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Applying clear-headed business rationale to the charitable sector is not a new idea but it has recently gained fresh impetus.
Back in 1889 steel tycoon and philanthropist Andrew Carnegie famously wrote, “One of the serious obstacles to the improvement of our race is indiscriminate charity.” In recent years the concept has been bolstered as the likes of Bill Gates, Bill Clinton and Warren Buffet have highlighted the effectiveness of taking a business approach to a charitable cause.
This is a core concept behind ARK, Absolute Return for Kids, a collective philanthropy initiative supported predominantly by the European hedge fund community, and of which I am a co-founder and trustee. ARK aims to take the business principles which generate financial returns in our investment businesses and apply them to generating social returns, with a focus on three core themes: HIV/AIDS, Education and Children in Care.
The application of these investment principles - such as rigorous screening of new interventions, evaluation of risk, accountability and the rapid scale up of successful programmes – can be as integral to success in philanthropy as they are in a financial market.
This approach can be seen most clearly in ARK’s HIV/AIDS programme work in South Africa.
Over five million South Africans, about 11% of the population are HIV positive and over 1.2 million children have been orphaned. To quote Nelson Mandela, “The challenge is for action at an unprecedented intensity and scale. There is a need for us to focus on what we know works.”
At ARK we have chosen one key measurable goal to maximise our impact – keep HIV positive mothers alive through the provision of antiretroviral treatment.
By keeping a mother alive we delay the onset of orphanhood for their children, we also enable a stable family unit that gives both the children and their community improved life chances. Analysis has shown that 46% of orphans in South Africa play truant from school and become involved in criminal offences.
By getting treatment to a HIV positive mother we also dramatically decrease the chance she will transmit the disease to a new baby. HIV transmission rates during birth are approximately 30% but, for the cost of a few dollars, a single dose of the drug Nevirapine to the mother during labour reduces the risk to 15%; more intensive ‘triple therapy treatment can reduce the risk to less than 2%.
The single intervention of keeping HIV positive mothers alive is producing multiple outcomes. In the hedge fund world we often use the terminology of making a leveraged investment where one single investment can produce a number of positive outcomes. The same principle is working in South Africa.
We also want to ensure our philanthropy is scaleable and sustainable. Working through government hospitals and clinics, ARK facilitates and supports the delivery of accessible treatment. (See box)
There remains some controversy in the philanthropy world over this business-like approach, and I know some argue that money can be best spent if it is handed to charities on an unconditional basis.
However, I believe Carnegie was right to argue that limited resources mean we must be discriminate with our investments. Improving our human race is also a race against time.
Through charitable initiatives such as ARK I have found that blending business know-how with the skills and dedication of our people on the ground is one of the most effective weapons we have to deploy for philanthropic goals.
Kevin Gundle is a co-founder and trustee of ARK and Director of Aurum funds, London.
ARK passed a significant milestone by the start of 2008 as its antiretroviral treatment programme in South Africa has now helped put over 20,000 HIV positive carers and children onto treatment.
The international charity also announced a new £2.7m phase of funding in December for clinics in South Africa’s Western Cape, ensuring that patients receive life saving drugs, support and care. This brings the total commitment to ARK’s HIV/AIDS programme in South Africa to £21m.
By 2012, ARK’s target is to treat 32,400 HIV positive carers and children in South Africa – preventing a further 65,000 children from becoming orphans.
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