Information and stories about aid effectiveness and reform

All the foreign aid in the world could be useless if not implemented well. The Borgen Project seeks to help third-world countries join a global market and become self-sufficient. Among the many ways for developing governments to reach this goal, there is a common debate over whether it is better to have foreign aid creating jobs for the unemployed, or to simply give would-be entrepreneurs cash directly. In the debate of job programs versus payouts, each tactic has its own valuable strengths.

Technology reduces access to good entry-level jobs

Supporting a work program would equip workers with what they need for a good job in a competitive world. The World Economic Forum predicts that five million jobs will be lost around the world by 2020. For first-world nations, this loss can be offset by an increase in productivity and wealth. For third-world nations, artificial intelligence means low-wage workers will lose their competitive cost advantage in a global market.

The Financial Times predicts that 85 percent of all Ethiopian jobs are at risk due to automation. Corporations do not wish to pay human employees more in exchange for less efficient work. A job program, for nations striving to reach industrialization, can teach citizens skills that machines cannot learn. And that system will help developing countries keep pace with their richer neighbors.

Each country’s difficulties are best solved through their own workforce

The World Bank examined how small and medium enterprises (SMEs) contributed to the growth of almost 100 developing countries. Its research concluded that SMEs do more than provide the most employment for states. SMEs help developing nations even more than the biggest firms, in contrast to the U.S. economic system. SMEs bring in more than 80 percent of job creation even in countries with net job loss.

Some of a starting business’s greatest obstacles include lack of finances and burdensome taxes. Helping people help themselves would be an efficient use of money. As The New York Times notes about job programs versus payouts, human capital “could catalyze more business investment and activity in low-income neighborhoods, which would further promote economic growth.”

Emerging nations need money invested in its entrepreneurs, not its corporations.

The World Bank admitted that to claim “SMEs provide productivity growth” is dubious. If job programs only train developing nations to be cogs in a global machine, then ultimately only large corporations will benefit.

The USAID website, similar to the World Bank, agrees that entrepreneurs in developing nations need help to get started. But USAID notes that investors don’t contribute to high-risk yet promising early enterprises. If cash only flows to what’s proven to work in an economy, then no startup will escape a global corporation’s shadow. Through several nonprofits and systems, USAID “efforts focus on directly strengthening individual, high potential entrepreneurs.”

The debate of job programs versus payouts may never be solved. Artifical Intelligence will not be the last technology to threaten jobs, and corporations will ultimately never be the only factor taking a nation to greatness. USAID, the World Bank and the Financial Times can all agree on one thing: investment in the poorest among us is the key to our brighter future.

– Nick Edinger

Photo: Flickr

Donate money, not stuffIn the midst of global tragedies, many charitable people decide to send old junk or underused resources to foreigners in need. Here are five reasons why one should donate money, not stuff if one wants to solve global hunger.

  1. “Junk” is a logistical nightmare for volunteers. The people brave enough to enter disaster sites must provide emergency care to people in immediate need. They lack the necessary time to sort, transport and store cheap diapers or old sweaters sent in by well-meaning folks. Yahoo Finance reports an incident where, in the aftermath of Hurricane Katrina, a benefactor sent thousands of pounds of cheese to New Orleans. The trouble was that no working refrigerator could hold such a gift. Lots of material goods appeal to a customer’s wants… they’re not so effective in situations of dire need.
  2. Material donations can wreck a nation’s economy. Kathleen Tierney, the director of a Natural Hazards Center in Colorado, notes how economic problems occur in recovering nations when supply outstrips demand. “If you want to see economic recovery, you don’t want to send so many supplies that you create a situation where people can’t survive in a business sense,” said Tierney. Ultimately, the best use of aid is to help a country until they can take care of themselves. It’s difficult to make one’s living selling T-shirts if a global superpower dropped off millions of shirts for one’s potential customers to wear for free.
  3. Local groups know what resources they need. The Central Texas Food Bank, the largest provider of emergency food distributions in the country, was shut down by flooding during 2017’s Hurricane Harvey. The group’s president, Derrick Chubbs, supports monetary donations instead of material aid. He reasons that relief groups in a disaster area know exactly what they need for certain situations. They only lack the funds to acquire the most helpful tools for the job. The chance to clean one’s house and accomplish a moral good is tempting for a lot of do-gooders. But one can achieve similar results by selling old junk to a consignment store (like Goodwill or Half-Priced Books) and donating the proceeds to a respected charity. With one additional step in giving aid, the effectiveness of a donation multiplies.
  4. “Stuff” is a short-term solution to a long-term problem. The media focuses on the immediate aftermath of a tragedy but often loses interest by the time victims have to return to their homes. Groups like the Salvation Army understand that maintaining emergency shelters and rebuilding destroyed sites takes a long time. This is why nonprofits want people to donate money, not stuff. Not only do charities know what to spend cash on, but they know how to divide that cash to ensure a complete job. Such relief groups cannot fix a community with a stuffed animal sent from across the country.
  5. It’s more effective to call/email your representative. So how can someone help if they feel they lack the money to keep themselves afloat? One free solution would be to contact your representative and ask that your government contribute aid to a country or region in need. The Center for Global Development reports that the U.S. donates only 1 percent of its budget towards International Affairs, which includes disaster relief. Not only can this amount be increased through advocacy, but concerned citizens can ask their representatives to support revenue-neutral bills to solve global problems. Anyone interested in this surprisingly easy path to advocacy should explore The Borgen Project’s page on calling Congress.

