The Business of Philanthropy

Achim Steiner; A Conversation with Badr Jafar

July 18, 2021 Badr Jafar Season 1 Episode 21
The Business of Philanthropy
Achim Steiner; A Conversation with Badr Jafar
Show Notes Transcript

Achim Steiner, Administrator of the United Nations Development Programme (UNDP) and Badr Jafar, Founding Patron of the Centre for Strategic Philanthropy discuss the future of development and development financing, including the role of technology, and how philanthropy's ability to connect with innovation can help re-think development pathways. 

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Badr: On behalf of the Center for Strategic Philanthropy at Cambridge University's Judge Business School, thank you, dear Achim, for taking the time to speak with me on the changing nature of philanthropy and the opportunities that exists for strategic philanthropists particularly in the emerging markets to help address some of the core challenges that are at the very heart of the UN Sustainable Development Goals. Achim Steiner, of course, leads the UNDP, the United Nations Development Program, which has a presence in 177 countries, I believe, and which is primarily focused on the eradication of poverty and supporting human development. And of course, advancing the 17 UN Sustainable Development Goals. Achim formally ran UNFD, United Nations Environment Program for 10 years. And in between demonstrated his dexterity taking up a position in academia as director of the Oxford Martin School at the University of Oxford. Dear Achim, you've lived or worked across numerous platforms in Africa, Asia, the Middle East, Europe, Latin America, obviously, and the United States. So I'd like to start by asking you from where you currently stand, how far back does the COVID pandemic, and the social and economic disruption that is caused around the world put us in our efforts to meet the UN Sustainable Development Goals by 2030?


Achim: Thank you, Badr. And it's a pleasure to join you even though as you already allude in your first question, this is a very tough time. And I think the simple answer to your question is, it's a major setback, I think it is a setback that potentially is of generational proportions also because it is not only a downturn in our economies, it is literally eroding social capital.


It is eroding the gains of decades of development. And for instance, UNDP’s Human Development Report index, will probably go backwards for the first time in the 30 years that it has been measuring human development progress. So, I think whatever figures you take right now those are principally the economic parameters, we are facing a major setback, and people are living it every day. And clearly, we are not yet at a point where we can begin to see you know, that everything is going to recover.


People use terms like V shape recovery, W shape recovery, some recently spoke about a K shape recovery, where some may recover quickly, and others will continue to see an erosion of their work and also of their savings. And so extreme poverty will increase. People will go into debt. Whole nations will go into debt. And I think from that point of view, we are facing a major setback. But out of every downturn comes a moment and an opportunity to recover, to rebuild. And I think the great challenge will be how we actually are able to shape that recovery process from here onwards.


Badr: In that spirit. What do you think the longer term I guess, implications of the pandemic will be including with respect to the broader opportunity you just mentioned, to build back better and perhaps reset our priorities vis-à-vis societal development and environmental resilience?


Achim: Well, clearly, in the current situation, what we have seen is frequently, people talking and referring to a future that is going to be different, building forward better, building back better, I think these are many different narratives that are playing out in societies across the world right now. And they point first of all, to the fact that what COVID-19 has really done in these first few months is to reveal a great deal of what is not right.


The so-called underlying conditions are vulnerability, the lack of resilience, but also inequality, unsustainability, clearly moving very much into the center of our attention. And I think in the way that COVID will shape the future, we're just beginning to see how this will drive change the billions the trillions that are going to be invested in managing and stabilizing the crisis, but how they will also develop and clearly will have an impact. And I think to some who, for instance, take the Sustainable Development Goals and analysis of the current crisis, they're no longer achievable, they are redundant, I would say actually, you may find that the opposite may be true.


We will see. I think people, communities societies prioritize differently, invest in different futures. And that I think creates extraordinary opportunity. And I would venture to say that on for example, the Paris Climate Agreement, we may find ourselves by the year 2030 closer to realizing the targets we set ourselves in the year 2015 than we were a year ago. Look at the Green Deal in Europe, look at Canada, look at China, look at many countries that are actually trying to mobilize significant investments in a transformative agenda.


So difficult to predict, but I think the one prediction that is clear is things will be different out of this crisis, and in many respects could be better.


Badr: So, turning to philanthropic intervention, how do you see the role of private philanthropic capital in helping to address the world's long term social and economic and environmental challenges for the strategic philanthropists that are watching this from the emerging markets? specifically? How would you recommend that they engage with organizations such as UNDP, most effectively? And perhaps more generally, what are the keys to creating successful collaborations between philanthropy and international NGOs engaged in development and humanitarian work?


