The utter failure of the Red Cross and other aid orgs in Haiti

Vice and ProPublica did some recent investigations of US aid to Haiti after the quake, and unfortunately you can probably guess what they found. It was literally like the Iraq War in terms of incompetence, mismanagement, hubris, CYA, and outright lies. I am done with the US Red Cross.

http://www.npr.org/2015/06/03/411524156/in-search-of-the-red-cross-500-million-in-haiti-relief
https://www.youtube.com/watch?v=BNM4kEUEcp8

Generous Americans gave the US Red Cross $500MM for Haiti relief. They outraised all other charities, probably due to marketing and brand. They promised that they would build thousands of permanent homes (with water and sanitation) for Haitians, and even "new communities". So far, they have built SIX (yes 1-2-3-4-5-6) new homes, and are getting ready to pull out. At least Bush eventually got Saddam.

The problem is that the RC is good at distributing temporary disaster aid (like post-Katrina water and tents), but knows nothing about reconstruction. Yet they gladly took our money and promised that they would get it done. Well, land rights and building logistics in Haiti is a Third World disaster as you can imagine, so the RC contracted with third parties. Except doing that requires higher mgmt fees on donations up to 33%. For scale, good charities have mgmt margins of like 5%. So millions of dollars went poof, and those orgs paid bureaucrats to try to get houses built, but never broke ground. For the few shovel-ready projects, they were delayed by red tape from HQ, and many people resigned out of frustration.

All the while, RC PR maintains that they did an awesome job and saved Haiti. They said they gave 4.5MM Haitians shelter, which is pretty impossible considering that is the entire urban pop. of Haiti (and only Port-au-Prince was affected). I have no idea how they got their #s. We know that there are inept, unmotivated people at every workplace. And unfortunately charity orgs are no different, despite their inspirational missions. RC leaders in DC treated Haiti like a 9-5 job, and it wasn't their ass if they didn't deliver. What about hiring local Haitian experts to manage the projects instead? It's their country and they had more innate motivation. Unfortunately there were HR delays and even overt prejudice against Haitian applications and hires. Mr. Big Boss Know-It-All American had to call the shots. I really hope Nepal doesn't turn out like this.

There are opportunists and carpetbaggers after every disaster/war, but I naively didn't expect them to have a red cross on their arms. But the truth is that they are no better than an occupying army, or USAID, or Halliburton.

----

Like, who can you trust? Charity Navigator supposedly rates nonprofits. They rate the ARC as 3 out of 4 stars, with a 10% overhead ratio (90% of donations go to "programs"). That is pretty good, if we can trust their accounting.

But unfortunately, people have been trying to exploit others' generosity/sympathy since the advent of money. What level of hell is reserved for those scum? I can almost tolerate the Nigerian oil scammers and Wolf of Wall Street types, as they are preying on people's greed. But how can you lie to profit from goodwill?

http://www.charitynavigator.org/index.cfm?bay=content.view&cpid=1903#.VXBesecmz9k

Also, F John Paulson for donating $400MM to Harvard Engineering. That's like doing volunteer work for the House of Saud. Literally he could have done much more good if he just gave the money away on a street corner in Boston. But that really wasn't a donation, it was more like a purchase of legacy and boasting to his peers.

http://www.republishan.com/e/7151433366795166/For-the-love-of-God-rich-people-stop-giving-Harvard-money

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.

Goldman & Chrysler get aid but not CIT?

http://www.chicagotribune.com/business/chi-fri_cit_0717jul17,0,1042812.story?track=rss
http://www.nytimes.com/2009/07/17/business/17factor.html?_r=1&ref=business
http://marketplace.publicradio.org/display/web/2009/07/16/pm_cit/
http://money.cnn.com/2009/07/17/news/companies/goldman_sachs_tarp_ingratitude.fortune/index.htm?section=money_latest

Politicians often laud the entrepreneurial spirit of Americans and claim to be supporters of "small businesses" at the core of this economy. Small businesses need a lot of credit (payroll, raw materials, etc. until sales revenues come in), and many of them fail. So interest rates on them can be fairly high if they patronize traditional banks. That's where CIT (Commercial Investment Trust) comes in. For over 100 years, that company has collected private investment money and in turn loaned it out to small businesses at more reasonable rates. They have over 1M clients and $40B worth of loans, from Dunkin' Donuts franchises to Eddie Bauer to Dillard's to Wal-mart subcontractors. They are on the Fortune 500 and service 80% of the Fortune 1,000, so it's not like they're a podunk community S&L.

