Foreign Aid

Health charity spent millions to raise thousands

(July 6) A charity in charge of collecting funds for medical programs in the developing world can’t raise enough money to come near covering its operating costs, writes Andrew Jack in the Financial Times.

An international charity created to raise money from airline travellers to support patients in the developing world has collected only a few thousand dollars while spending millions in operating costs.

The Geneva-based Millennium Foundation has fallen drastically behind schedule in efforts to generate up to $1bn (€791m, £657m) a year since its creation in 2008, raising about $14,000 directly from the public while spending $11m given to it by governments on salaries, advertising and legal expenses.

Its directors – who include representatives of the British, French and Brazilian governments, as well as the charity Oxfam – have requested fresh scrutiny of its operations and are holding a board meeting on Wednesday to discuss a revised strategy and spending plans for the organisation.

The poor performance raises questions over ambitious projections prepared by McKinsey, the consultancy, which were central to the foundation’s business plan, and is an embarrassment as international health organisations seek to defend their budgets against cuts by donors following the financial crisis.

“How many doses of antiretrovirals, how many bed nets against malaria, how many packs of therapeutic food could have been bought with those wasted $11m?” said one health activist who has followed the foundation closely.

The problems have intensified a debate over the governance of the foundation and Unitaid, the United Nations agency, which has given $22m to fund its development.

Both organisations are chaired by Philippe Douste-Blazy, a former French health minister and UN undersecretary-general for innovative financing.

Jorge Bermudez, executive secretary of Unitaid, said: “We have requested a clear analysis of the situation … and to set clear priorities and actions for the next six months.

“In parallel, we are launching an independent review of [the foundation’s] implementation plan.”

In 2008 Mr Douste-Blazy announced that the Millennium Foundation would by early the following year launch a campaign in the US and many other countries to raise funds for Unitaid from the public, with customers who buy airline tickets online offered the chance to click a box and donate $2 to the campaign.

McKinsey projected that annual income from these “clicks” would be $120m- $1.8bn, with forecasts suggesting the foundation – through its internet brand dubbed “Massivegood” – would raise $590m in 2010, rising to $980m in 2011.

The foundation provides little information on its website, but its first progress report, prepared for the board and obtained by the FT, instead describes repeated launch delays caused by technical difficulties over the software, reluctance by travel agents to agree to the “click”, delays caused by the need to create a US-based charitable foundation, tensions with its communications agency, and disagreement between corporate partners over how funds raised should be distributed.

It has hired 23 staff, paid for offices in Paris and Geneva, and is believed to have spent more than $500,000 alone on a short promotional film directed by Spike Lee, including interviews with novelist Paul Auster, and a voice-over from former US president Bill Clinton.

It recorded a song with and Yvonne Chaka Chaka, but says the sound quality “was not of sufficiently high quality”.

Bernard Salomé, the foundation’s manager, said: “This is an operation which is extremely complicated. It’s normal that it takes a bit of time to build.”

He said he had imposed a tough budget and was starting to see “incredible support” from a campaign launched recently in Spain.

He said total donations – which have largely come from several corporate contributions – were about $150,000, and that delays in the US launch were partly caused by the financial crisis, the Haiti earthquake and the Icelandic volcano eruptions.

Mr Douste-Blazy said: “Our objective is to reimburse our costs as soon as possible. It’s important not to break the dynamism at the start. This is starting to take off.”

He anticipated that the Millennium Foundation would be fully active within a year, and that he would step down as chairman “from the moment the money arrives”.

Andrew Jack, Financial Times, July 6, 2010

Read the original story here.

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