– Nick Edinger

Photo: Pixabay

Foreign Aid Spending
Much of what Americans believe about foreign aid spending is wrong. A recent Kaiser Family Foundation poll of 1,505 people found most couldn’t accurately place the percentage of its federal budget the U.S. spends on foreign aid. The average amount they guessed is 26 percent; the answer is less than 1 percent. Only one in every 20 people answered the question correctly.

Where do these misconceptions come from?

The U.S. spends more in net amount than any other country on foreign aid; the total came to some $32 billion in 2014. However, when looking at aid spending as a percentage of gross national income (GNI) , the amount the country and residents abroad take in as income, the U.S. spends a mere 0.19 percent of the wealth it receives each year in aid.

The American contribution falls flat behind larger benefactors like Sweden which donates 1.1 percent of its GNI, or Luxembourg at 1.07 percent and Norway at 0.99 percent.

The misconceptions of Americans regarding foreign aid are showing no signs of clearing up on their own. Another poll conducted by in 2010 found the median estimate Americans believe their country spent on foreign aid was 25 percent. When the poll asked them what would be an “appropriate” amount, the median answer was 10 percent.

These findings might even be humorous if so many people around the world weren’t living amid crushing levels of poverty. The erroneous views Americans hold of foreign aid spending have a direct impact on millions of people who struggle each day with hunger and a lack of economic opportunities.

Americans also host conflicting views regarding foreign aid based on their party affiliation. A survey conducted by in 2016 revealed 49 percent of Americans identifying as Democrats believed U.S. aid should go to the poorest countries, while 59 percent of those identifying as Republicans believed aid should go to countries who support U.S. foreign policy.

Overall, 39 percent of Americans believed in aid for poor countries and 41 percent believed aid should be directed based on foreign policy support.

Our misconceptions of foreign aid influence how we think about the topic. In the Kaiser Family Foundation poll, 56 percent of those interviewed believed the U.S. spends too much on foreign aid.

However, when presented with the actual situation, namely the fact that the U.S. spends less than 1 percent of its $4 trillion federal budget on foreign aid, the poll found the number of Americans who think the U.S. is overspending on the aid dropped to 28 percent.

The wording of the questions also makes a difference. When the poll posed the question to Americans, “Do you think the U.S. is now spending too much, too little, or about the right amount on foreign aid?” 56 percent of respondents said too much.

However, when researchers modified the question to ask, “Do you think the U.S. is now spending too much, too little, or about the right amount in efforts to improve health for people in developing countries?” the percentage of those saying too much dropped to 28 percent.

Despite perceptions of corruption, elected officials tend to act in accordance with public opinion when faced with overwhelming support for spending measures. By dispelling the myths surrounding U.S. foreign aid spending, aid legislation will face less opposition as more Americans come forward to support it.

Will Sweger

Photo: Flickr

U.S. Assistance to the Developing World
“Could each of you tell me the purpose of the United States giving economic assistance to other countries?” These were the words Senator Bob Corker used to kick off the debate over the effectiveness of current U.S. allocations, and the purpose of U.S. assistance to the developing world.

In general, all of the witnesses agreed that the purpose of U.S. assistance to the developing world is to promote economic growth and the conditions that sustain it, but each participant expressed nuances regarding how this goal can be accomplished.

Dr. Jeffrey Herbst, CEO of Newseum, believes that the key to improving U.S. assistance is to ensure the accountability of recipient governments. In his introductory remarks, he recommended that countries meet certain performance outcomes or be subject to the withdrawal of aid.