Last year, Bush made his case for Wall Street and big bank rescue based on the fact that credit is the lubricant that keeps the gears of our economy rolling. CIT has already received $2.3B of TARP funds, but may need another $3-6B to stay afloat (they asked for $2B yesterday but were rejected by the Obama administration). Credit raters and analysts have already written CIT off as a dead man walking, and the company has lost $3B over the last 2 years. Maybe the company is doomed, and most of us on this email list are against "panic bailouts" to rescue "necessary" players in our economy. CIT is not too big to fail, but its credit services are crucial to retail commerce, and retail needs to rebound if we are to have a real economic recovery. So what do you do? Well, what has Uncle Sam done in the recent past?

Goldman Sachs, an investment bank (before it became a bank holding company to qualify for TARP), received a $10B bailout and government backing of its debt. Whether they desperately needed the money like AIG or BofA is doubtful, but their industry was in free-fall at the time. Did I mention that Goldman was the #2 corporate contributor to the Obama campaign, and gave plenty to Bush, Clinton, and other elite politicians too. Months later it returned its TARP portion of course (on its own accord, not due to government requests), in order to break free of executive compensations limits and other factors. Goldman also posted a huge $3.4B profit in Q2 2009, and analysts expect the company to doll out huge compensation bonuses to those responsible (mostly their fixed income division dealing with currency/commodities trading). Can't you just hear "The Boys are Back in Town" song playing? But now Goldman finds itself in a very different millieu. It's rivals Merrill, Bear, and Lehman, that invested much more heavily in toxic mortgage-backed securities to their own peril, are no more. In fact Goldman poached a lot of talent from those firms in the last half year, and now finds itself the dominant investment house on Wall Street, and they are going to be kicking ass despite this recession and however long it lasts. Less competition and mostly steady demand for their services means they can increase costs (and profits, obviously). So why can't the government give part of Goldman's returned cash to guarantee some of CIT's loans to worthy clients? Obviously they are in great shape and won't need another bailout.

Chrysler is not critical to the national economy, no matter how you slice it. Chrysler reported 58,000 employees in 2008, which is 1/6 the size of Target Corp. They were literally in the grave by the time they filed for Chapter 11 and Fiat took one for the team. As part of the bankruptcy settlement, Chrysler is guaranteed up to $8B US and 4B Canadian dollars (from the gov't of Ontario) in loans, on top of the $4.5B given in 2008 by the Bush crew. That is way more than what CIT is asking for, and those dollars won't go as far. But many Chrysler factories and their unions are very important to various Midwest Congressmen, as well as it's "sentimental value" in the American manufacturing landscape, so I guess they are worthy of rescue.

But not CIT, even though losing them would significantly impact already struggling retail and small business credit sectors. There wasn't enough credit to go around for small business needs before CIT took a nose dive, so if they fail it will get much worse. Desperate small businesses will need to turn to the Big Banks and Wall Street sharks for credit, and will pay dearly for it. Since many small business owners are emotionally and personally invested in their professions, they may go to irrational lengths to keep their life's dream going despite all their red ink. Droves of such desperate borrowers are a banker's wet dream. That tells you how bad the credit market still is when underwriters are still hesitant to loan to such small businesses, even at highway-robbery 20% monthly interest rates. Big banks even have loan vehicles where a small business owner can put his/her retirement account down as collateral. They really smell blood. So much for government reforms to protect borrowers.

It's not like CIT deserves its fate due to incompetence and greed. It was not heavily into the subprime mess. It had a tiny home mortgage arm that it is currently selling, but the core of its business was small-to-medium business loans. The problem is Wall Street investment in CIT is just drying up because investors are clutching their purses tightly in this recession, and as I said, small businesses often go under (especially now). Yet maybe CIT is "too big to fail" anyway; they are 60% of their market. They loan to 2,000 manufacturers that supply 300,000 retailers (60% of apparel makers). It's not like goods just magically appear on store shelves. Even large retailers usually don't own factories and make the goods they sell. It's not efficient. Suppliers/distributors need to be paid, and CIT facilitates that. We often hear of the "ripple effect" that losing a big auto company would have on our country (parts, mechanics, dealerships). Well losing CIT is a Maverick's wave compared to auto's ripple. I don't want to sound alarmist; it's not like CIT will disappear overnight. Parts of the company may be chopped up and sold. But for its core lending function, why can't the government guarantee those loans or even assume CIT's role (temporarily)? It's already sitting on GM's board for Pete's sake. The Federal Reserve has already broken tradition and become a direct lender to commercial banks. I think the government is doing something similar for college loans. Why can't they step in and use some of the TARP billions to support the small businesses that they constantly invoke on the campaign trail?

