Raj Kumar’s new book offers a strategy for transforming the global aid industry. Here’s an excerpt

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum. Author: Raj Kumar, President and Editor-in-Chief, Devex

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This excerpt is from Raj Kumar’s book, “The Business of Changing the World”. The book was chosen as the World Economic Forum Book Club’s monthly book for June. Each month, a new book is selected and discussed among the group, with the author joining in on the last day of the month to reply to some questions from our participants.

Join here: wef.ch/bookclub

At Harvard’s Kennedy School in 2000, the year we started Devex there, the atmosphere was heady. The internet had arrived and was turning the world upside down. That year two Harvard Business School professors, Michael E. Porter and Jan W. Rivkin, published a paper entitled “Industry Transformation,” in which they argued that the internet was transforming businesses in many sectors in a revolutionary way. Indeed, five of the ten most valuable companies in the world today were formed during the internet revolution.

At the same time, on the other side of the Atlantic in West Africa, a ten-year-old girl named Jaha Dukureh was grappling with the fact that she had already been promised to a much older man in New York. At one week old she had undergone a ceremonial brutality common in her country, the Gambia: her labia and clitoris were cut off in what is known nowadays as female genital mutilation, or FGM. Two hundred million women and girls in the world today have undergone this horror, which, among other things, increases the chances of death during childbirth. Now, she was soon to join the four hundred million women aged twenty to forty-nine alive today who were forced to marry while still girls, which meant, among other things, she wouldn’t get an education.

This internet era we saw budding in 2000 ultimately brought the decoding of the human genome, the development of artificial intelligence we can speak to in our homes, and such prosperity that well over two thousand people around the world are billionaires in US dollars. And yet, today 10 percent of all people on earth are still living in “absolute” or “extreme” poverty. Those adjectives are arbitrary but important. They’re an attempt to describe people who are so destitute their day-to-day survival is in doubt. Some economists refer to people in these circumstances as the “ultrapoor.”

In the country of Dukureh’s youth, the Gambia, half the people live in extreme poverty. In mine, India, it’s one-quarter of the people. Where there is extreme poverty, it’s not simply about not having enough income. Economists might measure poverty in dollars and cents, but it’s actually the sum of many interconnected deprivations too awful to put a price on. Not having enough to eat is one, sure, but another aspect of poverty is the girl with no say in when and whom she marries, how many children she has, or whether or not she gets an education. These injustices don’t just make people poor, they keep people poor.

An entire industry dedicated to ending that kind of poverty has been growing for well over half a century. The names are famous: UNICEF, World Bank, Save the Children, Bono, Bill and Melinda Gates, Malala. The industry writ large is enormous: each year more than $200 billion is dedicated to aid for the poorest people and countries.

Initially, the booming aid industry had been slower to adapt than other industries had been. This is probably because the transformational triggers that Porter and Rivkin identified—disruptive new technologies, “a change in what customers need or want,” and new regulations—were not in place. Today, they are. The new aid industry has the kind of ambitions we usually associate with Silicon Valley disruptors like Uber, Facebook, and Tesla. A confluence of related technology trends—increased internet connectivity, biometric identification, and mobile banking—is making it possible to reach the world’s poor directly and get real-time results about what’s working and what isn’t. Aid recipients are adopting the expectations of customers while donors expect results, not just feel-good information about how much money was spent on a school or how much medicine was distributed.

We are on the precipice of a new global aid industry, one that is undergoing massive transformation in three fundamental ways. First, there is a shift away from the dominance of a few big foreign aid agencies and established philanthropies into an era of more open competition. There are new players, including hard-charging billionaire philanthropists; for-profit businesses and investors aiming to make money and do good; “pure” social enterprises, “buy one, give one” companies; online crowdfunding sites; and many small startup initiatives working throughout the world. And there are new partnerships, some with major corporations, pension funds, and ordinary investors. The aid industry—formerly a closed club of mainly expat professionals—is fast becoming a global industry in which startups and social entrepreneurs challenge the power and influence of foreign aid agencies in Washington, London, and Brussels.

Second, there is a shift from a wholesale model to a retail model of aid. The wholesale mind-set envisioned aid projects as the main “unit of activity.” These often large-scale, multiyear projects are designed to reach entire populations over a set period of time within a particular budget. They are structured around identifying a problem that a population is facing, designing a solution, and implementing that solution through a cascade of contractors, subcontractors, grantees, and independent consultants—perhaps checking in at the midpoint and end of the project to monitor its actual effectiveness. Today’s technology and connectivity make it possible to do something very different. Now the individual in need, not the project, is becoming the main unit of activity. The aid industry today is increasingly targeting funds and tailoring programs to specific individuals and communities. These programs are set up like a retail business would be. They’re designed to react and iterate based on customer feedback. This is part of a major shift toward seeing aid recipients as “customers” of aid instead of nameless, voiceless “beneficiaries.”

