If not everything, it does seem to have an important effect on human cognition and decision-making, according to new research on a link between luxury goods and self-interest.
Could such insights help rein in Wall Street? Roy Y.J. Chua of Harvard Business School discusses findings from his work conducted with Xi Zou of London Business School.
The lessons of history, from the Roman Empire to Africa today, suggest that if we want to reduce poverty in emerging markets, regulation reform and business success are prerequisites, not outcomes.
In the history of economic success, no two countries have ever followed identical paths. But there is a universal pattern nonetheless: Nations rise out of poverty when elements of a thriving business sector replace the previous economic system.
The factors necessary for this transition are known. Since 2004, the World Bank has tracked them each year in countries around the world for its Doing Business report. (The most recent version is Doing Business 2009: Comparing Regulation in 181 Economies, by the World Bank and the International Finance Corporation [Palgrave Macmillan, 2009].) The report specifies 10 forms of government regulation that affect the various phases of a company’s life cycle: starting a business, obtaining licenses (such as construction permits), employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, and closing a business. The fewer impediments that government places before entrepreneurs in any of these areas, and the less time it takes (for example, to stand in line) and the less money is required (for fees or bribes), the more business-friendly the country is — and the more prosperous.
an exclusive platform for business analysis, insights, commentary, and other intellectual capital from the authors, strategists, and editors at strategy+business
Woody Tasch, founder of Slow Money Alliance, a nonprofit that hopes to do for capitalism what the Slow Food movement has done for food and agriculture, would recommend you invest closer to home.
Money—not the paper stuff in your wallet, but the bits of data that whip around the world in billions of instantaneous transactions each day—moves too fast. So argues Edward “Woody” Tasch, a venture capitalist with a seemingly anticapitalistic ambition: to put the brakes on our money, bring it closer to home, and elevate sustainability over profits and growth.
For Tasch, it’s a goal more than 20 years in the making. In 1989, he founded one of the nation’s first venture capital funds with a conscience, but it failed to attract the $25 million in investment for which he had aimed. Later came Investors’ Circle, a network of about 150 venture capitalists, angel investors, and foundations that launched in 1992; as chairman, Tasch orchestrated the distribution of more than $130 million to hundreds of sustainable business start-ups.
Latin America produces an estimated 75 percent of the world’s organic coffee. But the economic benefits many small farmers were promised if they converted to organic haven’t materialized.
A California-based foundation has given a fresh boost to the FT’s seasonal appeal on behalf of the Room to Readcharity by adding £250,000 to the pool of funds available to match readers’ donations.
The money from the foundation, which wishes to remain anonymous, brings the total of available matching funds up to £875,000 ($1.4m).
This new, never before reported number, showing $1,248,740,645,993.00 (over $1.248 trillion) in total investment since 2007, indicates how investors and entrepreneurs are leading governments in promoting sustainable growth.
The scoreboard totals investments in solar, wind, geothermal, ocean/hydro, energy efficiency and storage, and agriculture. We purposefully omitted nuclear, “clean coal,” carbon capture and sequestration, and biofuels. Thery indicate which investments have been publically announced and committed by major companies for 2010 and beyond.
Dr. Marc A. Weiss, Chairman and CEO of Global Urban Development and Chair of the Climate Prosperity Alliance, said, “This $1.248 trillion of investments are not only from North America and Europe, but also from China, India, Brazil and other developing countries. They indicate that the private sector currently is ahead of governments in understanding that during the 21st century, people, places, and organizations can only get richer by becoming greener and only earn more money by using fewer resources and reusing more. Private capital investment is now leading globally in promoting technological innovation and resource efficiency that will accelerate environmentally and socially sustainable industrial growth and economic development throughout the world.”
Dr. Hazel Henderson, futurist, author of Ethical Markets: Growing the Green Economy (Chelsea Green, 2006) and president of Ethical Markets Media, serves as vice-chair of the Climate Prosperity Alliance together with vice-chairs C.S. Kiang (China), Rodrigo Loures (Brazil), Lawrence Bloom (UK) and James Nixon (USA). Dr. Henderson said, “Ethical Markets Media’s mission is reforming markets and growing the green economy globally. Our Global Climate Prosperity Scoreboard® will be updated regularly to show progress toward the ecologically sustainable economies that are vital to our common future. Societies are transitioning from the 300-year old, polluting, fossil-fueled Industrial Era to the advanced technologies of the information-rich Solar Age.”