Well, I guess CIT execs didn't donate enough to the right campaigns. I say this with all seriousness, since they obviously qualify for aid based on the other economic considerations and rationale give to us by Washington leaders. Plus the only reason why a company like Chrysler would qualify for aid is political connections.

Aid to Israel

"The military rabbinate [religious wing of the Israeli Army, like chaplains] brought many magazines and articles with a very clear message: 'We are the Jewish people, a miracle brought us to the land of Israel, God returned us to the land, and now we have to struggle so as to get rid of the gentiles who disturb us from conquering the holy land.' All the feeling throughout all this operation of many of the soldiers was of a war of religions," he said. "As a commander, I tried to explain that the war is not a war of Kiddush Hashem [the sanctification of God's name, including through martyrdom] but over the stopping of the launching of the Qassam rockets."
- Israeli soldier identified as "Rahm" on the recent Gaza war, interviewed by the Washington Post

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/20/AR2009032003463.html?wprss=rss_world

I know that every war has its ingrained religious dogma and nationalist propaganda, but give me a break. Since this controversy broke, some military rabbis have been reprimanded or given leaves of absence. And that's not all; Human Rights Watch and the IDF are conducting separate investigations into the use of white phosphorous munitions (used to illuminate battle areas at night, but can also rain down on people and burn their flesh) during the Gaza conflict. Using such materials in an urban zone is a war crime, and HRW has concluded that Israel is guilty. Peace activist and former IDF soldier Yehuda Shaul interviewed 20 soldiers who participated in Operation Cast Lead. "Some soldiers from some units who led this operation in the front, basically when they received the briefing, it was - guys, we're entering in, everything that moves, everything that is a threat, everything you are afraid of, you shoot," said Shaul. Needless to say, shooting indiscriminately is also a violation of the Geneva Conventions, though unfortunately it takes place in all wars. The Israeli government has dismissed Shaul's work as unconfirmed anecdotes.
The [Israeli] army says it's investigating, even as some Israeli soldiers are coming forward with their own accounts of what they describe as needless civilian deaths and highly permissive rules of engagement. Shaul says some of the soldiers he's interviewed also say they destroyed civilian property and homes, actions that seemed to have little or no tactical purpose or necessity. Some soldiers, he says, called it gratuitous and stupid. -NPR
http://www.npr.org/templates/transcript/transcript.php?storyId=102371101

Personally, I don't want my tax dollars financing such brutality and RELIGIOUS EXTREMISM. My own country engages in enough of that - we don't need to indulge others overseas. Ironically, the War on Terror is built on the premise that radical Islam is the most significant international security threat, yet we overtly or implicitly condone Zionist extremism? Obama seeks to increase foreign aid from $20B currently to $50B by 2012, but that may run into trouble in Congress due to the economy. Already they are looking to trim $4B in aid to try to pass the 2008 budget, but not sure how that affects aid to Israel (probably negligibly).

How is it that Israel receives 1/7 of all US foreign aid ($2.5-3B annually)? Israel's population is 7M; that is 0.12% of the wold's population. In comparison, Bangladesh and its 151M people get $50M. Unlike Israel, Bangladesh is one of the poorest nations on Earth, often hit by natural disasters, and has been peaceful with its neighbors since the 1970's. The per-capita difference there is 1,286-fold in Israel's favor. Speaking of per-capita, Israel's GDP PPP is $28K (#31 worldwide according to the CIA Factbook, ahead of Czechs and Saudis) and Bangladesh's is only $1.5K. Only 20 nations are pooer. I am not so naive to think that we give our foreign aid based on need, but some disparities are too ludicrous to ignore. But then again, I am sure that pro-Israel lobbyists in Washington vastly outnumber their Bangladeshi counterparts.

