Last year, I had the pleasure of speaking on a panel titled Social Entrepreneurship & Philanthropy: Synergies for Change, alongside Forbes featured social entrepreneur, Jacqueline Novogratz, the founder and CEO of Acumen Fund.

 

Acumen Fund, which tackles poverty through “dignity, not dependence, and choice, not charity”, has worked since 2001 to invest more than $80 million in social enterprises impacting over 100 million lives in South Asia and Africa and creating more than 58,000 jobs.

 

In Bahrain and much of the Arab world, our approach to tackling social and environmental issues and causes is largely donations-based. In fact, for much of the business community, the terms “Corporate Social Responsibility” (CSR) and “charity” are synonymous!

 

Although charity is often well intentioned—and sometimes necessary, particularly in times of emergency and disaster relief—there is a down side that most of us are unaware of. If you’re one of those well-intentioned individuals or companies that makes donations to charitable causes, please read on…

 

Real Good or ‘Feel Good’?

 

Noble Laureate and microfinance pioneer Prof. Muhammad Yunus points out that the weakness of charity is that, “It relies on a steady stream of donations by generous individuals, organisations or government agencies. When these funds fall short, the good works stop.” In other words, in times of economic hardship, charities suffer in this donor-dependency cycle.

 

Not only that; charity can do more harm than good and inadvertently hurt the very people it is trying to help. An increasing number of foreign aid practitioners and agencies are beginning to recognise the flaws with aid.

 

For starters, charity and donations unintentionally weaken already tenuous local economics, undermining local business and stifling entrepreneurial spirit through creating unsustainable donor-dependent economies. So instead of helping to alleviate and eradicate poverty, aid can exacerbate the very problem it’s trying to solve.

 

In an eye-opening interview with SPIEGEL, Kenyan economist James Shikwati, points to the disastrous effects of Western development policy in Africa. An excerpt of the interview follows:

 

SPIEGEL: In the West, there are many compassionate citizens wanting to help Africa. Each year, they donate money and pack their old clothes into collection bags…

 

Shikwati: …and they flood our markets with that stuff….Why do we get these mountains of clothes? No one is freezing here. Instead, our tailors lose their livelihoods [sic]. They’re in the same position as our farmers. No one in the low-wage world of Africa can be cost-efficient enough to keep pace with donated products. In 1997, 137,000 workers were employed in Nigeria’s textile industry. By 2003, the figure had dropped to 57,000. The results are the same in all other areas where overwhelming helpfulness and fragile African markets collide.

 

This interview immediately brings to mind Tom’s shoes. If you’re not familiar, Tom’s is a popular global brand famous for donating a pair of shoes to a child in Africa for every pair bought. Sounds good, right? Actually, no…

 

Tom’s CSR approach has been condemned for being designed to make consumers feel good rather than improve quality of life in the long-term.

 

Although Tom’s has donated over 1 million pairs of shoes it hasn’t changed the conditions in which people are too poor to buy shoes. Had Tom’s integrated CSR into its core business operations rather than viewing it as a marketing-driven add-on, Tom’s could have manufactured its shoes in Africa, created local jobs, and pumped much needed foreign direct investment (FDI) to boost the economy.

 

But this isn’t just about poverty. Charity can create dependency and have negative consequences even in more developed economies. For example, in the Gulf, I think most of us would agree that our approach to helping the blind, autistic or other differently-abled individuals is through donating to charities.

 

Few of those charities actually work to empower those individuals and foster independence, dignity and self-sufficiency.

 

One of my favourite examples of how we can be more effective in creating impact is Discovering Hands: a German social enterprise that provides employment opportunities for visually impaired women by training them to become Clinical Breast Examiners (CBEs). These women are 50% more effective at detecting tissue changes than doctors. The programme simultaneously creates social and economic value through leveraging perceived ‘disabilities’ into abilities.

 

William Easterly, an author and economics professor at my alma mater, New York University, is quoted in a Times article, saying:

 

“I’m sorry to be so unkind to someone who has good intentions, but you don’t get a get-home-free card just for having good intentions. You have to do things that make sense…If a surgeon is about to operate on me, I’m not all that interested in whether he has good intentions. I hope he doesn’t have evil intentions, but I’m much more interested in whether he knows what he’s doing. People have a double standard about aid.”

 

I couldn’t agree more. Charity in the Arab world needs to evolve from ‘feel good’ to ‘real good’.

 

- Leena Al Olaimy