Capi­tal means responsibility

You have many years of expe­ri­ence in inter­na­tio­nal deve­lo­p­ment work. Has the colla­bo­ra­tion between the various stake­hol­ders evol­ved and is it working better today than it did years ago?

There are promi­sing approa­ches. Howe­ver, I do not see that we have found a formula for how the colla­bo­ra­tion should ideally work.

Where do you see approa­ches with potential?

Where­ver people manage to bring toge­ther diffe­rent manda­tes (huma­ni­ta­rian, deve­lo­p­ment, envi­ron­men­tal, econo­mic and finan­cial), diffe­rent levels (local, regio­nal and global stake­hol­ders) and geogra­phi­cal contexts. One exam­ple from the past few years is the Huma­ni­ta­rian Inves­t­ing Initia­tive in the context of the World Econo­mic Forum, in which I am invol­ved as co-chair. The elea Foun­da­tion takes a forward-looking approach with an entre­pre­neu­rial focus.

But these are isola­ted cases?

We are certainly not where we should be in order to have a grea­ter impact. Offi­cial deve­lo­p­ment aid and huma­ni­ta­rian orga­ni­sa­ti­ons, multi­la­te­ral finan­cial insti­tu­ti­ons and phil­an­thropy must constantly rede­fine their roles and moda­li­ties of coope­ra­tion, parti­cu­larly in fragile contexts and crisis situations.

Where does the problem lie?

When it comes to the major chal­lenges of our time, such as water, energy or health­care, educa­tion issues or the provi­sion of housing for an incre­asing number of people, some of the problems stem from manda­tes and poli­cies that are unrea­li­stic. There is curr­ently no consen­sus on who plays what role and how we can better link the orga­ni­sa­ti­ons with their diffe­rent manda­tes and approa­ches. There are some good approa­ches and successful colla­bo­ra­ti­ons, but the weak consen­sus about what impact we measure reflects the major hurd­les we have to over­come. There is also no clear under­stan­ding of how we combine diffe­rent finan­cing instru­ments in value chains.

Could you give an exam­ple of one of these value chains?

At the ICRC, we have tried to go beyond the purely huma­ni­ta­rian emer­gency when it comes to water supply. Phil­an­thro­pic capi­tal has allo­wed us, for exam­ple, to carry out plan­ning work for water reme­dia­tion projects. On the basis of this work, states were prepared to provide not only short-term emer­gency aid but also deve­lo­p­ment funds. With the support of indi­vi­dual states, we were able to further deve­lop this approach. Owing to the posi­tive results, the World Bank was then prepared to grant a larger loan. Private inves­tors follo­wed suit with the invol­vement of the World Bank.

Where is there a lack of mutual understanding?

The great debate, which still domi­na­tes the discourse on this topic today, is: what impact do we want to achieve and what crite­ria and stan­dards do we use to measure it? We have seen a rela­tively large number of new finan­cing instru­ments and forms of colla­bo­ra­tion with phil­an­thro­pic stake­hol­ders emerge in crisis situa­tions. When it comes to protec­ting the envi­ron­ment and comba­ting climate change, our CO2 emis­si­ons and net zero targets are rela­tively broad-based and measura­ble para­me­ters. By contrast, there are no such targets in areas such as educa­tion, health or good governance.

Do approa­ches such as impact inves­t­ing help because they bring entre­pre­neu­rial ideas to philanthropy?

First of all, it seems important to me that we should not spend money either in the public sphere or in the private and phil­an­thro­pic sphere without defi­ning and checking its impact. Indi­ca­tors are needed to measure when targets are reached. First of all, this has nothing to do with a market economy, but with sound finan­cial manage­ment. It is no longer enough to spend money to solve a problem using poli­ti­cal and moral argu­ments without knowing what effect we want to have and what effect we actually have. Gone are the days when phil­an­thropy was cheap or even free money.

So what is needed is a more impact-orien­ted approach?

I am very much in favour of impact-orien­ted invest­ments. Entre­pre­neur­ship is one of the most sustainable ways to spend money effec­tively. Where, by what means, what effect is to be achie­ved, must become the domi­nant guiding principle.

Does it take entre­pre­neur­ship to achieve that?