As part of with an initiative by then-Prime Minister Benjamin Netanyahu, the civilian aid has been steadily decreased over the course of the past 10 years, going from USD 1.2 million to being completely cancelled this year. At the same time military aid to Israel has increased from USD 1.8 billion to USD 2.4 billion.
-Yitzhak Benhorin, ynetnews.com, 2007

Since the founding of the Jewish State, they have received over $80B in US assistance (over half of that for their military, and the proportion is growing), which is over $10K for every Israeli alive today. And our federal government spends all that effort cracking down on "welfare moms" and Earned Income Tax Credit abusers? Plus it's not like they would be out in the cold without us. Since the Luxembourg agreement of 1952 and subsequent decrees, Germany has been giving substantial aid to Israel (like unofficial reparations for Nazi crimes). As of 1995, Germany has given over $26B directly to the state and people, as well as $94M in annual low-interest loans. They have a legal and moral responsibility to do so, but what is our reason?

There are poor people in Israel and some Arabs have had their homes demolished by the government. I have no problem helping them, but I'll be damned if some of my labor contributes to the sniping and shelling of innocents in Gaza for their "holy war". The lifeblood of war is money. I wonder how international conflicts would be affected if the US universally cut military aid to Israel, as well as other big recipients like Colombia, Egypt, Turkey, Saudi. And imagine how many Americans could be put to work or how many Africans could be fed/immunized with those billions.

http://www.vaughns-1-pagers.com/politics/us-foreign-aid.htm
http://www.hotpolitics.com/tax4israel.htm
http://www.ameu.org/page.asp?iid=97&aid=134&pg=1
http://philanthropy.com/news/government/7609/congress-may-cut-some-foreign-aid-money-from-proposed-budget

All this is not anti-Semitic; it's just fact.

Generosity only in good times?

http://www.philly.com/inquirer/world_us/20081017_Annan__Nations_not_paying_hunger_aid.html
http://www.alertnet.org/thenews/fromthefield/219724/122417271741.htm

World Food Day was last week, and with the rising costs of basic staples and fuel, the number of malnourished humans on the planet has almost reached a billion. 10,000 children will die of hunger today. The global financial crisis will only make matters worse. Reduced economic activity from recession pushes down sales and prices for exports like coffee that poor nations rely on to survive. Regardless of what losses we took to our 401(k)'s and home values, the poor in the Third World (and their struggling governments) will be hurt much more. Those making less than $1/day are much more vulnerable to the global fallout from an economic downturn, so we should stop feeling sorry for ourselves and recognize the other innocent victims of our greed. We might have to cut back on our summer vacations; they might have to cut back half their caloric intake. When compared to that reality, even people in danger of foreclosure can't really complain.

It's easy to give when our cups are overfilled, and yet America was stingier than Japan or most of the EU per capita during the economic booms of the 1990's and mid-2000's. But now, when the Third World will unjustly suffer from the mistakes of the industrialized world, is when we really need to step up and show our humanity. Is it more important to keep bank deposits insured, to cut economic stimulus checks, or to keep children alive? So far the industrialized world has injected over $3T in loans and other aid into their banking systems, but renowned economist Jeffrey Sachs estimates that we could virtually wipe out hunger with an investment of just $3B a year (1/1,000 of what was given to banks). Over half a billion more people (mostly in Africa) would be able to live to see 2009 and maybe improve their situations. All they need is literally some high-yield seeds, fertilizer, agriculture education/equipment, and maybe some medicine. No more than what the Amish have; it's really that simple. Loosening some protectionist trade policies would help a lot too, though as our wallets are squeezed, I suspect that the opposite will happen.

G8 nations already have a reputation for promising way more than they actually deliver in terms of poverty aid, including the Tony Blair-promoted UN Millennium Project ($50B for Africa by 2010). Recently, big names like Kofi Annnan and Sachs came out with scathing criticisms of rich states. In response to the price hikes and food riots in June (gotta love ethanol), the G8 et al. pledged an additional $12B to stabilize world food markets/supplies, but so far have only ponied up 0.4% of that ($50M from AUS). Unfortunately, sometimes the money that rich nations "pledge" is money that they already promised in the past (but haven't yet delivered on), or pre-existing aid money that they just re-allocated for this purpose. That's like your boss giving you a raise, but the money comes from next month's salary (or your friend's salary).

