the great example of local oral surgeons performing cleft palate surgery.
Sterling,
Thanks for your comment, I’m glad to hear you’ve enjoyed my postings.
If I read your correctly you have two main points, first it is easier to tell if the aid agency is providing good aid if you’re there in person and second the needs of the donor are as important as the needs of the aid recipient.
To the first point I would say that it is extremely important that you critically evaluate an aid agency before giving money. If you have a working knowledge of what factors contribute to good or bad aid you can do a decent job of evaluating their work from a distance. If you don’t have a clear idea of what factors contribute to good or bad aid, you may not be able to evaluate their work even after having volunteered. Volunteering for an agency can sometimes make it even more difficult to evaluate them because what you enjoy doing as a volunteer may not necessarily be the best for the people you are helping.
As for you question about whether or not the needs of the donor are just as important as the needs of the aid recipient, I’ve been meaning to write a post on “voluntourism”. I will do so in the near future, hopefully it will help you understand why I think that the needs of the donor are not as important as the needs of the aid recipient.
Again, thanks for commenting, I’ll try to write a full post soon.
Cheers,
Saundra
Due to difficulties in posting a comment this was sent from Richard Brubaker via email.
A very interesting, and valid, question that I think many should think about.
Operating a volunteer based organization in China, I am often asked about our ability to manage foreign volunteers and donation of goods.
In selected cases this can be an opportunity, the earthquake, and for specific goods it may also be an opportunity, and while these exceptions may be more expensive the need outweighs the savings.
On the wider topic of local capacity (operation smile), I wholeheartedly agree. There should be no greater goal than to build capacity locally and to solve problems locally. Flying doctors around the world to perform needed surgeries is a great service, but to improve the quality of healthcare locally through training is something that would reduce the need of an area to long term look for outside assistance.
http://www.china-crossroads.com
As a follow up to the two comments on flying in surgeons, I just came across an article from the New England Journal of Medicine talking about the costs and problems associated with sending surgeons to developing countries to preform surgeries. Here’s the link
http://content.nejm.org/cgi/content/full/354/5/443
The “value” of buying goods locally rather than shipping goods from elsewhere is predicated on local goods being of reasonable quality AND the money spent locally remaining local. In Zambia I can tell you that if an organization received 2000 usd to purchase office supplies they would not be forced to purchase those goods at a shop owned by a foreign investor who employs very few people at slave wages and as a company they evade 99% of their taxes. Very little of the money sent over would ever be reinvested in this economy, most of it would be expatriated and invested in the states or the proprietors home country. Sad but true. Clearly the shipping of goods isn’t a bright idea, and on the margin, buying locally is better…but until nationals own and operate these companies the impact will be minimal.