The Business of Giving
Gabrielle Daines Gay
Remarks delivered at the Extreme Affordability Conference, University of Utah, January 20, 2017.
Today I want to talk about something I don’t think gets discussed enough. We often hear about success. People love to share when things go well. But we don’t often hear about failures. Abject failures. Failures that came from good intentions. Failures where great amounts of money were lost. Failures where things are worse than when you began.
In 2010, 32 tractors were donated to a farm project in Mpumalanga, South Africa with the goal to promote small-scale farming. Five years later only six of the tractors were even running. The farmers didn’t have enough money to fuel the tractors and one by one, when the tractors broke down, there were no parts, money or knowledge to fix them. A picture accompanies the report: tractors sitting, rusted out, on fertile fields.
In the report one farmer said:
Instead of assisting farmers, [the program] brought devastation and hopelessness. Before, we would plan in advance to get the field plowed, but we were given a false sense of hope. Now we are sitting with heaps of fertilizer and seed that has not been used.[1]
Let’s go to Uganda. At a cost of hundreds of thousands of dollars, a top-of-the-line MRI machine was donated to a cancer clinic. It is the only MRI machine in the region, intended to serve patients from as far as Sudan. The clinic and the MRI machine now sit empty and silent. The daily power surges fried its power source and no one knew how to fix it. There it sits, a memorial to good intentions gone bad.[2]
You may chuckle at these first two examples of misguided donations in Africa, but this third example is a very personal story because it involves my own family.
In 1968, my great uncle Sam was working with the Ford Foundation on a project intended to help Chilean peasants in agriculture. Young Sam persuaded his six older brothers, my grandfather being one of them, to partner with him. All the brothers were successful doctors or lawyers and they were all raised on, and owned, farms. They understood what success required in the unforgiving climes of Northern Utah. The brothers pooled together some two million dollars to buy a fundo, import modern farm equipment, purchase the right seeds, import the best suited breeds of cattle, etc.
Together they purchased a most beautiful and fertile country estate on the banks of Lago Llanquihue from a German family. Fundo Alhucemos was over 7 square miles and had its own town, home to its 75 workers and their families. Utah State University, an advisor to the brothers, opined that the fundo with its climate, water and topsoil was one of the most outstanding agricultural properties in the entire world — anything could grow there.
Each brother took a turn managing the farm. They began with wheat, barley, potatoes, sugar beets, milk cows and cattle operations. And they even brought in teachers to teach the children. Fundo Alhucemos was undertaken to help the people of Chile — it was not project designed to make a profit. They envisioned reinvesting the proceeds into the fundo and its people.
Things ended badly — very badly. By September 1970, not two years later, the fundo was abandoned. The rise of Salvador Allende — elected president in 1970 — was a time of great political upheaval in Chile. The foreman of the farm was murdered. One of the police investigators sent in to investigate was murdered and the other was never found again. The house was burned, the machinery stolen or ruined and the cattle gone. The little town was desolate and the workers scattered. The last Daines brother fled under the cover of night while bullets flew. Failure was the experience of my family in Chile.
Unfortunately, good intentions often, maybe most often, end in failure. This is true in the developing world, but also in the developed world. There is a famous saying: “The road to hell is paved with good intentions.” We need to carefully study each failure and one by one glean all the experience and wisdom possible. Only then can we become wise. We should analyze what elements led to each failure? Pogo said: “We have met the enemy and he is us.” Our presuppositions, our methods, our culture, and our ignorance are often what hold us back from achieving our desires to help. What are the questions we should ask about our failures?
1. What societal need did we respond to? (Demand)
2. What were our inputs? Money, personnel, expertise, time, facilities, legal, logistical, educational, governmental? What inputs would be required for each level of success? Jim Collins has a word to say about this. We must be careful to separate the inputs of our efforts from the outputs. So many charities today are “ranked” by how much money they’ve raised, the credentials of their leadership or the percentage of budget that goes to overhead and management. These are all inputs! This is akin to ranking football teams by the credentials of their coaches, the depth of their funding or the size of their stadium. We all know this would be ridiculous.
3. What were our outputs? How did we measure them? Did our outputs respond to the original problem we were seeking to solve? Were our outputs consistent with our idea of success?
4. Were the levels of the inputs sustainable and reliable? To what degree?
5. Did we confuse seed funding with operational funding?
6. Was the project synergistic with the local people and environment? Consider culture, religion, family, tribal, governmental, social aspects. To what extent did we involve local people and entities in the work?
7. Did we have the right people on the bus?
8. Did the government and legal systems allow us to accomplish our vision? In what ways did they support or hinder our efforts?
9. Did our work result in strengthening local participants? Did they have a stake in the project’s outcome? Were they decision-makers and major actors? Was the project a home-grown and owned project or a detached “donor” project?
