January 25th, 2011
January 25th, 2011
The talk of the week has been about Bono. Specifically, the chatter is over the Global Fund, a massive multilateral organization that provides development aid to poor countries for fighting AIDS, tuberculosis and malaria. The Fund, which in its lifetime has disbursed about $13 billion to 150 developing countries, is backed by several celebrities, including Bill and Melinda Gates, UN secretary-general Kofi Annan, and rock-star Bono.
Bono believes in the Fund so fervently that in 2006 he created global brand Product(Red), which partners with major corporations including American Express, Gap, Converse, Starbucks, Apple, Dell and Hallmark. These companies then donate a portion of their profits from their sales of RED products to the Global Fund. In a quote typical of a musician, Bono notes “Philanthropy is like hippy music, holding hands. RED is more like punk rock, hip hop.”
Product(Red) has already seen a lot of criticism. For one it has demanded a costly advertising campaign, which makes it less efficient than direct charitable contribution. Some estimates place the collective marketing costs as high as $100 million in 2007, though the products generated only $18 million in contributions. Also many retailers are not clear on how much of the sale price of RED products is actually donated to the Global Fund. For example Apple’s website declares that “proceeds from every [RED] iPod Nano sold go directly to the Global Fund to fight AIDS in Africa.” How much exactly? About $10 of the $149 – $179 of the price of a Nano. For that kind of slim margin, you might as well buy one on eBay for $125 and donate the remainder yourself.
But as Bono says, donating money straight to aid organization is like holding hands with the developing world. Owning a RED iPod Nano is like being a rock-star. Plus you get to enjoy the smug sense of superiority every time you plug in your headphones at the gym.
Unfortunately, as it would turn out, Bono’s preferred organizations aren’t done seeing bad press. It’s all the result of an article published by the Associated Press, which yesterday reported the Global Fund loses as much as two-thirds of some grants to corruption. Most of the lost money “is accounted for with forged documents or improper bookkeeping, indicating it was pocketed.” In all, the Global Fund has likely lost about $34 million to corruption. The worst offenders include Mauritania, which stole 67% of an anti-AIDS program, Mali, which squandered 36% of funds to fight tuberculosis and malaria, and Djibouti, which pocketed 30% of all of its donations.
Some donors have reacted violently. Sweden, the fund’s 11th largest contributor, has suspended its annual donation until the fund’s problems are fixed. Canadian Prime Minister Stephen Harper has noted he is “deeply concerned.” NBC mused that “celebrity do-gooder Bono can’t be happy.”
Their concern is not misplaced, but it is misguided.
Corruption is a huge problem when it comes to development aid. Not only does it render aid less effective, it also erodes public confidence, weakens social infrastructure, and damages the perceptions of donors. But it is not a new problem. And it is not unique to the Global Fund. In fact, while the numbers are huge in some of the individual countries I listed above, the $34 million loss is less than .3% of the organization’s total donations.
And here’s something else the AP article didn’t address. The reason these numbers have come out in the first place are the result of an internal investigation by the Global Fund, precisely for the aim of discovering corruption and rooting it out. Bobby Shriver and Bono, the co-founders of RED, noted in an editorial today in the Huffington Post “We…know that the idea of zero corruption is a naïve, impossible standard.” And they are right.
The Global Fund has saved an estimated 6.5 million lives by providing AIDS treatment to approximately 3 million people. Losing $34 million to corruption is unacceptable, but only because of the many lives that money could have saved, not because the Global Fund is not committed to its work.
So don’t throw out that RED iPod Nano just yet. You can still hold your head high when you wear your RED Gap t-shirt. And let’s not write off the Global Fund just yet.
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