Politics, Economic Inequality and the role of Charities and Social Enterprises

“We may have democracy, or we may have wealth concentrated in the hands of the few, but we cannot have both.” -Louis Brandeis, US Supreme Court Justice 

In the majority of countries economic inequality is increasing with a rapid pace. The total wealth of the world is divided in two, almost half going to the richest one percent; the other half to the remaining 99 percent. The bottom half of the world’s population owns the same as the richest 85 people in the world. If it is left unchecked, our political institutions will become undermined and government will end up serving the interests of the elites only.

The World Economic Forum in Nov. 2013, ranked widening income disparities as the second greatest worldwide risk. Inequality is impacting social stability. It is important to make commitments needed to counter the growing tide of inequality.

Some economic inequality is essential and healthy for the growth and success of the economy. Those who innovate, entrepreneurs who take risks, those with hard earned skills and talents must be rewarded. However, the extreme levels of wealth concentration occurring today, threaten to exclude hundreds of millions of people from realizing the benefits of their talents, hard work and entrepreneurial skills.

Wealth concentrations can impact equal political representation. When wealth captures government policymaking, the rules bend to favor the rich. The consequences include the erosion of democracy and equal opportunities for all. Unless bold political solutions are instituted to curb the influence of wealth on politics, governments will work for the interests of the rich, while economic and political inequalities continue to rise.

There is some good news. The US, Europe and lately Latin America had reduced inequality while growing prosperous by popular politics that represent the majority, not the tiny minority. And the result has been good for their entire population, rich included.

It is appropriate to mention the contributions of some of the good charitable and social enterprises working for the poorest of the poor. They have done a commendable job by working with the donor's community and provided sustainable solutions for overall poverty reduction, rather than providing short term and superficial solutions to their immediate problems. Charitable organizations world over need to practice a strategy where they should work for the poor with the support of the donor community along with the government to tackle this global menace of poverty and to bring some kind of justice and social stability.

Let me know your thoughts.

Regards,

Khalid A. Khan

Annual Charity Best Practice Award 2014

Further to my previous blog “Charity management, do it right or don’t do it at all”, I would like to let you all know that November 22 2014 is the date set for Annual Charity Best Practice Award 2014.

The objectives of the Annual Charity Best Practices Award 2014 is to honor the outstanding professionals and organizations in the varied fields of charity management, to support continuing professional development and contribute towards raising the standards of charity management. It would promote and raise the profile of the charity sector and to provide recognition for those who are providing effective support to the sector.

The Award recognizes charities that have adopted the highest standards of governance. It is an initiative of the Brainchild Foundation; the award aims to promote good governance in the charity sector by acknowledging the excellent work of charities, while inspiring others to emulate their best practices. Its efforts in serving the community by partnering with self-help groups locally and overseas to enhance their services to the beneficiaries through delivery of structured and sustained community service programmes.

It would set excellent benchmarks in encouraging the spirit of giving in India and recognize best practices in volunteer and donor management, fundraising and corporate governance.

Being recognized in Annual Charity Best Practices Award will take the profile of your charity to the next level of excellence in governance and best practices which will benefit in terms of gaining trust of your current and potential donors and n turn meeting all your objectives.               

The website and other digital presence are yet to be launched, in the mean time I would sincerely request the charities and other relevant organization to submit their nominations for the award in the appropriate category in this application form:

     

https://docs.google.com/forms/d/1f8cgBG-N4rXW1BY1WKBsXRcMaR_BgXGN7KwiTqQvPdo/viewform

Charity Management – Do it right or Don’t do it at all

Most people would say that charity is always good, but some argue that charity is sometimes carried out badly, while others think that charity can bring bad results even when it is well implemented.

Charities should not target symptoms but causes. Usually charity helps the recipient with immediate problem, but it doesn't do much to deal with the causes of that problem. Some charities do stopgap or band-aid work. But in fact, a lot of charity work is devoted to dealing with the fundamental causes of problems.

Charity is wrong when it's used to patch up the effects of the fundamental injustices that are built into the structure and values of a society. Charity, from this viewpoint, can sometimes be seen as actually accepting the injustice itself, while trying to mitigate the consequences of the injustice. Charity should not become a substitute for real justice. 

Charitable giving may not be the most effective way of solving world poverty. Indeed charitable giving may even distract from finding the best solution - which might involve a complex rethink of the way the world organizes its economic relationships, and large-scale government initiatives to change people's conditions. The effort and resources of the charity might be better devoted to pressuring governments to bring about needed change. And governments might be more likely to focus on dealing with poverty if they weren't being helped by charities. Therefore, charity can be self-defeating if it allows the state to escape some of its responsibilities. Large-scale philanthropy to support 'essential services' is wrong because it switches provision from government to charity, rather than increasing benefits to the needy. Large-scale philanthropic activity carries with it serious risks of changing the balance of funding from the public to the private sector, thereby exposing those most in need to the changing state of the market. To the extent that private funding of essential services becomes the norm, the vulnerable become the recipients of uncertain aid, which is liable to fluctuations and constant reduction.

If the charity sector increases spending in an area also funded by government then there is a risk that government will choose to spend less in that area with the result that governments save money, and extra benefits provided by the charity spend are reduced.

The issue here is whether the charity we give to devotes a high enough proportion of its funds to the needy. Responsible charities make it very clear what proportion of contributions is spent on administration and fund-raising. Charities are often accountable to the givers not the receivers. If the purpose of charity is to benefit the recipients, it seems obvious that those best able to say whether they are achieving this end are the recipients. But because the recipients of charity are often unorganized and the charity doesn't know their individual identities, it's often easier for charities to make their performance reports to the givers.

Charities should also take accountability to the recipients seriously and conduct research to tailor their actions more closely to the needs and preferences of their beneficiaries.

There is a need to ensure charities and social enterprises are aware of the best practices in the sector and work accordingly, else their hard work and the funds of their donors will not only go waste, but it also can become detrimental to the interest of the very same people, these charities claim to serve. 

Let me know your thoughts.

Khalid A. Khan