Who Pays for the End of Poverty?
By Helen Greene
Development & Communications Associate
On Monday November 6, Trickle Up hosted the Patricof Forum, our annual thought leadership event, where we discussed how the world will fund the first Sustainable Development Goal – ending extreme poverty. Panelists Kavita Ramdas of MADRE, Evelyn Stark of MetLife Foundation, and Lorenzo Bernasconi of the Rockefeller Foundation, moderated by Sam Roberts of The New York Times, had a thought-provoking and lively conversation on the role – and limits – of philanthropy in solving this global challenge.
In front of an audience of 50 Trickle Up supporters, friends, and staff, the panelists shared varied perspectives on how government, the private sector, and philanthropy can or should interact to precipitate the end of extreme poverty.
The panel began by discussing some of today’s trends in philanthropy.
When it comes to financing the SDGs, global philanthropy is an important component to the funding puzzle, even if it doesn’t make up the largest piece. But we must not forget that the United States is just one of many countries with significant philanthropic potential, as panelist Kavita Ramdas reminded us, “In fact there are extraordinary philanthropists now all over the world and they don’t come from the US. And I think until we begin to reset our assessment of what global philanthropy really is, we will find ourselves in a sort of side story.” Philanthropy is growing from a US-centric sphere to a truly global landscape, and these shifts will affect how we fund poverty alleviation.
For Trickle Up, another important trend in philanthropy over the last decade has been financial inclusion, as Evelyn Stark defines it: "having access to, use of, and benefit of financial services." She posited a new term, just as microcredit gave way to financial inclusion, "the term ‘financial health’ is a lot more outcome oriented." Financial health challenges the current status quo where financial inclusion implies that "governments get to check off a box that all of these people are included – they have a bank account. But this isn’t inclusion.” Full financial inclusion involves more than just the access to financial services, and perhaps a shift towards the promotion of financial health can address these shortfalls.
And importantly, we must recognize that philanthropy has a role not only to fund the work of NGOs in the fight against extreme poverty, but also to challenge the systems that perpetuate poverty. As Kavita said, "We can’t think about what foundations are doing or not doing to address the needs of the very poor and excluded” without “both acknowledging our own roles as perpetrators of a system of inequality and finding the best ways” to address that inequality. Philanthropy is moving towards addressing these root causes as well by promoting community organizing, divesting from traditional investments to pursue impact investing, and more.
Speaking of impact investing, panelist Lorenzo Bernasconi shared his expertise in innovative finance to comment on the role of the commercial marketplace in ending poverty: “Impact investing is all about how we unlock large-scale, private sector capital for addressing the world’s challenges." He noted that bringing in the private sector is key given the large funding gap. It is estimated that $1.4 trillion annually is needed to finance the SDGs, but total US philanthropy only reaches $390 billion and governments are indicating they will decrease their support to global development.
In this context, "business as usual is not an option,” said Lorenzo.
In addition, the scope of the problem is beyond our current capacity to solve. As Lorenzo said: "Climate change and poverty are incredibly complex…and so we think that the nature of those problems require business to be a part of the solution.” The private sector often finances simple, nascent ideas with much more than philanthropy is able to provide for some of the world's toughest challenges. Take apps, Lorenzo said, "Snapchat got $2.5 billion in financing before it even went public to offer the service to their users to send photos and videos that disappear within seconds. And then people look at philanthropy and say $100 million to address a really difficult challenge – there’s a real disconnect there.”
But as we look to innovative finance, like impact investing, to provide some of the capital to finance the end of extreme poverty, we must balance this also with the need to create a more equitable world with robust public and private sectors.
We discussed ideas around what it might take to end poverty and where philanthropy fits in. As we know poverty is complex, with multiple dimensions and a variety of ways to tackle it.
Kavita noted: “aid is an important [tool] but not a sufficient one.”
Lorenzo pointed out that “the role of philanthropy is sometimes to test a concept that governments may see as too risky at first.“ In this sense, philanthropy can seed innovative ideas, and then promote the ones that work best to be scaled by governments and multilateral organizations.
This model is similar to what Trickle Up has done with the Graduation Approach - testing a concept and then integrating it with government services. As Evelyn said, “Trickle Up is proving the point at the local level, and what we’re doing with them in India, Mexico, and Vietnam is then going to the government and saying here look, those conditional cash transfers and welfare payments that you’re doing – look what we did with that kind of money.”
Another way Trickle Up can be a model for other poverty alleviation programs is by bringing vulnerable populations, especially women, to the attention of global development programs. "The emphasis Trickle Up puts on the power and voice and engagement of women is actually a very important piece of how it has been successful," according to Kavita. Through Trickle Up's partnerships with government agencies "working with women’s groups, [now the government] will have heard from and listened to and put women in places where they are listened to and respected and seen as leaders in their communities.”
Although less than 6% of US philanthropy goes to international causes, Evelyn sees Trickle Up as having a similar appeal to domestically-focused organizations: “people like to give at home, they like to see the results actually happen. And I do think that is something you can see impact with at an organization like Trickle Up.”