Achim: Well, let me first of all say, I think in the midst of this unprecedented crisis, philanthropy has been enormously important not only in the volume of finance that it has provided, but also in its agility, its ability to connect to communities, to pioneers, to innovation. And I want to particularly pick up on the last two, because clearly, in a crisis of this magnitude, we have all turned back to the state and public budgets to achieve the kind of scale in stabilizing the situation that is needed.


But at the same time, in moving forward, what we need is a great deal of innovation. We need a great deal of rethinking, I think philanthropy always has the advantage that it can be far more targeted, far more agile. It can take more risks, it can also connect to, let's say, non-mainstream actors whose ideas, technologies, business platform service ideas could be tomorrow's economy. And therein lies the first opportunity.


I mean, clearly, we have a humanitarian moment in looking after our community, the people who are most vulnerable, and there we see a great deal of philanthropy doing an enormous amount of good. But I would argue equally, the kind of strategic philanthropy that you also advocate needs to look at the future, the future of development, and then extrapolate backwards to what is it that we can invest in now, in order to make this new set of futures possible. In UNDP, we established you know, a year and a half ago, in 60 countries, the accelerator labs. UNDP’s accelerator labs were deliberate injection of different kinds of skills into our organization and order to better study innovation in the countries in which we work. And look how we can support governments or indeed entrepreneurs, startups and scaling them up.


I think it is that collaboration between philanthropy and philanthropic capacity to invest and institution such as UNDP, or indeed public institutions in the country, that have the capacity to take things to scale, and to link it also to the public policy arena. Because philanthropy often struggles in taking the ingenuity of what they have experimented with or what they have invested in into a broader public policy arena.


At the end of the day, public policy can prevent or accelerate innovation. And I think it is at that interface that I see a particularly interesting arena. For us as UNDP, the UN's Development Program working in 170 countries connecting to that sea of philanthropy and philanthropic investments that are looking at innovation, and at new possibilities. And I would hope that we will see a great deal more of that interface, not least because together, we can also mobilize the private sector more effectively.


I've invested since my arrival in UNDP, a significant amount of energy on trying to understand how can we help to attract more private capital into the kind of public good outcomes that the SDGs represent. And we have developed these SDG impact guidance and norms for bonds and equities. And we are beginning to see financial markets investing into that kind of, let's say, hybrid future investment proposition that for far too long I think has not worked well.


Badr: And on the topic of that interface, and engagement of private sector, are you witnessing an increase in the use of blended finance?  Economic development projects, and how can we enable between donors from different sectors 


Achim: I think we have seen in both the financial markets themselves a broadening of that outlook of where investments are likely to grow in the coming years, new investment markets, new technologies. Take climate change, for instance. I mean, in terms of renewable energy, technology and infrastructure it's a, you know, $300 billion economy that started 10 - 15 years ago from virtually nowhere.


We are seeing, you know, the whole automotive sector transforming itself, not in a generation, but in a period of just 10 to 15 years electric mobility, beginning to become a driver in terms of technology, innovation, but also the markets that will address mobility. And so, whether it is energy mobility, or also indeed agriculture and land use, these are three major drivers of a rapidly shifting set of imperatives to act differently, but also opportunities to invest.


We are seeing massive possibilities. And for instance, countries are now racing on the financial markets and public bonds. and Mexico just a couple of weeks ago raised over 860 million euros in Europe, for an SDG bond that UNDP also accompanied and it was oversubscribed, I think three or four times. So the financial markets clearly see an opportunity, both from an investment perspective, but also the risks of not investing in transformation are becoming ever more present, not just climate change the insurance sector, but indeed, the costs are transcending, you know, narrow sectors. Its national economies, their competitiveness, and indeed, the competitiveness of businesses, the major corporations in the financial markets, clearly beginning to sense that there is a need to invest in a different future pathway.


And I think, how public policy can incentivize that, you know, we have fiscal policy, we have subsidies, but we also have regulations for markets, we can incentivize, we can reward investments in the future, and make the true costs of hanging on to legacy economies and technologies more expensive. That is what we have done. for the better part of the last 100 years. It's what has driven innovation, new markets and economic growth for decades. And I think this is a moment in which we will see a great deal more of that.


And it is where UNDP really focuses its attention, when it advises governments helps them to analyze where very constrained fiscal space can still be leveraged with private sector funding at national level.