“If the recipient country is not committed,” said Herbst, “to private sector growth and a dynamic economy, then no matter what the design of foreign assistance is…the aid is not going to have a significant effect.”

But this is also a matter of perspective. Alicia Phillips Mandaville, Vice President of Global Development at InterAction, explained that many of the factors affecting program success are overlooked due to a lack of technical tools. Mandaville emphasized growth diagnostics and cost-benefit analyses to determine the real obstacles to growth and whether those can be overcome in the long term.

For instance, Mandaville pointed out that one common barrier to growth in West African countries is poor infrastructure. Roads there are congested and do not accommodate large transport vehicles, so the perceived solution is to simply make an infrastructure investment.

However, from a technical point of view, high transport costs are created not by the macro-situation, but rather by its surrounding actors. “The problem is that there are three different ministries allowed to set up safety checkpoints,” Mandaville explained. “So you’ve tripled the instances for graft, and you’ve slowed down speed by threefold.”

Mandaville and Herbst’s examples underscore this trend of awarding targeted aid programs to countries with strong records of good governance.

To round out this idea, Dr. Todd Moss of the Center for Global Development stressed that the future of U.S. assistance lies in the public-private partnership. Highlighting initiatives such as USAID’s “Power Africa,” he expressed that “the deployment of commercial capital for public policy purposes” is the greatest enabler of economic growth.

To date, “Power Africa” has secured funds from private actors such as the Africa Finance Corporation ($25 million) and SolarNow ($2 million), combining them with government contributions like those from the Swedish Development Agency ($1 billion).

The conclusion, then, is clear: the purpose of U.S. assistance to the developing world is to enable growth in countries committed to democratic governance. This assistance will compete with that of other donors (such as China) by enforcing metric-contingent funding, and it will promote the public-private investment model as its vehicle for deployment.

These changes are a signal to prospective governments that the U.S. is committed to producing results and not just “buying friends.”

Alfredo Cumerma

Photo: Flickr

U.S. Aid Package to Cuba
“The changes in Cuba are for more socialism,” reads a sign in Havana. As relations between the United States and Cuba become warmer, this statement reflects how the U.S. aid package to Cuba should strive to protect its notable accomplishments in human development.

An improved U.S. aid package to Cuba is essential, and with it must come certain qualifications and stipulations that benefit both the U.S. and Cuba.

But what exactly should Americans look for in the next set of policy changes toward the island nation? Here are three attributes to support for an improved U.S. aid package to Cuba.

1. Lifting restrictions on U.S.-backed NGOs

It is true that Cuba boasts one of the lowest rates of extreme poverty in the world—1.5 percent in 2006. But despite this achievement, the island still suffers from food insecurity.

With an average monthly income of $20, even a typical Cuban government employee cannot afford meat daily. Milk, cheese or ice cream are reserved as weekly treats, and an aging population means that Cuba will struggle to meet more specific nutritional requirements in the future.

Yet many NGOs, especially those from Europe, must bypass subsidiaries in the United States and look elsewhere for funding. Major funding partners such as the World Bank, IMF and Inter-American Development Bank are blocked due to American veto powers in these institutions. These restrictions limit capacity-building in the agricultural sector.

In the words of one Cuban teacher, this is all too clear: “People want to leave Cuba just because they are hungry.”

2. Funding for Collective Enterprise

Cubans love to share, and one of the ways the island recovered from the fall of the Soviet Union was through its collective (public-private) business. In fact, the number of small to medium-sized firms has grown to roughly half a million since Raul Castro took office.

Raul has also implemented other changes. Private and hybrid firms can now sell services to each other and to government entities. New credit lines are being issued with unlimited ceilings, and decreases in the value of welfare and food subsidies are motivating Cubans to try entrepreneurship.

For instance, at Bella II Beauty in Havana, one esthetician is now making $42 per month instead of the $14 while under government control. Her business is one such worker cooperative.

“The inspector would come and the products that weren’t from here,” she says, “I had to hide them.”

Under the collective business model, workers can now streamline operations to increase profits, with each having say in their decision-making.

To add to this, the Cuban government is cutting back on expenses, as its banks are unable to provide more than $40 in loans to individual citizens. The Brookings Institution estimates that over 500,000 civil service jobs will be terminated in coming years to halt the bloating of public sector employment.

An improved U.S. aid package to Cuba would, therefore, support economic cooperatives with training, technical expertise, and financial resources to continue their growth.