Entre­pre­neurs think about how and where they invest and what the effect will be. I’ve always resis­ted seeing entre­pre­neur­ship and phil­an­thropy or huma­ni­ta­rian work as oppo­si­tes. Entre­pre­neur­ship is proba­bly the best guaran­tee of effec­ti­ve­ness, not only in finan­cial terms, but also under a much broa­der defi­ni­tion of sustainable busi­ness management.

What does entre­pre­neur­ship mean?

When we talk about phil­an­thropy and entre­pre­neur­ship, we’re talking about how we can use resour­ces to make an impact. Entre­pre­neurs natu­rally deal with all aspects of the opera­tio­nal manage­ment of invest­ments, effi­ci­ent orga­ni­sa­tion, the compe­tence of employees and the impact on the envi­ron­ment. This corre­la­tes with ‘impact inves­t­ing’ in the best sense of the term. Capi­tal can be struc­tu­red in diffe­rent ways and take diffe­rent forms. In view of the global chal­lenges and the important issues facing our society, it is important to consider how we can best combine finan­cial profi­ta­bi­lity and social impact.

Is there a consen­sus among inter­na­tio­nal orga­ni­sa­ti­ons as to what consti­tu­tes ‘impact’?

There are various approa­ches, and time and again, the danger arises of dogma­ti­sing one aspect or another as a catch-all remedy.

How can it be defined?

Those who provide support must always deter­mine the impact in colla­bo­ra­tion with those who need the support. This idea also shapes the Red Cross move­ment, origi­na­ting from the Swiss ‘bottom-up’ culture. Those affec­ted must arti­cu­late their needs. Conver­sely, money flows only under certain condi­ti­ons. There needs to be dialo­gue between inves­tors and the people who are impac­ted. Without it, there is a risk of disre­gar­ding local and finan­cial reali­ties. Without local roots, capi­tal can hardly have an impact, and without finan­cial realism, capi­tal remains far away from where the problems are. We need an under­stan­ding of the diffe­rent roles in society, and we need to reco­g­nise where support measu­res create poli­ti­cal sensi­ti­vi­ties and even, in the worst case, foster social conflicts.

What role can phil­an­thropy play in our society?

Phil­an­thropy has many faces. It is shaped by indi­vi­du­als and insti­tu­ti­ons. It can be combi­ned with diffe­rent approa­ches. Phil­an­thropy doesn’t have a clearly defi­ned nature. Instead, there are a number of ques­ti­ons that phil­an­thro­pic stake­hol­ders need to ask them­sel­ves today.

What ques­ti­ons?

What contri­bu­tion do they want to make to their own society and to inter­na­tio­nal chal­lenges? Is phil­an­thropy seen as an auto­no­mous stake­hol­der or as part of a support system?

What would that mean?

When phil­an­thropy sees itself as part of a system, it compe­tes with, comple­ments or is subsi­diary to, other aid services that use other instru­ments, and it is on the lookout for new forms of coope­ra­tion; syste­mic approa­ches force colla­bo­ra­tion. Does phil­an­thropy regard itself as a trans­for­ma­tive force or a huma­ni­ta­rian stabi­li­sing force? Here, too, phil­an­thropy isn’t a single entity. The diffe­rent stake­hol­ders have to answer these ques­ti­ons indi­vi­du­ally for themselves.

Is there also a poli­ti­cal role?

There is nothing that is comple­tely apoli­ti­cal in this area. Anyone who gives someone money for projects, program­mes and acti­vi­ties is always inter­vening in an area that is also poli­ti­cally defi­ned. In doing so, they can choose to focus more or less on the current poli­ti­cal agenda. But it’s not just about their posi­tion on politics.

What else is signi­fi­cant in this regard?

Equally important is the ques­tion of how phil­an­thropy rela­tes to the market and market fail­ures. How does it deal with the state and its short­co­mings? How does it respond to socie­tal demands for fairness?

Meaning?

In society, capi­tal is not gene­rally distri­bu­ted equi­ta­bly. Today’s debate about inhe­ri­tance taxes and wealth has a crucial impact on phil­an­thropy. Phil­an­thro­pists have capi­tal at their dispo­sal and are ther­e­fore forced to think about how it is used. Ulti­m­ately, it is about the rela­ti­onship between the indi­vi­dual, society and the state. Where do indi­vi­du­als have respon­si­bi­lity and oppor­tu­ni­ties for action? There are very few issues in our society today that are undisputed.

What follows from this?

