Haiti after the quake: the wrong way for the world to help

http://www.bbc.co.uk/news/world-latin-america-20949624

Haiti is the poorest nation in the Americas (their $13B GDP is the same as 1/9 of IBM) and their quake 2 years ago set them back even further. 200K died out of a nation of 10M, many were seriously injured, and 20% of Haitians were internally displaced. Tough for any nation to recover from, even a rich one.

The global community showed a great outpouring of compassion and charity, giving in total $9B of aid (cash, goods, services). But those resources were mostly a boon to foreign NGOs, not Haitians directly. It's like they got a juicy gov't contract all of a sudden. I took some classes this spring about nonprofit finance and unfortunately they are not much more noble than for-profit entities. Their #1 goal is the mission of course, but goal 1.5 is related but somewhat more selfish: justify their existence, comfortably fund their operations, and grow in revenue/prestige if possible. And of course 501(c)(3) non-profits are fully entitled to earn a tax-exempt profit (see Kaiser Permanente) - they just can't legally pass it on to employees and (nonexistent) shareholders. Like many international development projects, these well-meaning folks from the G20 arrive with their Range Rovers and lofty plans. They think they know best and they tell the locals what to do and what to ask for. Then they give themselves a pat on the back, pack up, and go home to tell great stories of their philanthropy - even if the task is not done and the sustainable impact is minor. And of course there was the scandal about Christian groups trying to smuggle out (a.k.a. rescue) "orphans" and other children back to the US.

http://www.dailymail.co.uk/news/article-1247788/Haiti-earthquake-One-Haiti-orphans-kidnapped-American-church-group-parents.html

Yes that is an overly cynical assessment. If zero aid dollars went to Haiti, clearly they'd be in far worse shape today. Volunteers and paid workers labored tirelessly to clear debris, attend to the injured, distribute supplies, feed people, and give useful advice. Lives were touched and saved. But $9B during a global recession is a lot of green, and it could have been utilized more effectively. Some economists even suggested that it would have been better to give ~$3,000 (about 2.5 years of avg. income) to each affected Haitian and let them decide how best to use it to improve their lives. Because the way it went down, about 90% of the money didn't "stay" in Haiti and was paid out to foreign orgs. Their labor and supplies stayed in Haiti, but we know that help is temporary (and Western labor is pricey) and supplies are consumed and wear out fast. People are still in tents in refugee camps 3 years later.

So instead of this expensive "reactive medicine" to hurriedly bind the wound, collect your fee, and clear out, there was no lasting, sustainable development effort. Surely it's the Haitians' fault too with their dysfunctional government and low levels of skills/education/employment. But if they could care for themselves, they wouldn't need foreign help. We can't blame the victim. And the fact that so much $ went to foreigners suggests that the funds were not efficiently allocated. Like with Iraq and countless other examples, foreigners tend to be driven by other incentives (not necessarily helping Hatians optimally), be ignorant about conditions on the ground, and the locals know better about the people's urgent needs. Haitian leaders needed more say. But we can understand that charities, like any other orgs, want to control their money (and some may feel that it is their budgetary duty to oversee expenditures). In fact, some Haiti relief funds were legally mandated to be spent on certain projects over others, even if they were ignoring more important ones. That is the "central planning" and cobweb of nonprofit finance that makes corporate taxation look trivial. 

Maybe the lesson learned from all of it is: if you want to deliver the most impact for your charity, invest in vetted local orgs who will be there for the long haul. They don't have short term objectives and short term thinking, so they will better allocate resources and deliver impact. I guess there is a chance that the money will be squandered by corrupt local thieves, but your buck could go a lot further too.