3. Support for the Housing Sector

Every three days in Havana, at least two buildings collapse on average. This statistic sums up the state of Cuban housing: a cramped, expensive and decaying affair.

Over 85 percent of Cubans own their homes thanks to transfer measures that turned renters into owners during the revolution. But there are 11.2 million residents living in 3.9 million homes. This means that Cubans often live with not only their partners, but also their parents and grandparents.

Government estimates indicate that more than 500,000 additional housing units are required to meet demand, but construction is lagging. In order to reach that goal within eight years, the government would need to build 70,000 units per year, compared to its current yield of 16,000.

This is another opportunity for NGOs to offer properly trained labor and grants, especially since mortgages are illegal in Cuba to prevent real-estate speculation. In the words of prize-winning jurist Rodolfo Fernandez, “Housing is for living in, not for making a living from.”

An improved U.S. aid package to Cuba would preserve these unique advances by finding a middle ground between full-fledged capitalism and the more regulated (think: France) vision held by the island’s citizens.

Alfredo Cumerma

Photo: Pixabay

Data Literacy
The World Bank has launched a data literacy program to improve evidence-based policymaking and development outcomes in Sudan.

Funded by UKAid, experts from the World Bank will work over the next eight months to bridge the gap between data producers and data consumers. The program will bring together statisticians, who produce oftentimes complex development indicators, and journalists, academics and government officials, who use this data to inform policymaking.

“This initiative is timely,” said World Bank Country Representative to Sudan, Xavier Furtado. “In addition to better quality data, the World Bank hopes that the Evidence Base Program will contribute to greater transparency and accountability in how public policy is debated and decisions are made.”

Sudan faces a complex set of development issues requiring sound policy.

The most recent data from the World Health Organization indicates that the under-five mortality rate is 77 per 1000 children, the maternal mortality rate is 360 per 100,000 live births and the number of deaths due to tuberculosis is just over 25 per 100,000 citizens. The most recent data from The World Bank indicates that 46.5 percent of the population in Sudan is living in poverty.

But WHO notes that its figures haven’t been updated since 2013 and Sudan didn’t begin to measure these statistics until between 1990 and 2000. The World Bank also notes that its figures have not been updated since 2009. On the World Bank’s 0-100 scale of level of statistical capacity, Sudan sits just above 51, compared to the average for all sub-Saharan African countries of 70.

Finding solutions to the challenges facing Sudan will require targeted, efficient development programs and leaders cannot hope to make progress without first filling its data literacy and acquisition gaps.

The United Nations Development Program (UNDP) has also been working toward this objective. Since 2006, UNDP has hosted workshops designed to train government representatives on how to understand, analyze and utilize development data – hoping to foster better aid policy.

“We understand that changes will not happen overnight,” Furtado said. But by building capacity to collect, analyze and manage reliable data at national and provincial levels through its new program, the World Bank hopes to ingrain data use into the development culture of the fragile state. In turn, they estimate that better programs and more inclusive economic growth will occur.

Ron Minard

Sources: UNDP, WHO, World Bank 1, World Bank 2
Photo: USAID

Global Burden of DiseaseChris Murray, a professor of global health at the University of Washington Institute for Health Metrics and Evaluation, wanted to understand one simple question, “Why do people get sick and die?” To get the answer, he created a comprehensive database known as the Global Burden of Disease (GBD).

The tool is incredibly useful to policymakers and health care providers whose mission is to keep people healthy. Health is affected by a variety of factors including one’s demographics. Where someone lives play a role in his or her vulnerability to certain health risks; some countries experience higher rates of heart disease due to cultural dietary influences while others lose children at early ages because they do not have access to necessary vaccinations.

In order to effectively address health issues in a given country, there needs to be a clear picture of what the biggest health culprits are. While data that could help paint that picture has existed for years, it has been scattered among researchers, hospitals and governments, making it inaccessible and consequently less useful.

Murray created the GBD data collection to provide information to health workers, policymakers and the general public. It is the largest effort to measure epidemiological levels and health trends globally and contains the collected and analyzed data of more than 1,000 researchers in more than 100 countries.

The GBD is open to everyone and contains a visualization of data that allows for greater contextualization of what has been collected and observed. Experts from around the world have collaborated and continue to update the database to ensure it stays as accurate as possible.

