The Business of Changing the World documents a recent series of important shifts in social entrepreneurship. Its author, Raj Kumar, reports on how billionaires, technology disruptors and social entrepreneurs are now transforming and dramatically changing the global aid industry. Kumar is the founder of DEVEX, a Washington, DC-based organization that started in 2000, which is a “Bloomberg-style platform for the aid industry,” with more than 150 employees around the world and an audience exceeding one million aid-industry professionals. Kumar is therefore in a unique position to accurately share with us the potentially major shifts within the global aid industry.
His main message is to contrast “old aid,” driven by the giver, in a top-down fashion, often with political—if not colonial—motives, from “new aid,” focused on the receiver’s needs.
In parallel to this tectonic shift between old and new, Kumar identifies several additional evolutions:
An increased demand for results through clearer impact evaluations
More explicit performance metrics and more transparency regarding aid activities
A direct focus on the real needs of the people (these are the customers!)
More effective listening
Kumar then discusses how new social enterprises have matured (e.g., Hello Tracker, Yanus Microfinance) and how many big businesses have evolved to become more in line with today’s ideals. The Lorange Network has already published multiple articles documenting this evolution. See, for instance, the recently published book review on Chouinard’s Let My People Go Surfing, which deals with sports goods manufacturer Patagonia. Other examples include our book review on Nike as well as our profiles of Nestlé’s Laurent Freixe and Partner Group’s Urs Wietlisbach.
Kumar then discusses how aid has increased its responsiveness by directly connecting aid to its recipients. Evolving technology (e.g., satellite imagery and mobile phone providers, to name only two) has proven to be a key enabler for such an evolution. Also, project-based aid programs seem to be becoming relatively less en vogue. Here lies the chasm that Kumar sees growing between new and old aid. In fact, he articulates 12 differences between both forms of aid, among which the following three seem particularly important:
Post-project evaluations (old) versus real-time data feeds (new)
Decision-making close to the funding provider (old) versus decision-making close to the funding recipient (new)
Budget size being a measure of success (old) versus results being the measure of success (new)
Kumar acknowledges that many established aid organizations, both governmental and private, may resist these types of change. He also points out that the effectiveness of aid can be questioned when it is directly linked to foreign policy.
The author then appropriately shifts toward discussing systems thinking in aid. Examples of affected systems include health systems and/or educational systems. Such complex systems make providing effective aid particularly challenging.
An often less-positive systematic dimension might be specific governments: Should aid be given in countries with significant corruption or authoritarian politics? Kumar fails to take a clear position on this matter. The Lorange Network’s profile of Jan Egeland covers an extensive exploration of the subject.
The author reiterates that aid organizations are demonstrating better results. Yet, whether these results will be enough to eradicate extreme poverty remains debatable.
Despite this reviewer’s occasional reservations regarding some of Kumar’s arguments, especially in the book’s final four chapters, the overall message is compelling clear: Aid has dramatically changed so as to be more results-oriented and closer to the recipients. The days of well-meant but largely ineffective traditional aid projects are gone!
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