Badr: So a final question on technology. A few years ago, you were appointed to cochair the UN's Task Force on digital financing of Sustainable Development Goals. What's your work on this identified as opportunities to deploy best in class technology to enhance financing mechanisms around the global goals? And how can we use tech to better engage the community of givers, I often refer to as the retail philanthropy sector? Smaller sums on their own but huge when pooled. For example, as you know, as we have spoken about [Indiscernible] [0:12:48] compulsory and discretionary forms of giving from Muslims around arms givers results in many hundreds of billions equivalent dollars every year.


Achim: First of all, let's I think, just postulate that digitalization will change virtually everything in our lives, economic lives, personal lives, but also in creating new opportunities and new markets in leading together with Maria Ramos, the former CEO of Absa bank from South Africa, the Secretary of the taskforce on digital financial technologies and the SDGs. I must admit, to me, it was an eye opener, partly because we had an extraordinary group of taskforce members from the frontiers of the technology sector, the finance sector, the public regulatory sector, who really took a deep look at what was unfolding already.


And the implications for the future and the report People's Money, it's called People's Money is available on the web for those who want to look a little bit deeper. It was extraordinary. You already alluded to with the wonderful platform that you established looking at that powerful traditional Zakat [phonetic] [0:13:59], for example. Connecting people is one thing that digital does in an extraordinary way. And therefore, you're able to not only connect, let's say somebody who is giving with somebody who is receiving, you're also connecting in a sense transparency.


You're allowing people to aggregate. For instance, in Bangladesh, we believe that millions of micro investors or savers, literally with just $10, $20, $30 perhaps are able to join now. And government is able to borrow in the domestic financial market rather than having to go outside the country for mega national infrastructure projects. This used to be very expensive, very difficult to do.


We now see it happening in more and more countries. Kenya is another country that has lowered the ability of citizens in Kenya to buy into public bonds and therefore, you have millions of people who can come together. But perhaps the most powerful and vital part of FinTech as it is evolving, is going to center around not so much the technology led advancement.


It is an ingenuity of human creativity that we are seeing emerge here. But as with all technology led revolutions, they can either deliver for society, let's say the early, or for those who have captured a market segment. Inclusion is going to be critical. And certainly FinTech in the early years has been phenomenal. We have hundreds of millions of people today, who are able to participate for the first time in our financial system.


They were excluded in the past by virtue of having, you know, maybe no passport or having no address, no credit rating or record and therefore unable to open an account. Today, we have ubiquitous examples of people borrowing through their smartphone in the morning, money to buy produce, go to the market, sell it and repay the loan in the evening. I mean, it is an extraordinary opportunity that's opening up. And I think we will also see much more engaged public investment discussions.


People can have an idea of how are their pension funds being invested, how are their savings being invested, because much of the last 30- 40 years has seen an extraordinary disintermediation between those who actually own the money because we often forget, pensions and savings and virtually all the money in the world belongs to people, not the institutions that manage it for us. And yet, people were essentially left outside of that decision making realm. They were takers, rather than shapers of their investment decisions. And that's not to say that we will, you know, not need professional advice.


But transparency in the market, the opportunity to choose different things that you can invest in. The increasing enthusiasm for seeing your money earn a return, but also not doing bad, but doing something good with it is growing exponentially. Every financial institution confirms that. So FinTech and digitalization are going to change not only the world of finance, but through that, in fact, I think will fundamentally reshape the future of development.


And now we need to figure out how do we incentivize, how do we regulate, how do we engage the public, so that this is a financial ecosystem that we build, where people are able to participate by having first of all access to the digital connectivity, but then also be able to not be simply overrun as consumers, but be empowered to be decision makers about their money and that is going to be a very interesting process. In the larger context of development, clearly, development finance is going to change significantly and it is why also in UNDP, we have invested a lot in the last few years in understanding the future of digital in the way that it will shape the future of development.


Badr: Yeah, as you say, it can be a very exciting time to see how technology is enhancing the impact of philanthropic output. But also as you exactly said, also enhancing the relationship right, the relationship two ways between donors and recipients, and with the overall objective of improving and enhancing impact through an enhanced experience. And thank you for all the fantastic work that you continue to do through the UNDP and really as a champion of best practice around improving and enhancing relationships and broader impact. And thank you again, so much Achim, for speaking with me and I look forward to speaking with you again hopefully next time in person. Thank you again.


Achim: Badr, thank you so much. And thank you also for your philanthropy which I have always found inspiring and look forward to cooperating with you, as you discover new frontiers and ideas.