The Climate Prosperity Alliance, a volunteer, global network of financiers, businesses, economic development authorities, scientists and NGOs is based on earth systems science, showing the widespread evidence of destruction caused by the now-obsolete technologies of the combustion-based Industrial Revolution and its extraction and exploitation of the Earth’s capital: oil, coal, gas, minerals, forests, water, land and biodiversity. Human societies are now gradually re-industrializing our economies using the Earth’s income – the renewable energies of sun, wind, ocean/hydro, geothermal and non-agricultural biomass – based on human capital: new knowledge of planetary processes and ecosystems, designing our economies with Nature.
The Climate Prosperity Alliance uses the Climate Solutions 2 computer model of Australia’s Climate Risk Pty., showing how $1 trillion invested every year for the next 10 years can assure the global transition to sustainable prosperity and job growth. This $10 trillion is less than the bailouts of failed banks in the USA and Europe and less than 10% of the world’s pension and institutional funds of $120 trillion. Institutional fund managers can shift 10% of their assets away from hedge funds, risky derivatives and commodity speculation to real investments in a greener global economy, thereby assuring their beneficiaries a healthier future.
“While we encourage progress toward directly investing in growing the green economy, we urge government officials meeting in Copenhagen December 7-14, 2009, to follow the lead of these private investors that have already committed $1.248 trillion. We applaud our pension fund colleagues of the UN Principles of Responsible Investing who have joined in pledges to allocate more of their members’ $19 trillion of assets into similar green companies. Now, governments must go beyond arguing over targets, caps and carbon-trading – and follow the lead of China and the USA in their comprehensive plan for cooperation on clean energy and climate change. Such a general agreement in Copenhagen can promote and underwrite more direct investments and growth of the green economy,” said Dr. Henderson.
The new Global Climate Prosperity Scoreboard® is researched and compiled by the Ethical Markets Media expert team: Timothy Nash, M.Sc., principal, Strategic Sustainable Investments, Toronto; Rachel Tubman, M.Sc., senior researcher/futurist; assisted by The Cleantech Group and members of the Ethical Markets Sustainability Research Group. As these investments increase, the scoreboard will track totals, providing investors and governments with tangible evidence of the growing green economy.
·Dr. Marc A. Weiss, Chairman and CEO, Global Urban Development, www.globalurban.org, and Chair, Climate Prosperity Alliance, www.climateprosperity.com, marcweiss@globalurban.org, 1-202-554-5891
So Argue Scholars; Ideas Build on Hudson Institute Report
The U.S. government needs to leverage its foreign assistance by partnering with foundations and nonprofits working overseas, according to Carol Adelman of the Hudson Institute and Nicholas Eberstadt of the American Enterprise Institute. They wrote a lengthy Aug. 31 article in the conservative Weekly Standard identifying nine principles of successful foreign aid projects, developed through analysis of projects from foundations and others which they deemed to have had a measurable impact.
The article follows the recent publication of the fourth Index of Global Philanthropy and Remittancesfrom Adelman’s Center for Global Prosperity, which called for a new business model for official U.S. foreign aid that reflects the role of private giving.
Adelman and Eberstadt’s specific ideas call for the government to partner with foundations to better leverage resources far beyond the initial dollar value and in ways that more successfully reach low-income regions. They argue that such leverage should be the model for most all government assistance going forward. Further, priority should be given to sustainable public-private partnerships in host countries, and to encourage local ownership and initiative. And the U.S. aid system should become more flexible and adaptable! to local contexts, with a greater willingness to take risks and even to fail.
President Obama has named Dr. Rajiv Shah to head the embattled US Agency for International Development (USAID). USAID long has been a backwater agency, helmed by hacks and captured by consultants who monetize AID budgets like farmers milking their cows. But Dr. Shah is a different kind of leader, someone with origins far from the Beltway and whose point of view promises a very new approach to development.