It’s diffi­cult these days to simply ‘do good’. Each insti­tu­tion needs to address broa­der poli­ti­cal and social issues. Phil­an­thropy needs credi­ble and consis­tent answers. This is chal­len­ging, as tradi­tio­nal phil­an­thro­pists have diffe­rent ideas from repre­sen­ta­ti­ves of Gene­ra­tion Z, for exam­ple. We need a broad under­stan­ding of phil­an­thropy instead of a reduc­tion­ist definition.

Does capi­tal offer phil­an­thropy oppor­tu­ni­ties above all, or does it mean more duty and respon­si­bi­lity to play a pionee­ring role in solving global chal­lenges such as climate change or hunger?

Expec­ta­ti­ons of soci­ally respon­si­ble conduct have certainly risen. Phil­an­thropy is ther­e­fore more soci­ally and poli­ti­cally defi­ned and deman­ded. There are many people in Switz­er­land who embrace their respon­si­bi­lity as owners of capi­tal. They create foun­da­ti­ons and indi­vi­dual acti­vi­ties. What space they are given and how such acti­vi­ties are judged by society and poli­tics are ques­ti­ons that are in flux. It’s about finding the ideal combi­na­tion of publicly and demo­cra­ti­cally legi­ti­mi­sed insti­tu­ti­ons and private social commit­ment. Phil­an­thropy is part of the effort we need to make toge­ther today to solve the major problems. When I say toge­ther, I don’t mean that ever­yone should do the same thing or inter­fere with each other. Toge­ther means reco­g­nis­ing that the extent of the problems we are facing today requi­res ever­yone to contri­bute where they can.

How can phil­an­thropy itself promote this role? Large foun­da­ti­ons in parti­cu­lar can use their funds to influence or deter­mine the direc­tion of solu­ti­ons, can’t they?

This is a dilemma. They can orga­nise the legal land­scape in such a way that private inves­tors have rela­tively large amounts of capi­tal at their dispo­sal. This is proble­ma­tic in terms of demo­cra­tic poli­tics, because indi­vi­du­als have a dispro­por­tio­nate influence on the shaping of actions and poli­cies. On the other hand, today we also see where the problems of large public insti­tu­ti­ons lie. They have often become part of the poli­ti­cal debate or become embroi­led in bureau­cra­tic prac­ti­ces without having the effect commen­su­rate with their weight.

Do you see a possi­ble solution?

We still have an almost ideo­lo­gi­cal contro­versy about whether state, coll­ec­tive or indi­vi­dual approa­ches are better. I’m stron­gly in favour of checks and balan­ces, comple­men­ta­rity and clari­fi­ca­tion of roles. The soci­ally phil­an­thro­pic approach has its advan­ta­ges and disad­van­ta­ges, as do purely state approa­ches. Today, it is important that we can achieve posi­tive effects and demons­trate that we are credi­bly fulfil­ling an important role in the over­all system and not simply repre­sen­ting the prefe­ren­ces of an indi­vi­dual or a poli­ti­cal trend in an uncoor­di­na­ted way. If the stake­hol­ders on both sides can credi­bly prove this, they will also face less poli­ti­cal scrutiny.

What do inter­na­tio­nal orga­ni­sa­ti­ons need in order to conti­nue to work effectively?

Poli­ti­cal consen­sus-buil­ding is hugely important for aid deli­very. Globally, we see that these acti­vi­ties mostly take place in divi­ded socie­ties with many tensi­ons. For this reason, it is essen­tial that aid also contri­bu­tes to buil­ding poli­ti­cal consen­sus: what does it do to keep socie­ties from divi­ding further?

And is that some­thing that’s missing?

I think what’s miss­ing is the reali­sa­tion that it is crucial how solu­ti­ons are deve­lo­ped and whether they are poli­ti­cally viable where they are applied. Of course, you need evidence and profes­sio­na­lism. But if these are not accom­pa­nied by poli­ti­cal consen­sus-buil­ding, things will be difficult.

How can that work?

The Red Cross move­ment has always tried to design projects and program­mes in such a way that diffe­rent groups work toge­ther. This has worked parti­cu­larly well for water projects, because even in a war, both parties need water. We have ulti­m­ately often mana­ged to persuade warring parties to jointly manage water systems or health insti­tu­ti­ons. Good projects are those that bring people and divi­ded socie­ties together.