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Aid “Industry” vs Humanitarian “Relief”

We don’t call it this, but there is a “PDT Doctrine”, a general world view among PDT staff that informs what we do and how we do it. Regular readers of this blog or those with whom we work can sketch the rough outlines without much trouble. We believe job creation comes from private entrepreneurs, not government planners.  We think market forces (and not a log-frame) determine if something will be sustainable. Like some bloggers we admire, we believe “good intentions are not enough.” And we believe you shouldn’t send your yoga mat to Haiti.

One of the most elemental parts of our doctrine is that aid is an industry. Functionally, there is very little that differentiates it from any other industry, such as plastic surgery or shoes.  There is demand and supply, competing organizations, and the profit motive is a key driver (be it explicit, or implicit).

Aid industry is actualling eerily like the plastic surgery industry.

Because we see it as an industry, I (switching to the first person here – as I dive deeper I don’t want to speak for my colleagues) strongly believe that greater impact, innovation, and efficiencies will only come from greater competition. For example, imagine how heavy your laptop would be if IBM was still the only manufacturer on the market.  IBM isn’t, which is why we have things like the MacBook Air.

The magic of free market competition

So, when aid types whine about new NGOs “crowding the field” and spreading scarce resources too thin, I say balderdash. If your NGO isn’t getting funded because another NGO is, then you need to make your NGO faster, smarter, leaner, and more effective. And, even if there is a short reduction in the overall effectiveness of the NGO sector in a particular country because there are too many, it is offset by the long-term improvement that competition and innovation will bring.

But that’s for the aid industry. Not for humanitarian relief.

It is called humanitarian relief for a reason. Short-term relief, to save the starving for example, is a public service not an industry.  The immediate threat to life outweighs the long-term need for competitive innovation. Let me illustrate with an example:

Imagine there is a famine in Eritrea, and 1 million people are starving. Three relief agencies are on the ground, but collectively, they only have enough money to feed 700,000 people. You have $100,000, which you can spend in 2 ways:

  1. Send it immediately to one of those 3 agencies on the ground, and save 100 people. Or,
  2. Start your own NGO, which will be on the ground in 6 months, and with a more innovative model but proportionally more administrative costs, save 90 people, which may or may not lead to an incremental improvement in the entire industry. (And in the meantime, the other 100 died.)

I see this as a variant on the philosophical “trolley problem”, and my own view would be save the 100 now, competition be damned.

I’ve made (belabored?) this point because too often in the debate about development reform and aid effectiveness we get sloppy and lump humanitarian relief into the mix. We shouldn’t. It’s not an industry and shouldn’t be seen as such.

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  1. I like the distinction you make, but let me offer two differences between aid and industry: 1) Usually the person paying for the plastic surgery and shoes is the same person wearing the new face and swanky Toms. 2) The people who work in the aid / development / humanitarian sector often make deep personal and financial sacrifices because they are motivated by the mission – so they will often keep pushing ahead with what they are doing even when ‘market signals’ are clearly not behind them. This may be good…but maybe not.

  2. Token Humanitarian says:

    Two sets of issues to think about. The first relates to the long-duration of relief — after a while, even humanitarian relief becomes an industry. What happens when the emergency becomes “protracted” — and how does that change the way we look at the question? What happens when humanitarian actors start following the money and building schools (not ever, imho, a humanitarian activity) and employing longer-term project staff who are partially “relief” funded, and partially doing aid? What about when providing “relief” now extends the situation that causes the crisis — when, for example, shabab is obtaining funds from relief operations (theft/leakage) and using that to maintain its insurgency?

    There’s an aggregation problem to the question also. For a single emergency, it is absolutely true. But over a large number of emergencies, over a large number of decades, suddenly your organizations start to look more like IBM and less like Apple. (note: I think IBM is unfairly maligned — quite brilliant corporate strategy recognizing the death of the PC market, and selling to Lenovo high). How do we shake up the secure world of humanitarian response to make it more effective and efficient. There’s clearly room to improve, but where’s the incentive?

    now back to my newborn…

  3. aidnography says:

    Interesting that cosmetic surgery and Apple products are the examples, because they are essentially *lifestyle* choices, driven by a complex web of a consumerist desiring machine. Aid and relief have to some extent become lifestyle choices as well. Being an aid entrepreneur, or social venture capitalist or NGO guru is as much about the lifestyle as it is about a ‘better’ product. Maybe there is a ‘market’, but that’s essentially the same ‘market’ that helped to enable conditions that made a famine in Eritrea possible in the first place. Humanitarian relief is as much part of the ‘industry’ as all the other parts, because only on the surface does it look differently from development work. In most humanitarian cases it’s not innovation that’s lacking, but good old-fashioned political will. It’s not about the ‘better product’, but about donors willing to act.

  4. Sam Gardner says:

    I think the difference between both is more stark and more subtle at the same time.