The US has benefited from the handiwork of a small group of social entrepreneurs who are caring for the world through action. Dr. Shah should find allies in remarkable Americans like John Wood of Room to Read; Bruce McNamer of Technoserve; and Gary White of water.org. These are the new leaders, true revolutionaries who are modeling change with powerful models of social enterprise that blossom, not from the top-down, but bottom-up, across what Paul Collier calls “Africa-+”. By Jonathan Greenblatt, Ethos Brands, blogging on the Huffington Post.
Governments from around the world and bi-laterals such as the World Bank have poured $568 billion into Africa in the past 42 years through a plethora of aid agencies.Meanwhile, the standard of living across the continent has steadily declined since the 1960’s. The impact of aid projects managed by these agencies has not been measured, preventing them from identifying best practices. Consequently programs that do not work are often repeated.
The opacity surrounding where the aid money goes is astounding; accountability and transparency do not come naturally to the elite in the Aid Industry, they generally live in fear of oversight by Congress or the local equivalent. Simply put, big aid is perhaps the most inefficient ‘business’ on the planet.
There has to be a better way. So contrasttheold way with themethods deployed by Glimmer of Hope which will have invested $35 million in over 4,000 projects between 2001 through 2009. Their field is Water and Sanitation, Health, Education, Veterinary Service and Micro loans in Ethiopia. All delivered by Philip Berber’s ‘better way’ clearly articulated in this video:
However efficient - and 100% of donated funds reach the aid recipients - this amount would appear to be a mere pilot program within the Aid Industry, the so called ‘Lords of Poverty’ - the title of a book that had a profound impact on Philip Berber, the organization’s Chairman back in the early 90’s.
As controversial as these books may be, they point to decades of arrogant leaders and front line workers in the ‘development aid business’. Their good intentions but patronizing approach to the aid for which they are responsible have demonstrated a singular inability to come up with a business model that works.
Just how inefficient is the Development Aid model?
During the Bush administration $80 million was appropriated for Malaria reduction in Africa, but less than 10% of the budget reached the intended beneficiaries.This information was not volunteered, The World Bank and USAID don’t ‘do’ transparency, it had to be dragged out of them.
Oversight chairman Senator Dr. Coburn wrote to Paul Wolfowitz at the World Bank, requesting reform & accountability of the controversial malaria initiatives.To read the letter, please click here.
To read the response from the World Bank, please click here.
The World Bank had faced scathing critiques in 2006 in a few key areas: the Bank’s reliance on ineffective drugs to treat malaria; the Bank’s failure to make use of effective mosquito control techniques to prevent infection; and, finally, the financial disarray of the Bank’s malaria program – both in accounting for how funds are spent, and for not keeping its promises about the amount of funding to have been directed to malaria in past years. For more background and news coverage of accusations of medical malpractice and financial mismanagement in global malaria control, please click here.
To hammer home the point, here are some excerpts from:
“The most important U.S. aid vehicle, the United States Agency for International Development (USAID), has failed disastrously in its mission.
·Data from USAID’s Buy American Report, the best available assessment, indicates that over the last decade between 70 and 80 percent of funding appropriations were directed to U.S. sources. In gross terms…foreign aid sustained 200,000 U.S. domestic jobs.
·Former USAID Administrator Brian Atwood stated, “Foreign assistance is far from charity. It is an investment in American jobs, American business.”
·Despite the Agency’s claims that it takes a “comprehensive approach”, it spent less than 10 percent of its $80 million malaria budget for 2004 on purchasing these interventions (most on only one intervention–bed nets).
·So what of the other 90 percent? Some sleuthing reveals that about $10.5 million is dedicated to researching and testing a malaria vaccine, and the rest is spent on “capacity building”, “technical assistance” and “strengthening” or “supporting” government health ministries in malaria-affected countries.
·USAID does not disclose any details as to what these categories actually mean, but as Agency malaria staffers explained to me, many involve U.S. consultants giving advice to government ministries. For example, the consultancy Management Sciences for Health (MSH) received $64.3 million from USAID in 2003 (the last year for which figures are available) for dispensing such advice. MSH is active on many malaria projects, and its 2003 IRS Form 990 illustrates how USAID malaria funds are typically spent: Between 52 and 70 percent of MSH’s program expenses are dedicated to compensation and travel. That amount is separate from what MSH designates as overhead.”
