Rapid relief where it counts

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Amy Robbins made the decision to send $200,000 worth of aid to Somalia before picking up her son at school. When she sat with her six-year-old outside his Manhattan private school, the boy listened intently as his mother told him what she had done. He nodded and said, “Oh, I know, in Africa.”

Recalling that moment, she still seems shocked by how quickly, almost impulsively, she was able to get potable water to some 500,000 people in southern Somalia and food to malnourished children.

“We had a conference call at 2pm and we dispersed the money the same day,” she says. “In an emergency you don’t have time to do the analysis. If something happens, I don’t have time to learn about Somalia. We rely on the experts in the field.”

Meshing quick action with trusted experts is something she knows professionally. She and her husband Larry started Glenview Capital Management five years ago and it is now a $2bn-plus hedge fund. The Somali donation was also part of longstanding philanthropic interests in children and education.

In the US, the family gives $10m a year to groups such as the Robin Hood foundation, the New York-based charity, and to organisations such as the Kipp Academy for their schools in Houston and New York. Yet abroad, Robbins did not want to go it alone and opted to go through the US Fund for Unicef, the children’s aid organisation.

She chose that organisation after a trip to Niger last August, when she came to believe that Unicef could have the largest impact in a crisis. “Unicef co-ordinated supplies in Niger because the government couldn’t do it,” she says.

Taking this to heart, she gave $5m earlier this year to set up The Mercury Fund, whose goal is to help Unicef get supplies to disaster areas as quickly as possible. Somalia was the first disbursement in March.

The relationship is also unique for Unicef, which has never had a situation such as this before. All aid decisions are made jointly by Robbins, Daniel Tool, Unicef’s director of emergency operations, and Chip Lyons, president of the US Fund for Unicef, so funds can be sent to an area within days, not weeks.

“The public doesn’t react until people see the emergency on television,” says Lyons. “The Mercury Fund has a preparedness to work before CNN records the images that get people to respond. It is not often people react before the crisis.”

The fund has just announced its second disbursement to help children in Darfur in Sudan. It will match all gifts to the region up to $500,000. “It’s not just a cheque to a general operating fund,” says Robbins. “It’s a need fund.”

She adds: “We are going to do our due diligence up front but I’m not going to go into a country office and tell them how to do their job.”

As more donors look to fund programmes in the developing world, particularly around health issues, questions about effectiveness continue to crop up: how can they be sure the money they are sending is being put to the right uses? And how can they measure the impact it is having?

Realising this uncertainty, Geneva Global started selling reports six years ago that apply securities analysis to overseas non-profits. The Philadelphia consultancy bills its “delta reports” as “buy-side research” on foreign charities.

“These are private placements for philanthropy,” Eric Thurman, chief executive, says of the reports that are tailored for individual donors and often take a couple of months of research and site visits to compile. “Everyone who works with us gets a Delta report and a results report at the end.”

A 12-page report in December 2004 evaluated COE, a Christian volunteer organisation that wanted to teach poor Ecuadorians to fight human trafficking. The report said the grant needed to be $45,000 to be effective and then rated three factors reflecting the likelihood of success: its magnitude of impact was “significant”, the second tier of a four-level scale; the risk of success was toward the low end; and its “delta score” was 9.58.

This last figure is the group’s signature statistic. The currency for the score is a child sponsorship, which has a rating of one and is computed as “one life changed in multiple ways for $360 in one year”. This project gave a donor more than nine times that yield.

In a follow-up report in March 2006, COE received an achievement rating of “achieved”, the second-best rating. It also exceeded its revised delta score.

Thurman says 79 per cent of foreign charities met or exceeded their forecasts. “Half of what we look at doesn’t get recommended,” Thurman says, who expects to advise on $30m of donations this year. He stresses that the key is donors coming to them, not charities that want to solicit donations.

“We work much more like an investment bank than a rating agency,” he says. They also charge investment banking-level fees. Their reports cost 10 to 22 per cent of the grant, which Thurman justifies as a way to “raise expectations”.

A more traditional and less costly approach is offered by Rocke­feller Philanthropy Advisors. Formerly part of Rockefeller & Company, the family’s office, RPA advised on $130m in philanthropy last year, 20 per cent of which was outside of the US.

“When a donor says international giving, what we try to do first is figure out the depth and specificity of what the person is trying to do,” says Melissa Berman, president and chief executive of RPA. “It’s not the dollars, because you can do a lot with little money. It’s time and your willingness to accept risk.”

“It’s the philanthropic equivalent of how you invest your money,” adds her colleague Douglas Bauer, senior vice-president. “Do you invest your money in a mutual fund or do you want to be an entrepreneur?”

With Afghan Women Leaders Connect, RPA found a way to work within larger aid networks to provide Afghan women with healthcare and education after the fall of the Taliban. RPA contracted with Care Inter­national to get the aid to the right places; Care was also able to provide quarterly reports on the $2m-$3m that has been sent in the past four years.

“We were able to scale these grants to a level that makes sense – you need only $5,000 to launch a women’s healthcare centre,” says Chris Page, RPA vice-president. “It is aid versus capacity building. The Red Cross will respond to a country in distress; our donors want to be part of something sustainable.”

This is one of the key points of foreign giving, particularly in the third world. Because the sums are often small, it is more difficult to get them where they are needed. RPA’s creation of a “yak bank” in Tibet illustrates this. Essentially a microfinance programme in an area that does not have a cash economy, the bank loans a herder a yak, which he can breed with his other yak; when his herd has grown, he returns the yak to the bank.

In spite of the increasing amount of research, foreign giving presents pitfalls that do not exist with domestic charities. For one, a donor can only receive a US tax break if he gives through a US-based charity – such as Unicef, one of RPA’s donor-advised funds or a private foundation. The donor also needs to evaluate the charity to make sure it meets requirements similar to the 501(c)3 designation in the US tax code.

There are two common ways to do this. One is an equivalency agreement, which evaluates the charity itself. The other is called expenditure responsibility, which ensures a project being funded through a charity is working.

“The route you take depends on the goals of the grantor,” says Julia Chu, head of philanthropic services at UBS private wealth management. “If you want to undertake the equivalency on your own, it is a tremendous amount of initial work. There is a lot of financial information that is extremely detailed. However, once it has passed, the foundation can make the grant like any US charity.”

(The US Treasury and State departments publish lists of charities, some terrorist front groups, that will almost certainly misuse the donation.)

Robbins’ plan is to attract donors to The Mercury Fund to maintain it beyond its $5m, five-year commitment. She is confident this can be done because of the way the fund targets disasters but also because of the way it will solicit help.

“You invest one time, and we won’t call you again,” she says. “We will host a dinner to thank you. That’s a great feeling to be thanked and not asked for more.”

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