Where does the aid money go in Afghanistan (if it even gets there)?

http://www.oxfam.org/en/news/2008/pr080325_donors_failing_afghanistan

Oxfam Press Release – 25 March 2008 Major donors failing Afghanistan due to $10bn aid shortfall

Forty per cent of aid spending returns to rich countries in corporate profits and consultant costs The prospects for peace in Afghanistan are being undermined because Western countries are failing to deliver on their promises of aid to the tune of $10bn and because aid going to the country is used ineffectively, according to a new report written by ACBAR, an alliance international aid agencies working in Afghanistan. Read the report: Falling short: Aid effectiveness in Afghanistan The international community has pledged $25bn to Afghanistan since 2001 but has only delivered $15bn. The US is the biggest donor to Afghanistan but also has one of the biggest shortfalls - according to the Afghan government between 2002 and 2008 the US only delivered half of its $10.4bn commitment. The same sources show that over this period the EC and Germany distributed less than two-thirds of their respective $1.7bn and $1.2bn commitments, and the World Bank has distributed just over half of its $1.6bn commitment. The UK pledged $1.45bn and distributed $1.3bn. An estimated 40% of the money spent has returned to rich donor countries such as the US through corporate profits, consultant salaries and other costs, vastly pushing up expenditure. For example, a road between the center of Kabul and the international airport cost the US over $2.3m per kilometer, at least four times the average cost of building a road in Afghanistan. Around 90% of all public spending in Afghanistan comes from international aid so the massive shortfall hinders efforts to rebuild infrastructure damaged by over two decades of war, and to ensure the widespread delivery of essential services such as education and health. The report's author Matt Waldman, Afghanistan policy adviser at international aid agency Oxfam, said: "The reconstruction of Afghanistan requires a sustained and substantial commitment of aid - but donors have failed to meet their aid pledges to Afghanistan. Too much aid from rich countries is wasted, ineffective or uncoordinated. "Given the slow pace of progress in Afghanistan, and the links between poverty and conflict, the international community must urgently get its act together. "Spending on tackling poverty is a fraction of what is spent on military operations. "While the US military is currently spending $100m a day in Afghanistan, aid spent by all donors since 2001 is on average less than a tenth of that- just $7m a day." The report says a level of donor under-spending can be expected because of the lack of government capacity, large-scale corruption and challenging security conditions. But the size of the shortfall highlights the importance of donors making concerted efforts to address these issues. The report also shows that a disproportionate amount of aid follows the conflict and is being used for political and military objectives rather than reducing poverty. Mr. Waldman said: "This is a short-sighted policy. There must be strong support for development in the south but if other provinces are neglected then insecurity could spread." Looking to the future of aid to Afghanistan, Mr. Waldman said: "The priority now is to increase the volume of aid and ensure it makes a sustainable difference for the poorest Afghans, especially in rural areas. Aid must address Afghan needs, build local capacities and help Afghans help themselves." ACBAR's main recommendations are: Increased volume of aid, particularly to rural areas. Transparency by donors and improved information flows to the Afghan government. Better measurement of the impact, efficiency and relevance of aid. An independent commission on aid effectiveness to monitor donor performance. Effective coordination between donors and with the Afghan government. Read the report: Falling short: Aid effectiveness in Afghanistan Contact For more information, please contact: Matt Waldman +44(0) 7812 119 615 or + 93 (0) 700 278 838 Sean Kenny +44 7881 655 715 Notes to Editors 1. ACBAR – the Agency Coordinating Body for Afghan Relief - consists of 94 Agencies including Oxfam, Christian Aid, CARE, Islamic Relief and Save the Children 2. Most full-time expatriate consultants working for private companies in Afghanistan cost $250,000 to $500,000 a year, including salary, allowances and associated costs. All figures below in $m Donor Aid committed 2002 - 2008 vs. Aid distributed 2002 - 2008 US 10,400 vs. 5,022 European Commission 1,721 vs. 1,074 World Bank 1,604 vs. 853 UK 1,455 vs. 1,266 Germany 1,226 vs. 768 Canada 779 vs. 731 Japan 1,410 vs. 1,393 Italy 424 vs. 424 Netherlands 493 407 Norway 399 vs. 277 France 109 vs. 80 Spain 63 vs. 26