Good intentions not enough with global philanthropy

December 05, 2007 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: News, Global Giving

Inc. Magazine recently wrote an article entitled “Everybody Wants to Save the World: But when you start a charity overseas, good intentions often go awry”

The article profiles Troy Wiseman, former owner of fashion label, BUM International.

“There was a nasty surprise waiting for Troy Wiseman in Zambia. The founder of InvestLinc, an investment and wealth-management company, flew into that African nation in the summer of 2005. On the agenda: taking Zambia’s first lady on a tour of several institutions financed by his charity, World Orphans. Unfortunately, the orphanages seemed not to exist. Nor could Wiseman locate the supervising pastor, to whom he had wired almost $70,000 over the past year. After half a dozen phone calls failed to clear things up, Wiseman made his apologies to the president’s wife and headed anxiously back to Chicago.  The Zambia debacle was especially troublesome because World Orphans had recently begun soliciting outside donations. What if this wasn’t an isolated situation? Wiseman wondered. How could he pitch his organization to donors if it was beset by fraud? So he hired a veteran philanthropist, Paul Myhill, who visited 53 of the charity’s 400 sponsored orphanages and compiled a detailed report. It painted a grim portrait. Many of the orphanages were poorly maintained or were being used as old-age homes. Some had never been built. Wiseman estimates about half the projects Myhill visited did not fit the mission statement. About 20 turned out to be outright frauds.”

Embarrassing.  Also if he has no idea what happened to this money could it not only have been lost but also used for nefarious purposes.  It is too bad that a smart entrepreneur takes so many years to work out that he needs assistance if you don’t want to be fleeced in conducting international philanthropy.  To his credit he has acknowledged the problems.  Many reputation conscious philanthropists would probably try to brush this sort of embarrassment under the carpet.

The article continues: “Many entrepreneurs reach a point in their lives when, having tackled the problems of customers, employees, and industries, they are tempted to take on the world’s ills. Inspired by the likes of Bill Gates and George Soros, some launch philanthropies aimed at providing aid to developing nations. They assume that the skills responsible for their for-profit successes will translate easily into the nonprofit realm.”

Ned Breslin, Director of International Programs of Water for People, wrote an interesting article on well meaning but misguided philanthropic efforts in water development in Africa.  You can see the short article at http://ww2.waterforpeople.org/pdfs/News/Articles/WCP_Breslin_0907.pdf

Having an experienced team of people is important.  Conducting due diligence on projects is important. Trying to measure the effectiveness of the funds being spent is important.  It seems that Mr. Wiseman has learned the importance of using trusted partners.

With international philanthropy if you are not going to do it right - save yourself the headache and the sector the bad publicity and make a donation to a reputable Canadian charity such as Care, MSF, Oxfam, Plan, or Save the Children. 

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Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.

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