Compare this sad, disgraceful story of less that 10% of the taxpayers money eventually reaching malaria sufferers in Africa with this video:A New Approach to International Aid in which Donna and Philip Berber describe their 100% promise and why they decided to launch A Glimmer of Hope.
With the organization covering all overhead cost, the 100% promise means that the Berber’s $35 million of impact investing is at the very least 4 ½ times more efficient than the $80 million malaria program administered – one should say totally mismanaged – by USAID.
Speaking on the phone with Philip Berber recently, he stressed the importance of economics and designing the right - and airtight - channels of distribution. Without carefully designing the entire channel of distribution, flawed, leaky and failed models will be the inevitable result.
So who is Philip Berber?
And how did he come to create and design what the former US ambassador to Ethiopia Tibor Nagy boldly declares to be “the silver bullet for Africa”after closely examining A Glimmer of Hope’s highly integrated model in operation on the ground.
According to the Austin American Statesman: “Philip and Donna Berber met in a London disco in 1982. Philip was from Dublin. Donna was from London.They married in June 1985.
The following month, Donna and Philip went to the Live Aid concert at London’s Wembley Stadium, which raised money for famine relief in Ethiopia.”
So it may have been while watching David Dimbleby the presenter of Panorama, the longest-running current affairsdocumentary series in the world, or it may have been a 1984 BBC report by Michael Buerk highlighting the famine that had hit the people of Ethiopia that formed the early seeds of Philip and Donna Berber’s epiphany.
What we know for certain is that the young couple was in the crowd of 82,000 on July 13, 1985 for the Live Aid rock music concert at Wembley Stadium, London (1985-07-13). The event organized by Bob Geldof to raise funds for famine relief in Ethiopia, was billed as the ‘global jukebox’, with the event taking place simultaneously in JFK Stadium, in Philadelphia attended by a further 99,000 people. Other concerts inspired by the initiative happened in other countries, such as Australia and Germany. It was one of the largest-scale satellite link-ups and television broadcasts of all time: an estimated 400 million viewers, across 60 countries, watched the live broadcast.
Moving from his native Dublin to London in 1979 Philip Berber worked in marketing before founding his first start-up in 1988 called Financia. The company provided advanced financial market analysis and predictive technologies.Then in 1991, the Houston-based financial markets predictive technology company, Frontier Financial, bought Financia and as part of the arrangement the family agreed to transfer to Houston.
In 1995, they moved to Austin where Philip started CyBerCorp, an online trading company.
In 2000, the Berbers sold CyBerCorp to Charles Schwab Corp. for $488 million.
The couple pledged to put $100 million of Schwab stock in an endowment for international charity work. Selling at the top of the market with restrictions on the timing of selling the plummeting Schwab stock clearly affected the size of the new endowment. Today, the endowment is worth over $60 million.
On the phone Philip allowed that he was still skeptical about the new social enterprise and was not fully won over until he saw video of Donna handing out bread in Addis Ababa. In this video:Why Ethiopia?Philip explains that his real epiphanydid not blossom until his first trip to the country with Donna at which point he dropped his commercial activities to devote himself full time to the organization.
We discussed the role of a number of celebrities and their endorsements of African causes.The good ones are deeply involved, travel to Africa to see how they can be of genuine help. He quotes Bono as using his celebrity as ‘currency’ and he invests that intangible into an array of tangible goods.Another is Matt Damon, he and Donna helped finance Matt’s movie Running the Sahara.
Three dudes running across the desert 50 miles a day would be interesting enough for me in itself, but there’s the added weight of the water. The sad fact is that a child (under five years old) somewhere dies every 15 seconds because lack of clean water. That means during this 3-minute trailer alone another dozen kids bite the dust.
So let’s watch this movie and then make our move, right? Check out h2oafrica.org website for more information.”
Philip’s views on scalability: humanitarian aid in the form of clean water, sanitation and schools takes a great deal of time to coordinate with local government and other critical partners.Philip Berber’s business model is scalable at the pace he has set for A Glimmer of Hope.Far more scalable, however, is the organization’s entry into Micro Lending.By careful selection of the best three or four micro lending banks operating in Ethiopia the Berbers can scale faster because they do not need to recreate the infrastructure their partners already have in place.