Cracking the Ensign Nut
Let me shift gears here to tell you about a project that began about 12 years ago and that I’ve been working on for almost three years now — Ensign College of Public Health in Ghana. Here are some of the realities I have experienced doing work in West Africa.
Seen for the first time as an American, West Africa is a land of rawness. There is an exotic honesty to the land and people. Initially you see wide cracks in the red dirt when land is parched for rain. You see the flood zones where farms, the sole livelihood of so many families, have been swept away. You see the mangoes of your dreams hanging casually on trees. There is an unseen world of parasites that hides invisibly in the beautiful waters of the rivers that wreak havoc on the digestive tracks of so many children. And, in these first views, if you look more closely you see all you don’t know about this world.
With time your eyes adjust and you see more. You see an indomitable people who doggedly replant and rebuild every time disasters come. You see the mistake of overcomplicating matters — sometimes things really are that simple. You meet individuals, supermen and superwomen, who have devoted their lives to honestly and intelligently trying to bring advancement to their people. You see that in many things, Africans have much more to teach us than we have to teach them.
Ensign College of Public Health was the dream of my parents-in-law after living in West Africa for three years. My father-in-law is a successful businessman and investor and my mother-in-law a true humanitarian. Together they’ve built something they hope will sow lasting seeds of change in Ghana and the West Africa region.
Ensign College is a campus of ten world-class buildings built on 50 acres of land along the beautiful Volta River. It is physically secure with reliable water, electricity, and internet. We built this campus with an eye to the future — there is excess capacity and ample room to expand. Currently the college offers a Master’s Degree in Public Health and we have 75 students. The University of Utah has been our invaluable academic partner. The project’s primary goal is to provide the knowledge and skill sets to a diverse group who will transform the country’s public health system.
Not for one day has Ensign College felt like a typical charitable endeavor — because it is not. And this was deliberate. In my role at the time as Director of Philanthropy at Kensington Capital, I determined to adopt certain professional maxims. One of which was that if the work Kensington was doing could not be continued if we left, we ought not to do it. This is the argument of sustainability. Charity, by definition, is not sustainable. When an effort finds its livelihood built on independent donated funds, it is not sustainable. It is also not efficient because continued efforts are dependent on securing new donors at each stage. I think it is essential to view givings with these things in mind.
For Ensign College I knew I needed to summon the smartest people I could find to figure out how establish this college and develop some sort of resource-generating mechanism that would sustain Ensign in the years to come. If we couldn’t do this Ensign would be in danger of becoming another relic in the world of good intentions — a rusted tractor on a fertile field. If we succeeded, then Ensign College would live up to its name. It would be a beacon of knowledge and skills, changing public health in West Africa.
We needed to generate enough revenue to support Ensign and tuition was our single source of revenue. To compound the problem, in West Africa, the market can only bear about 10% of the cost full US tuition. It was obvious that Ensign’s survival would depend on our ability to develop other streams of revenue.
There are many excellent groups who want to help and do good work in West Africa. Logistical realities, poor basic infrastructure, local customs and compliance issues, high risk profiles all keep groups out, or make their startup efforts costly and less than successful. West Africa is a great host for bacteria and parasites, but it is not a friendly host for agents of change.
Ensign provides a world-class hard and soft platform on which smart, well-intentioned groups can dock and do their work — a place where innovation can occur. Multi-national pharma companies wanting to develop delivery models for low-cost pharmaceuticals, med-tech startups navigating Africa’s unique mobile landscape, NGO’s investing in sanitation and other academic entities — they can all find a base at Ensign Campus. Many of the risks can be limited by the Ensign platform. The University of Utah resources at Ensign allow for world-class data-collection and research. Each project can build on the political, business, and healthcare connections Ensign has already developed. The facility is ready, it is safe and it is capable. Groups can immediately begin doing what they’re best at and not worry about everything else. Most valuably I believe, we can create a vibrant epicenter of knowledge from which life-changing innovation will flow. This is our vision.
What are my key learnings so far in this journey? I will share two. First, I’ve learned working in Africa is that people matter most. The greatest cause of disappointment and frustration has not been Ghana’s inexplicable legal system (did you know that land can be simultaneously “owned” by four entities) or its severe economic fluctuations. It has been people. I’m thinking about sending a couple of them a bill to cover treatment for the baldness they caused me. At every turn these naysayers make our efforts difficult and are highly resistant to break out of their dependency cycles. Most harmful is their effect on those around them. I would scientifically classify them as “contagions.” And, more often than not, these people are not the Ghanaians; they are people I’m working with on this side of the pond.
On the flipside, some of our leaders come from nowhere. We hired a wonderful woman named Josephine to be in charge the kitchen and the 75 apartments at Ensign College. Little by little she has been given more responsibility and each time she rises to the occasion. Josephine is now Hospitality Director and a valuable part of our executive team. She has implemented student meal and room plans. She organizes and hosts large events. She runs the apartments like a hotel and our dining hall has the reputation of a wonderful restaurant. She is responsive, transparent and ambitious. She has earned my confidence and respect.