In the 2013 systematic analysis for the Global Burden of Disease, researchers found that since 1990 the global life expectancy for both sexes has increased from 65.3 years to 71.5 years. However, an individual’s life expectancy and the likely cause of death differs based on where he or she lives and the economic status of his or her home country, which understandably plays a considerable role in the individual’s health.

For instance, while there have been reductions in the number of child deaths attributed to diarrhea, lower respiratory tract infections and neonatal causes in low-income regions, these health complications are still the leading cause of death in children younger than 5 years and are more prominent in poor countries compared to wealthy countries.

The GBD delivers information to the hands of people who can provide solutions. It allows health care workers to pinpoint the problem in order to begin addressing it. If governments know their citizens are vulnerable to certain health risks they can work toward identifying the causes and implementing solutions. There has always been power in knowledge, and the GBD allows for the consolidation of knowledge, thereby increasing its untapped power.

Brittney Dimond

Sources: WHO, The Gates Notes, IHME

Photo: Flickr

Voucher Programs: A Better Way to Transfer Humanitarian Dollars?
When it comes to helping the world’s poor, sometimes questions come up that the average person might never have considered.

Once there is an organization or a group that is willing to provide help, how will they do it? What does “providing resources” mean? How are “resources” defined?

There’re a few different ways for aid to be brought in the direct transfer of goods, such as food, clothing and other necessities, from humanitarian groups to the people in need.

However, there are also the methods of providing the impoverished with cash so that they can purchase the goods they deem necessary for themselves.

As Owen Barder, chair of the High Level Panel on Humanitarian Cash Transfers puts out, “A good starting point for our work is the acknowledgment that people are a good judge of what they need, and we should always think twice before putting our judgment ahead of theirs.”

Providing cash-based aid also has the potential to stimulate local economies, as recipients spend the money at small businesses and help their communities to thrive.

According to a study in the Journal of Development Effectiveness published last year, direct provision of cash is the cheapest way to bring aid, with costs coming to $2.99 per transfer. To put this in perspective, providing food directly came out to $11.46 per transfer because of all of the costs to store, package and distribute the food.

To some, it might seem unnecessarily expensive to provide food and other materials directly to those in need. To others, the idea of giving destitute, uneducated people a set sum of cash to spend whatever way they would like doesn’t make much sense, either.voucher_programs

Even assuming every recipient is perfectly ethical, is it safe to assume all of those in need have enough knowledge of nutrition and savvy spending?

Voucher programs, theoretically, are sort of a happy medium between the benefits of cash transfer and direct resource provision. Only slightly more expensive than direct cash at $3.27 per transfer, in the study, vouchers are like certificates redeemable for specific items, usually food.

Vouchers have the benefit of stimulating local economies without the corruption and security risk present with cash transfers. Voucher programs allow those in need to receive the most nutritious food available without the expense associated with food aid.

Vouchers are not the ultimate, game-ending form of humanitarian aid. Different situations will call for different ways to provide aid. (For example, when providing immunizations, it makes far more sense to simply provide the immunizations themselves en masse, rather than money for each individual to get immunized.)

However, it seems that this form of help is relatively underrated when compared to food and cash aid.

They can be used locally, they are relatively cheap to provide and when they are used at events such as voucher fairs, they offer recipients freedom to spend the aid on what they choose, within a specific context of essential items. Fairs like these can even help to address issues like gender inequality.

Said one woman at a voucher fair held by UNICEF in the Democratic Republic of Congo, “Before we came here, my husband and I discussed what we need. In the past, he did what he wanted with our money, but here it’s me who takes the final decision.”

Paul Harvey and Sarah Bailey said it well in a brief for The Overseas Development Institute (ODI). “Humanitarian organizations provide assistance based on agreed principles and standards. At its heart is the principle of humanity – the universal impulse to seek assistance and to provide it to those in need.”

Emily Dieckman

Sources: CGDEV, Europa , ODI, Research Gate, TUFTS, UNICEF
Photo: Flickr1, Flickr2

Kabul City: On the Road to Improvement
When we think of a “bad road,” often times we conjure an image of driving over narrow, uneven or pot-holed ridden paths, usually in the heart of a city or perhaps out in the middle of nowhere. But what if the main road we traversed in our walk to school every day or commute to work was in a state of even worse condition—unpaved and muddy, invisible beneath a cloud of dust?

For residents living in the Qala-e-Zaman Khan neighborhood in Kabul, traveling on roads which match this description was an everyday occurrence. A five minute walk to school became a 20 minute one, with students changing out of their mud-caked clothing several times a day, while also becoming more susceptible to illness as a result of breathing in the perpetual dust.