Philip is less sanguine about the scalability of Jeffrey Sachs’ initiative Millennium Villages - The Earth Institute, Columbia University.The program is well funded but the business model is ‘flawed’.A passionately driven social entrepreneur might be a more appropriate leader for such an ambitious project; an academic economist is unlikely to meet his targets.Philip visited one of these villages in Ethiopia to find the water well needed urgent repair and promptly offered his crew to fix it.The offer was declined in what sounded like an acute attack of NGO-itis; we will do it our way, thank you.
How Philip uses leverage: The organization’s overhead is currently running at about $2 million a year.But the effectiveness of the business model has attracted an important group of partners, including the Michael & Susan Dell Foundation, charity: water, H2O Africa and Whole Planet (Whole Foods) all have chosen A Glimmer of Hope to be their implementing partner for major initiatives in Ethiopia.
With substantially more money coming in than their modest overhead, there can be no question that this passionate, energetic Irish/British/America duo of social entrepreneurs has achieved the goal of true sustainability and the glimmer grows brighter with every project they complete.
The hope is that the World Bank, USAID and their brethren take note.
Mission and project data:
Offering hope and help, with dignity, to those who suffer unnecessarily from the injustice of poverty
8 years • 2,954 water projects • 308 education projects • 157 health projects
How the e-newsletter company Constant Contact works with their nonprofit bookstore neighbor More Than Words
By: Bob Nicoson and Sue LaChance*
More than Wordsprovides empowering leadership and supportive employment opportunities for youth who are in foster care, court-involved, homeless, or out of school to prepare them for self-sufficiency as they transition to adulthood. Waltham-based Constant Contact, a leading provider ofemail marketing and online surveysfor small organizations, has a long-standing relationship with More than Words, both as a service provider and as an ardent supporter.
While More than Words is a customer of Constant Contact’s email marketing tools, the relationship between the two organizations extends much deeper:
·Constant Contact has hosted More than Words youth at its the Waltham headquarters to give them a glimpse of what a “day in the life” of the company, featuring some of the real world attributes of life in the corporate workforce.
·The company has initiated book drives and holiday-themed giving trees with donated items to benefit youth members in the More than Words program.
·Most recently, the company participated in a day-long offsite for its leadership team who helped to put together office furniture for the second More Than Words bookstore slated to open in October.
Details on the leadership team service initiative:
In an effort to ensure that Constant Contact remains a great place to work, the leadership team is guided by two principles: developing and nurturing great managers and giving back to the communities in which it does business. The leadership team, which includes anyone who manages at least one staffer, has grown to more than 100 people. When searching for options for this particular leadership offsite, the human resources team organizing the offsite eliminated most of the traditional “team building” exercises and looked instead for something more meaningful. The goals of the offsite were to get leaders thinking about what skills, experiences, attributes and outlooks they could bring to the company table and how to leverage those for the greater good through an unusual team building exercise.
The company team asked More than Words what they needed most, which turned out to be office furniture for the new storefront. A team from the company and a group of More Than Words kids rented a large truck, gathered their lists, and went to the local IKEA to purchase the required items.They also ferried the unassembled furniture to the offsite location where the leadership team was tasked with assembling all of the furniture, as a team and with the participation of every company leader from CEO Gail Goodman to the greenest manager. The goal was to get people to focus on their strengths and apply them in a team setting.
In the middle of the day the bookstore’s founder and Teen LEEP director Jodi Rosenbaum Tillinger came to speak, alongside Rolgems Alphonse, one of the More than Words success stories. Both Jodi and Rolgems told their stories of leadership, followed by an appreciation of the organization by Gail Goodman. All of the speakers focused on the questions “What can you be the best at?” “What are you passionate about?” and “What drives your economic engine?” By sharing their individual stories, they encouraged others to think about their own strengths and ambitions.
The value from the offsite was both individual and collective. More than one-third of the Constant Contact participants signed up to do additional work with More than Words on an individual basis and the company has offered to continue working with the organization to address its needs. When the furniture was delivered at the More than Words location, the program participants were thrilled to see its arrival and begin to feel the unfolding reality of the second bookstore. For Constant Contact the satisfaction of accomplishing its goals for the offsite meeting was as palpable as the energy generated by giving back to a great community organization.
* Bob Nicoson, is Chief Human Resources Officer and Sue LaChance is Director, Organizational and Leadership Development at Constant Contact.