The second lesson I’ve learned is that charity creates dependency and this saps individual initiative. It has largely been the African experience that foreigners come into their country with exploitive ambitions or they come with good intentions, a predetermined line of action and a bag of resources. Fundamental to my parents-in-law’s commitment to build a college was their desire to tap to the root problems of West Africa’s health system; they would not be content remedying scattered issues in the branches. They wanted to enter in at the capacity-building level and sow seeds of knowledge that could forever transform lives. This means that unhealthy cycles of dependency must be broken. At Ensign College we can bring knowledge to the people and we can enliven them to their ability and duty to act, but the power of change resides with them. Lasting change can never be imported. I think there is a valuable lesson here for us as well. Are we caught in dependency cycles ourselves? Are our altruistic endeavors dependent on the largess of others? Do we excuse some of the realities or responsibilities of our efforts saying, “It’s OK, because I’m doing “good.”? Why follow roads of unhealthy dependencies that lead to failure when there is a better way?
The Power of Innovation
The solution for the African continent is not more donations — it is innovation. The most successful donations will cause and support innovation. When George Gilder wrote, “Knowledge and Power,” setting out the information theory of capitalism, I doubt he imagined that his ideas would find application at a small seedling college on the banks of the Volta River in Ghana.
The basic premise of the book is that we live in an economy not of money, but of knowledge. When transactions occur in a marketplace, it is not an exchange of money, but it is first and fundamentally an exchange of knowledge that occurs. Money is important insomuch as it is an indicator of value, but it is the knowledge itself that has true intrinsic worth. He argues that wealth springs from the expansion of learning and information. Any developing or advancing society will find its propellant in innovation and entrepreneurs who are constantly pushing on the boundaries of knowledge.
The University of Utah founding goals are knowledge creation, knowledge sharing and knowledge implementation. Since innovation by definition is a bountiful addition of information, or knowledge, to a system. The mission of the University of Utah is really all about innovation!
George Gilder and his theory of capitalism place the entrepreneur as the driver of society and technological progress. Unlike the investor who invests only his money, the entrepreneur capitalizes himself as an input — he has real skin in the game! The entrepreneur is on the ground getting dirty, assessing demand, trying new things, taking risks, failing often and succeeding sometimes. Do you think Thomas Edison discovered electricity sitting in a room studying books or drawing graphs? No! Thousands of experiments tinkering with this new energy, some of which nearly killed him, led to the breakthrough of electricity. This is how Edison viewed failures: “I have not failed. I’ve just found 10,000 ways that won’t work.”
Looking to recruit fellow men to join in his explorations of Antarctica, Ernest Shackleton placed this ad in a 1914 paper, “Men wanted for hazardous journey. Small wages. Bitter cold. Long months of complete darkness. Constant danger. Safe return doubtful. Honor and recognition in case of success.”
In the world of entrepreneurship true successes really are rare. How should we look at a success? Through the Gilder lens we would see success as an innovation that introduced new valuable information into the world. The level of value it introduced is signaled by the amount of money it is able to attract. With each success comes a societal lurch forward — pressing against old ways and plowing fresh earth — no rusted tractors.
If we were to plot the concentration of innovation on a global map and identify the areas that have the highest levels of innovation, what would those areas have in common? One of the most dramatic indicators would be a vibrant business environment that allows for failure. For the sake of this argument let’s say that one in seventy-five ideas ends up as a success. That means there are 74 failures for each success. The more easily an environment can absorb losses and not penalize people for failing, the more likely it is to see successes. Most successful ideas start out as crazy ideas anyways.
Think about Airbnb. What do you think the Marriott Hotel Group thought of an upstart company that rented out futons in other people’s apartments? Did they feel threatened by company that owned no real estate or buildings? Well that upstart has revolutionized the hospitality industry.
What do you think automakers and the taxi industry first thought of Uber? A company that owns no cars and produces nothing?
On this day when we are inaugurating a new president in our country, I think it is fitting to remember that the United States of America was once a “crazy idea” held by “lunatic people.” America and democracy were sure to fail. Democracy and freedom embrace failure for what we can learn from it. Further, isn’t it interesting that this land of freedom, and failure, gave rise to the greatest entrepreneurs this world has ever seen? Google, Microsoft, Amazon … Marriott, Airbnb, Uber all began here.
At Ensign College we’ve been guided by this theory to create a highly entropic open space where people, groups, businesses and academics can attempt success in Africa. We envision a collision space of ideas where a wide variety of groups and companies can work side by side in West Africa — learning from, partnering with and being challenged by one another. Additionally, Ensign College allows groups to be embedded in the environment they hope to influence — they can test their ideas against demand and they can better assess the human behavior they are hoping to change. In this panoply of efforts, we believe sustainable innovations will rise to the top. The energy and vitality of innovation will find root in the region and we can move the needle on Global Health. This is the opportunity of Ensign College.