Left almost untouched for nearly half a century, the need for infrastructural improvements for roads in the neighborhood of Qala-e-Zaman Khan was dire. Fortunately, with the support of the Kabul Municipal Development Program (KMDP), implemented by the Kabul Municipality, a project to build and pave roads could finally begin.

This program was funded by a grant equaling $110 million from the Afghanistan Reconstruction Trust Fund (ARTF). Established in 2002, the ARTF provides a financial vehicle for the government of Afghanistan’s budget, allowing them to make a significant difference in areas such as education, health, agriculture, rural development, infrastructure and governance.

Aside from improving street conditions, an article from The World Bank states that the KMDP organization has more goals in store.

“KMDP’s objectives are to increase access to basic municipal services in selected residential areas of Kabul city; redesign Kabul Municipality’s Financial Management System to support better service delivery; and enable early response in the event of a relevant emergency.”

Since the creation of newly paved roads in this area of Kabul, the quality of living has improved for its people. Shopkeepers have seen their income double now that dust no longer settles on food. Children don’t dread the mud-splattered walks to school, taxi cabs have reduced their fares and those seeking hospitals save time on the newly constructed streets.

The KMDP plans to reach at least 770,000 people with their services throughout the 1,770 hectares of government-owned land. So far, at least 618 hectares have been improved.

The organization has also funded over 310,000 beneficiaries comprising over 100,000 from upgraded roads and more than 210,000 from trunk roads. At least 76,000 indirect beneficiaries have also benefited, including students and staff of schools and institutions of higher education.

With the construction of asphalt roads in neighborhoods that have only known dust and mud-covered paths, residents embrace the positive outcomes that continue to surface with each new step.

Nikki Schaffer

Sources: World Bank, ARTF
Photo: Flickr

New Report Reveals Dramatic Growth in Impact Investments
Socially Responsible Investments (SRI), those that pay attention to the environmental and social impacts of what they fund while still turning a profit, have ballooned. The Forum for Sustainable and Responsible Investment, an association for professionals and organizations engaged in sustainable, responsible, and impact investing, recently released a report detailing the growth of SRI in the United States, showing huge increases in funding.

Coming in at over $6.5 trillion in 2014, the Socially Responsible Investments market in the United States has shown a 76 percent increase since 2012 and has grown nearly tenfold from 1995. “These assets account for more than one out of every six dollars under professional management in the United States,” the report states. The dollar amount is over 200 times larger than the annual flow of Official Development Assistance from the United States.

The growth in SRI is not limited to the United States. The Global Sustainable Investment Alliance, a worldwide collaboration of sustainable investment organizations takes a broader view, looking at the amount of money invested in SRI around the world by region.

In 2014, $21.4 trillion was tied up in SRI around the globe, an increase of $8.1 trillion from two years previously. Europe leads the pack, with 63.7 percent of the total, more than doubling the amount held by the United States. Canada contributes 4.4 of the share, an impressive number considering its relatively small population. In fact, per capita SRI in Canada is higher than the United States. These three regions contribute 99 percent of the total, with Asia and Australia/New Zealand taking .2 and .8 percent respectively.

Europe also has the highest proportion of SRI to total managed assets, with 58.8 percent of all investments channeled towards socially beneficial growth. The global average is just over 30 percent and has grown nearly 50 percent in the last two years.

To be sure, foreign investment by governments to aid developing nations must also be strong. “The global challenges are so complex and the size of the funding that’s needed is so large, traditional funding sources like philanthropy are probably not going to be sufficient to meet it,” said Anna Kearney, associate director for corporate social responsibility at the Bank of New York Mellon (BNY Mellon), in July.

In addition, the issue of how much of SRI ends up aiding environmental and social development in the developing world is unclear.

However, the Global Impact Investing Network — a nonprofit working to scale up impact investing — sheds some light on the answer. The group surveyed 146 SRI firms around the globe and found that 48 percent of the $60 billion under management by these firms was invested in emerging markets. That may be a proxy for the ratio of the $21.4 trillion in SRI that is invested in developing economies.

The trajectory for SRI remains promising. As more consumers look to put their money toward helping the planet and the poor while earning a profit, a growth in investment options that offer this will follow.

John Wachter

Sources: Forum for Sustainable and Responsible Investment 1, Forum for Sustainable and Responsible Investment 2, Global Impact Investing Network, Global Sustainable Investment Alliance, The Guardian, Organization for Economic Cooperation and Development
Photo: Flickr