Third, this growing focus on figuring out and rewarding what works is unleashing creative new approaches to solving the world’s biggest problems, including deeply rooted injustices like child marriage that are so linked to extreme poverty. These go well beyond the economic analysis typically associated with aid projects to include behavioral science, human-centered design, and systems thinking. Delivering results for the world’s poorest people now entails a new way of understanding poverty, hunger, disease, lack of education, and other societal ills—and what to do about them.

There is another, harder to pin down, shift going on—in attitude. The global aid industry has long operated with an underlying assumption that the most important thing is to have good intentions. This is, after all, a kind of charity. The World Bank lobby has a sign that says, in jumbo font, “Our Dream Is a World Free of Poverty.” USAID’s bags of grain delivered to hungry refugees say, “From the American People.”

For as long as people have been giving money and help to strangers, after all, they have felt driven by the intention to do good and, often, to take credit for it. Even the word “charity” derives from the Greek word agape, which refers to unconditional love for one’s fellow human beings.

The concept of charity, in other words, has been largely about the giver. It’s “our” dream and it’s “from” us. It’s a sign of “our” love: the good people who make a sacrifice to help others. When it’s all about the sacrifice, not surprisingly the amount we give somehow equates with how much love we have for those in need and, ultimately, suggests how good we are. I attended Catholic school growing up, and I recall that when a local priest named Monsignor Cassidy visited my eighth-grade theology class he made this very point. True charity, he said, is about “giving from your want.” In other words, giving so much it hurts.

This attitude is being turned on its head. In the new aid industry, giving is increasingly being evaluated not by the goodness of the intentions or the amount of money given but rather by results. Are fewer children stunted? Have more families become self-sustaining? How much good has actually been accomplished and for what cost?

Taken together, these changes are transforming the aid industry from an “old aid” model to a very different “new aid” approach.

Old aid said: give things away for free. New aid says: where it makes sense, give things away for free but do so in a targeted manner. Limit the time duration. Pay attention to market dynamics and the broader systems at play. Work to get local economies going on their own and to get people back to work.

Old aid said: come in from outside with the Big Idea. New aid says: ask local people what’s holding them back. Listen to them. Then provide support for their own ideas, which are usually smaller, more incremental, and more realistic.

Old aid said: development is a project with a budget and a timeline. New aidsays: development is a process. Build a business model that is self-sustaining, long-term, and can adapt based on shifting circumstances.

Old aid said: help the victim. New aid says: support the most powerful force for changing a person’s life—him- or herself.

In 2015, the General Assembly of the United Nations endorsed the Sustainable Development Goals, a list of seventeen ambitious targets for the world, to be reached by the year 2030. At the top of the list, which was signed by 193 countries including the United States, is ending extreme poverty. Other goals include eliminating hunger, radically improving human health, and reducing inequality and discrimination.

To some, these goals may sound quixotic, hyperbolic, unachievable. Really, in just a decade or so we’re going to eradicate several diseases and end extreme poverty? These are, after all, challenges human beings have faced since the advent of our species. If we follow the approach of the traditional aid industry, the cynics may well be right. Just writing bigger checks for larger aid projects won’t yield the kind of results humans have been waiting millennia to achieve. Even so, the new aid industry has largely taken these goals to heart and is working to eradicate specific diseases, dramatically improve nutrition, transform education and healthcare systems, and make extreme poverty a thing of the past. Could we possibly achieve these goals?

Consider the powerful new technologies and the tremendous wealth created in our time. Entire industries are being transformed before our eyes in what the World Economic Forum has termed the Fourth Industrial Revolution. Even the way we live day-to-day is changing. The aspiration to drive your own car is diminishing in favor of the convenience of on-demand transportation, which explains why Uber and Tesla are each worth as much as General Motors. More than half of all Americans now get their news from Facebook, a new reality with concerning implications. And something as basic as going to the store is changing as e-commerce infiltrates everyday life. Amazon, with a market capitalization above a trillion dollars, is now more valuable than the next twenty-one American retailers combined, including such massive companies as Walmart, Target, Home Depot, and Costco.

Ready or not, a similarly radical transformation is coming to the aid industry. As I will detail in this book, there’s a tidal wave of new actors shaking up the way aid work is done.

Jaha Dukureh ultimately was forced to cross the ocean and marry at fifteen. But she escaped and argued her way into a New York City public high school, even without a parent to consent. Later she settled in Georgia, where she got a college degree, remarried, started a family, and founded a small nongovernmental organization (NGO) called Safe Hands for Girls. It’s not exactly well-resourced or well-known. In one example she shared with me, Dukureh went back to the Gambia and borrowed a car. She drove around the country, attending all of the Gambian president’s speeches and appearances until finally he agreed to meet with her. In 2015, her campaigning led the president to outlaw FGM.

How quickly the aid industry transforms and whether it leads to achieving the global goals will be up to grassroots leaders like Dukureh. It will also be up to aid industry professionals, voters and taxpayers who fund foreign aid, ordinary givers and billionaire philanthropists, corporate and nonprofit leaders, and, ultimately, all people affected by global poverty, pandemics, climate change, and human rights infringements. In other words, it’s going to be up to you.