Friday, January 15, 2010

How *Not* to Help in Haiti

Whatever you do, don't text your donation (GigaOm):

It usually takes 90 days from the time of donation to the time it is received by the intended charity, in part because they are collected through each customer’s normal cell phone billing cycle. That’s eons in disaster recovery time
Update: Please don't contribute to anything to related to the United Nations: "U.S. Sends Help, UN Wants Money" (Claudia Rosett). With the lack of transparency, lack of operational urgency and taking credit for those who have it, it's not difficult to understand how some might conclude the organization were a scam or something.


alan said...

Ok, I get the point about cell phone billing cycle.

(link below) But if the money for disaster relief is really saved in advance and not much of the actual disaster money received now will go to Haiti (instead to the next one), then why not use the cell phone?


Thoughts? I'm not debating, I'm looking for opinions.

Clement Wan said...

Two thoughts on this:

(1) The first is that if reliant on billing cycle, it is no wonder that disaster relief agencies need to rely on the current disaster to pay for the next one. On the other hand, I would suggest that while there must be a certain amount of money spent on preparedness for the next disaster, the previous monies are being used to leverage money being contributed now.

Like all things, I would suggest that there isn't any reason that the velocity of money to impact hasn't improved with technology. Certainly the post would likely have been more true for the past, but I would also suggest there isn't a reason why it won't be considerably less true for the future.

Further, if there is a silver lining on disaster relief, it is that as countries get wealthier, they need less of it. Certainly population sizes may be increasing, but the impact is reduced considerably by development and wealth - and most countries have seen this occur in the last several decades - and I would suggest will continue to do so. As part of this virtuous cycle, this will also mean more money available when disasters do occur. For a disaster relief organization, this will mean to best leverage their resources, they should be leaner when disasters aren't happening, ensure they have payment systems where they can quickly access cash when disasters do occur, and involve themselves organizationally more to assist in the rebuild.

(2) Then it's an issue of options. Given the lack of empirical data being divulged in the linked email, and while I can respect the importance of the costly work to follow - both in Haiti and in preparation for the next disaster, making donations as fungible as possible is still important.

If we take the cynical view, as the email points out, we are more generous at times of disaster and therefore contribute more. So while the email argues for deferring contributions, it would seem to me to result in fewer donations over time. Granted, you suggest that instead encouraging gifting in the most convenient way possible - ie texting may be a better alternative. Perhaps it is, if you really don't have an alternative.

But surely, making funds available to organizations earlier rather than later is better because it (a) gives them ability to choose how and when to use the money and (b) reduces transactional costs if they need to access funds immediately through mechanisms like factoring. By choosing a mechanism that gives them funds 90 days out, you are forcing them not to use the funds - whereas if you look at the plea by partners in health for health care professionals, it suggests that they will be consuming considerably more cash in this crisis than they projected with their existing organizational resources.

alan said...

Yeah, I agree with all of that.

The anonymous letter also mentions that money earmarked for disaster relief must be used for that, and won't be able to be used for (re-)development.

So I think the underlying point is that disaster monies are in high supply, and development money is not. I would also like to see some empirical evidence.

Good point about technology improving the gap, if not now, then in the future.

To be sure, I wouldn't have ever thought to give money via texting for the intuitive reason that the mobile company is taking a transactional cut (whether true or not).

Clement Wan said...

In this case, I was reading that to their credit, the mobile companies are forgoing their cut on the donations via text. AT&T in particular was charging initially but then reversed all the charges (it was high like 50 cents a pop).

As an aside, and interestingly (though frighteningly), William Easterly has a post that includes a link suggesting that an expectation of outside help may cause governments to underinvest in disaster prevention.

That said, I didn't quite interpret the email as to saying that we should be giving more to development but on second read the comment about "make hay
while the sun shines" is the subtle hint. You probably know though how I feel about development and am particularly cynical here about both the utility and sustainability of development funds.

I've often thought that one could have more impact in a developing country through a thriving business or alternatively by sending in good property rights lawyers and economists than the traditional dig ditches, plant trees model - but that's for another time.