One of the start-ups launched from the Ensign Campus platform is called Health2Go. Health2Go is trying to solve the problem of how to extend the reach of the healthcare system to underserved communities in Ghana, which is most all communities. Without first line care, small problems go untreated, fester, and become serious costly problems. In what specific ways does the current community clinic system come up short? First, as in any resource-limited setting, there is a great dearth of clinics, professionals and medicine. Second, mobility is an issue. A sick or injured person cannot physically transport themselves to a clinic for help. So they stay in their villages perhaps to be treated by a priest, an untrained midwife or family member. Lastly, there are scant elements of education, prevention or early diagnosis at the primary care level. Many good-intentioned groups think the solution is more clinics. Clinics are costly — costly to build, staff and maintain, plus they don’t get to one of the roots of the problem — mobility.
Health2Go studied the problems and is now working with the Ghana Health Service implementing a new system that will reach previously unserved communities. They are putting trained, equipped, branded health service workers on rugged bicycles to regularly service specific communities. If people can’t get to the clinics, then the clinic is coming to them and it is coming with trained professionals who will educate and be the first line of treatment. They have mapped out funding and scaling plans and will roll out Health2Go in two new districts this year. I want you to understand this venture — they are seriously boot-strapping it. There is lean seed money, but no long-term operational funding. The local Health Service is putting their resources on the table too. Ensign College is playing the role of headquarters with faculty and students closely involved in strategy, execution and data collection. Health2Go’s close partnership with the Health Service is important. What they hope to demonstrate to the government is the ultimate cost savings by rolling Health2Go out country-wide. In most instances it would simply be a reallocation of existing resources into a more effective and efficient system. If Health2Go can figure out a functional delivery model, think what other things could be piggy-backed on it.
There have already been several iterations of the Health2Go model. Little failures and experiential, on-the-ground knowledge are helping them refine their plans. One of my favorite things to watch has been the evolution of the Health2Go bicycle. I think they’ve gone through 6 prototypes to engineer a bike suited specifically to Ghana’s extreme terrain and conditions. Each new prototype was subjected to rugged and unusual abuse to see how the bike fared. With a mind to low maintenance and endurance they have come up with an awesome bike.
I have also watched Health2Go brand their bikes and uniforms so that they will be recognized for their new and important role in communities. The NHS and all the workers are very proud of their association with Health2Go. They have become extremely motivated and critical partners. I’m really excited to see where this goes!
The Business of Giving
There are some who think that there ought not be much overlap between the business world and the world of impact or giving — that they are distinct and separate spheres. And there are others who think there ought to be complete overlap, so that social ventures are undertaken only for profit sake. I see a great spectrum in the interaction of giving and business and my experience in this space has led to some strong opinions.
Adapting a Steve Case analogy to suit my argument: “In the words of one skeptic, applying a [business model to giving] is kind of like a houseboat: It’s not a good house and it’s not a good boat.” But in my experience it is “less like a houseboat and more like brunch, … better than breakfast, and better than lunch.”
There is today a new breed of givers. Many of them, informed by their experiences in business, demand efficiency and measureable impact. They want to build something that lasts and isn’t dependent on their continued good will. Business models given place in social ventures introduce rigor, discipline, forecasting, business plans and efficiencies. Without these structures failure is likely.
A friend of mine, wanting to enter the social impact world, came to me seeking an opinion on graduate programs she is interested in — Master’s in Philanthropy or a Master’s in Non-profit Leadership. My strong advice to her was if she really wanted to be effective in the social impact world and if she wanted a graduate degree, she should go get an MBA from the best school she could find. This world does not need another philanthropist trained in the art giving or asking for money. It needs business-minded people who seek to understand the environment of their work and plant seeds of knowledge with integrity and discipline.
In closing I will share a quote from Henry Ford:
The only real mistake is the one from which we learn nothing.
Gabrielle Daines Gay is the Chief Operating Officer of Ensign College of Public Health in Kpong, Ghana and the Cofounder and Executive Director of the Schumpeter Center for Innovation and Development which is focused on supporting market-creating innovation and entrepreneurship in West Africa. Gabrielle received an MBA from INSEAD in Fontainebleau, France, and a B.S. in Economics from Utah State University. She currently serves as a member of the Advisory Board of the Center for Medical Innovation at the University of Utah and on the Board of Directors of Cache Valley Bank in Logan, Utah.
[1] https://www.timeslive.co.za/news/south-africa/2015-03-23-wheels-come-off-farming-project/
[2] https://www.theguardian.com/global-development/2016/apr/18/uganda-health-funding-crisis-radiotherapy-mri-money
