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Archive for the ‘Economy’ Category

On Thursday, October 7 the World Affairs Council and Global Philanthropy Forum hosted the 2010 Awards Dinner. The event celebrated technology and social innovation for the public good and honored individuals and organizations who are leaders in this field. The honorees were: John Hennessey, President of Stanford University; The William and Flora Hewlett Foundation; and Paul Otellini, President and Chief Executive Officer of Intel Corporation. After receiving their awards, Hennessey and Otellini, along with Hewlett Foundation President Paul Brest, spoke in conversation with Jane Wales. Watch an excerpt of their conversation here:

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This week the European Union announced new sanctions against Iran. The sanctions are one part of the EU’s strategy to pressure Iran to resume negotiations on its nuclear program. The United Nations imposed a fourth round of sanctions on Iran last month, but the EU’s go farther, affecting the energy, transport and finance sectors. While American investment in Iran has decreased in recent years, the EU is Iran’s largest trading partner and the new sanctions could have a significant impact on many European economies.

The United States also imposed new sanctions on Iran this month, with the goals of halting financing for the Islamic Revolutionary Guards Corps that oversees missile and nuclear programs as well as curbing even further investment in Iran’s energy sector. They also target federal contractors that do business with Iran.

Learn more about the sanctions on Monday, August 2 when the Council hosts Jillian Burns, the Acting Director of the Iran Office of the State Department. She will discuss U.S. policy towards Iran, offering insight into the effectiveness of current sanctions and exploring Iran’s role in the region.

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Imagine if countries competed with each other to create the best environment in which social innovation can occur. And imagine if social entrepreneurs were actively encouraged and supported in countries around the world.

Two consultative bodies affiliated with the World Economic Forum (WEF) – its Global Agenda Council on Philanthropy and Social Investing and the Global Agenda Council on Social Entrepreneurship – are aiming to make those ambitions a reality. These bodies are just two of 60 interdisciplinary entities part of the forum’s Global Redesign Initiative, which is seeking ways in which international institutions or arrangements should be adapted to meet contemporary challenges.

“Particularly in the wake of the global economic crisis,” according to WEF’s Klaus Schwab, “we need to rethink our values, redesign our systems, and rebuild our institutions to make them more proactive and strategic, more inclusive, more reflective of the new geo-political and geo-economic circumstances, and more reflective of inter-generational accountability and responsibility.”

Everybody’s Business: Strengthening International Cooperation in a More Interdependent World summarizes and reports on proposals from the WEF’s global councils, focused on specific challenges, from health to economic growth to poverty to sustainability. The Council on Philanthropy and Social Investing, chaired by The Economist’s Matthew Bishop, proposes development of a Social Competitiveness Index that would inspire countries to become more socially innovative. More broadly, the goal is to help analysts and policymakers catch up with the revolution that has been taking place in the social sector for the past decade or so – to “chart its evolution going forward and show countries how to make the most of this opportunity.”

The Council on Social Entrepreneurship, chaired by J. Gregory Dees of Duke University, proposes development of a Global Alliance of Social Entrepreneurs, guided by the Schwab Foundation for Social Entrepreneurship. This alliance, among other things, would establish a Consultative Group for Research to Advance Social Entrepreneurship (CGRASE) similar to the World Bank-hosted Consultative Group to Assist the Poorest (CGAP), which has become world-recognized for its role in advancing microfinance. CGRASE’s mission would be to conduct research on and promote policies supporting social entrepreneurship, including working to have the UN designate 2011 the “Year of the Social Entrepreneur.”

Beyond philanthropy and social entrepreneurship, other ideas proposed include: creation of a global financial risk watchdog; development of a strategy to improve the diet of the poor; establishment of a new business model for humanitarian assistance with better coordination among all sectors; and establishment of an Ocean Health Index to strengthen information available about marine life. The report authors are currently seeking public debate and refinement about the many ideas contained. And this fall they will convene meetings to further discuss and develop these proposals, culminating in the forum’s annual meeting in Davos, Switzerland, next January.

The report concludes that today’s global challenges require a more integrated and proactive approach, with new or upgraded international institutions and greater international cooperation: “No network exists that is sufficiently interdisciplinary, interactive and international to overcome these barriers to collective intelligence and action.”

— Jane Wales

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Life ain’t fair. Foundations pay full value to the for-profit consultants who advise them, but often fail to cover the true costs of the same services when offered by non-profits. How often have nonprofit leaders been tapped to provide advisory services to a foundation’s grantees or skills training for the foundation’s program officers, without thought of compensating the leader’s host organization for his or her time?  How many grants cover direct expenses but do not cover the true costs of a program or project by including indirect expenses? The Ford Foundation will pay 10% overhead. The Knight Foundation will pay none. Thus, each borrows from the grantee’s other sources of revenue, such as membership dues, registration fees or those increasingly rare general operating grants from other foundations or donors.

It turns out that governments do the same. The Government Accountability Office (GAO) surveyed nonprofits that receive federal grants and contracts and found that 88% are not reimbursed for their full costs. Some receive nothing at all for their indirect costs. Further, many of the federal grants managed by states are inconsistent in their treatment of indirect costs.

