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Following the Money in the Humanitarian Industrial Complex

When a large NGO arrives in a disaster zone to respond to a crisis, one of the first things they need is a set of wheels, but not just any wheels—what works in Kansas City doesn’t work in Khartoum.

In order to convert factory-issued Land Rovers into armored behemoths, aid organizations need help. For this, they might turn to an independent contractor like Guava International—the world’s only authorized retrofitter of Land Rovers—or one of the 200 other exhibitors present last week at Aid Expo, a convention in Europe targeted at buyers and suppliers of humanitarian aid.

With a total global expenditure of over $1 Billion in 2011, a leading NGO like Oxfam International has a lot of money to spend. And Aid Expo—awash with flashy marketing speak, simulated driving machines, and corporate sponsorships—underscored the fact that despite its name, the non-profit sector represents a major business opportunity for commercial enterprise.

Few would argue that the main actors of the humanitarian sector—NGOs, governments, the private sector, and the UN—share the sincere aim of providing assistance to nations that need it most. Some of those same actors though may be less keen to reveal just how prominent the profit motive is within the industry of aid.

“This whole thing is a business,” said a representative of a major NGO, who preferred not to be named. “But donors don’t want to see it that way. They would be burdened by knowing what we know.”

Carsten Voelz, humanitarian director of Oxfam International, said in an interview with GOOD that while the cozy relationship of non-profits and for-profits may seem counter-intuitive, in reality it’s mutually beneficial.

“We are turning every cent three times before we spend it so [an event like this] is an opportunity for suppliers to convince us that they have something better, something newer than we are currently using,” Voelz said. “But engagement with the private sector is also for us to influence their practices. We need to be realists about how much change [Oxfam] can trigger in the world from our services alone. We need to be influencers.”

Barry Coleman, executive director of healthcare transit non-profit Riders for Health, says that the relationship between NGOs and commercial contractors is indeed complicated and misunderstood by donors, but it is necessary nonetheless.

“We as an organization are not interested in property acquisition, but it makes more sense for us to buy the vehicles we use and lease them to [the Gambian] Ministry of Health, who pay us per each kilometer they use," he said. "That system only works based on the trust that comes from us being a non-profit.”

As much as NGOs rely on for-profit contractors for innovative supplies and solutions, they rely heavily on private donors for the ability to purchase those supplies in the first place. Competition among NGOs for donor dollars is no small matter. Because of this, NGOs often find themselves forced to spend on what donors can recognize and identify with, rather than what actually works or is really needed in the field.

Maggie Heraty, of the Humanitarian Logistics Association, cited the example of the 2008 tsunami in Sri Lanka, when she struggled to find ways to spend the millions of dollars in donations that poured in. Simultaneously, she said, projects elsewhere in the world were strangled for funding, such as repatriation of refugees to North Africa.

“Donors like visibility,” Heraty said during a panel discussion at Aid Expo. “They’d much rather pay for a bucket with a logo on it than the fuel to drive my truck to deliver the buckets—it’s not sexy if you can’t put your logo on it.”

Coleman said that in the packaging of aid for donors, elements crucial to doing effective work can become stigmatized.

“We’ve created somewhat of a monster in this sector,” Coleman said. “You end up with this question from donors: ‘If I donate £1 for a blanket, how much of it goes to admin and how much to a blanket, because I don’t want to pay for admin.’ But in reality what we do is mostly administration.”

Even in light of this wariness from donors, the amount of money funneling into aid by both private citizens and governments is robust. In 2011, the US government donated more than $20 billion overseas, a sum that Mitt Romney says he will slash. British Prime Minister David Cameron recently earned praise from humanitarians for agreeing to adopt the UN’s call for developed nations to donate 0.7 percent of GDP to foreign aid. In 2010, the US donated just 0.19 percent of GDP.

Donors keep giving, but simultaneously, the need keeps growing. That the industry of humanitarian aid has become so vast indicates the scope of need in the developing world. But Oxfam’s Voelz says that even with an increase in funding, the goal is for NGOs like Oxfam to get less involved in the nations they serve.

“The effective response [to disaster] is national level response led by national authorities and civil society,” Voelz said. “There’s still enough work to be done anyway—we will reinvent ourselves—but our wish is that we don’t have to play fire brigade so much because it’s not effective.”

To further this end, Voelz says that macro trends of the industry are shifting towards more ground-up, market driven methodologies—largely aided by the proliferation of mobile phones—rather than the top-down approaches of the past.

“If you bring free food into a place, you undermine food production,” Voelz said. “But if you actually stimulate the demand by getting the cash in quickly to the people using [cash transfers to] commercial mobile phones, people can then access the market and then the market accesses the producers. You’re stimulating rather than undercutting.”

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