Hedge Funds for Development? An evening with Ark

September 2, 2010

     By Duncan Green     

I spoke earlier this week at an annual retreat of a very different kind of charity – ARK. Set up by a bunch of hedge fund managers (it prefers the term ‘alternative investment industry’) in ark dinner2002, ARK raises a pile of money from glitzy gala dinners (see pic), and uses it to do what it calls ‘venture philanthropy.’ It focuses on education, child health (especially HIV and AIDS) and child protection and, like better known ‘philanthrocapitalists’ like Bill Gates, is fixated on measuring impact – hence the name, which stands for ‘absolute return for kids’.

The interesting part of the discussion was on what can be carried across from success in business and what can’t (see here for my previous review of Michael Edwards’ very critical book on philanthrocapitalists). When they enter the aid business, captains of industry and finance often act as if they regard all existing aid workers as imbeciles, who could easily achieve their aims if only they adopted private sector practices. What follows this hubris is often a painful learning curve. Sure, the private sector brings great skills in project management and prioritization, but there are some obvious and important differences when they enter the development arena.

In the absence of the clear bottom line of profit and loss, process matters much more – it’s not just about the destination, but how you get there. Is it inclusive? Who’s shut out of the decision making? Development is about recognizing the importance of power, and the way it is endlessly renegotiated and redistributed within society. This is particularly true in the case of children – I didn’t see much evidence (albeit only from a brief conversation and a cursory skim of their materials) that Ark has followed Save the Children and shifted from treating children as victims and beneficiaries, to promoting their rights and ‘agency’ – children as citizens, workers, individuals with opinions and desires.

And the focus on measuring impact and proving success doesn’t always sit easily with risk taking – a venture capitalist happily sees 19 out of 20 projects fail, if one succeeds big time. The same does not go for ‘venture philanthropists’, who sometimes seem just as risk averse as the rest of the aid industry. Are the private sector searchers being squeezed out by the planners?

Judging by our conversation, Ark staff are serious and thoughtful about development, and seem to be going through the same process as many charities before them – starting out with individual projects, then realizing that broader programmes are needed to reach significant numbers of people, then seeing the need to tackle systemic obstacles to development through advocacy (which is best combined with programming, rather than done separately).

But it would be a waste if it just became like all the other charities – what might its private sector DNA add to the mix? My suggestion was that Ark should focus on understanding and influencing developing country elites, a much-neglected group in our campaigning and research. How to change their attitudes to their poor compatriots, paying their taxes, respecting labour standards in the firms they own etc etc?

turkey christmasAnd in ‘turkeys voting for Christmas’ mode, might Ark like to use its links with hedge funds and other financial institutions to get some insider support for a Robin Hood Tax? No harm in asking, eh?

(This session was with Ark’s international team. It is also deeply involved in building and running Academy schools in the UK, something about which I have personal qualms, and is about to open an enormous Zaha Hadid-designed new school at the end of my road in London . If we’re overrun by vandals, at least I’ll know who to complain to…..)

September 2, 2010
Duncan Green