Federal agencies permit nonprofits to retain a share of contract funds for indirect costs, but when state and local governments administer the grants, each follows its own practices. The GAO offered the example of a US Department of Health and Human Services grant program, for which Wisconsin allows a reimbursement to nonprofits of up to 14% for indirect expenses, while Maryland provides no overhead at all.

In the meantime, for-profit contractors are usually able to recover true costs, while their non-profit colleagues may get as much as 20% less as a result of a government’s policy with respect to reimbursement to nonprofits.

Something is very wrong, especially given that many non-profits are often far leaner and more cost-conscious than their for-profit counterparts. Let us hope that the GAO report inspires a rethink at a time when governments are increasingly shifting their responsibilities to the social sector without the resources required to meet them.

—Jane Wales

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Ian Bremmer, author of the new book The End of the Free Market, will be at the Council on Wednesday, June 30. He will discuss the growing trend of state capitalism and the impact it may have on America’s competitive edge and the conduct of free markets everywhere. Learn about other June programs on our online calendar and watch Bremmer’s May 13 appearance on The Daily Show with Jon Stewart below.

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Last week, Time Magazine feted its 100 Most Influential people “who affect our world” at a gala that would be hard to match— with musical performances by Taylor Swift and Prince, a comic interlude by actor Neil Patrick Harris, a brief talk by Bill Clinton and toasts by Sarah Palin, scholar Elizabeth Warren and actor Ben Stiller. But what was striking about the evening were the less glitzy among the honorees: social entrepreneur Valentin Abe, who also gave a toast to Haitians struggling to restore their country; microfinance pioneer Michael Sherraden of the Global Assets Project; Avarind Eye Clinic’s Dr Naperumalsamy, and other remarkable leaders effecting change around the world.

Perhaps the powerful story is that of Chen Shu-chu, a market woman from Taiwan, who saves her meager salary so as to support orphans and to build a library in her school. Over the years, she has given the over $30,000, and now plans to establish a fund to provide education and health care for the poor.

Her first trip outside of this vegetable seller’s home village was this foray into New York’s worldly elite. Surrounded by those who had spent the equivalent of her annual earnings on their glittering attire, Chen wore a business suit selected by Taiwan’s Foreign Ministry (for which she insisted on paying). Such indulgences have no place in the life of Chen Shu-chu, who lives on three dollars a day, so that she can give the remainder to others.

How many of us with much larger earnings could be just a bit more frugal so as to put our funds to a larger purpose? I dare not count the ways I have expended my salary on unnecessary items with the full knowledge that others lack the basic necessities of life. It is one thing to know. It is another to act.

While my dinner invitation was the result of a small article I wrote, Ms Chen’s was the result of lives she had changed. That is true in her village in Taiwan. It was also true that night in New York City. For much as we all enjoyed the well-known speakers and the polished performances, Chen Shu-chu, my modest table companion, will remain the keynoter in my mind.

—Jane Wales

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Everyone has gripes with the ways in which government tax dollars are put to use. Especially now, knee-deep in tax season, some dream of a tax-free, libertarian society. It certainly has done that for those associated with the anti-tax Tea Party Movement.

But philanthropist Chuck Collins argues that the public debate should focus on the reasons for collecting taxes in the first place. The debate is “stuck” in anti-tax rhetoric, designed to appeal to the Tea Party Movement, Collins says. Along with Alison Goldberg, Collins is leading a campaign for progressive tax reform aimed at the post World War II goal of expanding the middle class and meeting collective needs ranging from public education to physical infrastructure. These two philanthropists are gearing up for Tax Day—April 15—by recruiting more colleagues to join their cause to provide a progressive counterweight of sorts to the Tea Party activists. Collins says the goal is to “bear witness” to the need for a tax system that produces a more equitable society. It should also produce more philanthropy.

As detailed in a March 24 Chronicle of Philanthropy online discussion and in a March 25 Bolder Giving teleconference, Goldberg and Collins’ organization, Wealth for Common Good, specifically aims, among other things, to end Bush-era tax cuts for those with annual incomes over $235,000, close overseas tax havens, reinstate the estate tax and create an additional top tax bracket for high incomes. Taken together, they assert that their proposals could generate more than $500 billion per year in revenue. Their organization is also considering ways to use the tax code to encourage more charitable giving aimed at reducing inequality. During the Chronicle of Philanthropy chat, Goldberg said that foundation boards and grant decisions should also be opened up to include representatives of the communities supported by their grantmaking.

The proposals contained in Wealth for Common Good reflect and respond to a growing worry about income and wealth disparities in our society. And philanthropy has a role to play in providing thoughtful solutions. As Goldberg wrote in a Jan. 13 post to the New Voices of Philanthropy blog, “the funding community can’t afford to be absent from these debates.” For the television news would have us believe that the tea Party Movement is the dominant—perhaps even the sole—voice.

—Jane Wales

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