    1. Development is a blur, with multiple competing and badly defined objectives, like halve poverty, political freedom, give microcredit, etc. If we would take only one aspect, e.g. reproductive health, the sector would become more like humanitarian assistance. Humanitarian assistance has better defined objectives, even with standards of defined service levels (e.g. Sphere, HAP.). Development priorities are sometimes more like lifestyle choices than like a choice for a pathway to development.
    2. If you have 100 dollars, and three organisations active, and there is in any case not enough money, who will you give the money to? The organisation that will save 500 people with this amount, the one saving 100 or the one saving 2? And what if the 500 is rather unaccountable, but with good local ownership? Ignoring the difference between agencies in efficiency, effectiveness and accountability kills. Because the needs are bigger than the means, we should regard humanitarian relief as an industry and let them compete on effectiveness, efficiency and accountability.
    3. The humanitarian sector is surprisingly good at their work, if the incentives are taken into account. Focusing on 80 % of the funding, and not on the big tail of yoga mat senders and shoe-shippers, we see a very professional, principles, quality and effectiveness focused sector, with a high moral standard.

  5. Joe says:

    I think the problem (from the perspective of the donor) might be that the NGOs deliberately conflate the humanitarian and the longer term development function.

    For example, I recently had an exchange with the medical NGO Merlin, who stated that they’d been able to reach 30,000 people in Somalia. Ambulance-style triage would suggest that you separate the wounded into the dead, the too-far gone and the treatable – and I’m wondering whether the sad reality of the situation is that the worst affected in Somalia are too far gone. That more positive outcomes might be achieved for the same money if it was spent in Dadaab or elsewhere in the Horn of Africa where the needy are easier and cheaper to find.

    I put it to Merlin that if this was not the kind of assessment they were making, then it was impossible to tell whether they were doing the right thing and that the criteria they were using for assessment should be available to donors.

    Anyway, to cut a longer story short, they then went on about longer term capacity building they were engaged in. Which might be true, but to me in the face of an immediate disaster, irrelevant. I bet they’re not doing much capacity building in Somalia at the moment!

    Maybe it would all just be easier if ‘this’ agency did the disaster stuff and ‘that’ agency the development stuff. I’m guessing that this doesn’t happen due to the speed at which disasters fall off the radar and the short attention spans of donors and the media.

  6. Soctrap says:

    Excellent Article. My comment relates to your explanation of the aid industry, as opposed to the difference between aid industry and humanitarian relief.

    One must be aware that competition is not the clean, bright bringer of goodness that you seem to imply (as an article as brief as this can deal with).

    The Macbook Air is as great an example of when competition works as the Internal Combustion Engine is of how competition fails completely. The main reason for Google, Apple, Microsoft, Edmund Hillary, Usain Bolt, Raphael Nadal etc is the desire to win something particular or be the best in their field. That is not the same as being economically viable both initially and longer term. You give the example of an NGO without funds targeting being leaner and more efficient to compete for funds. I personally would push resources towards marketing and lobbying instead of product. The economical winners are seldom the best product – never have and never will be (VHS, Blu-ray battles being legendary, but there are millions daily).

    Add the complexities some of the other commenters have addressed (eg the consumer is not the funder, distance and funder to user, political and economic inflation of demand side, participants in the market not being typical business people but either lobbyists or volenteers) and the market is messy messy messy.

    One last thing. Thinking commercially about aid, one would try to ensure that there is always demand, and keeping the same clients is the cheapest way of doing it. Therefore, finding a way to ensure you don’t succeed in solving an aid problem while being exhonerated from culpability would be the main economic driving force.

    Having followed your blogs and tweets for a while I don’t believe you are unaware of these complexities and distortions – the interests of brevity are probably to blame.

  7. Let me expand just briefly on the first point I tried to make above. Competition works in industry because the one receiving the product is also the one paying for it. Deliver a bad product, and eventually you lose. In aid, the ‘product’ you sell to the one who pays is mostly information about what was delivered to someone else. To the extent that this information is botoxed marketing messages, creative accounting for charity navigator, selective storytelling, and controlled donor visits, there is a market failure at work that will allow organizations that actually deliver inferior development and aid products to the people who consume them to survive and thrive.

    I was just reading this morning about an organization I won’t name here that was struggling. They got a new media director who tossed out the rule book on dignified marketing and went back to the old flies-in-the-eyes crap from the 80s and low and behold, its a miracle turn around. Money coming out their ears. Better products? No. But this is one reason why aid and development is NOT like industry. When industry overstates their product, the consumer will all too soon realize it. Meanwhile, we can keep on telling people that they can feed a hungry child for $0.20 a day and $50 will buy a family a cow – and they’ll never know the difference. So the organizations that are best at creatively twisting the real truth about the cost of delivering aid and development will prosper over ones with greater transparency and integrity. This is also a powerful incentive to deliver cheaper and more inferior goods to those we claim to be helping.

    For me, one of the ways out of this, is to explicitly refuse to see ourselves as industry, as something that responds to market forces. We have ways to escape these forces, we should recognize this and hang on to what is perhaps a more powerful force – the humanitarian idealism that drew most of us to this sector in the first place. Although not always true, I think to a large degree that mission driven organizations and people deliver better aid and development than market driven organizations and people. Of course, its never one or the other, and an imbalance on one side is probably as bad as the other, but if given the chance to self-identify as one or the other, I choose mission over market. It feels more accurate, not to mention satisfactory, to think of myself as part of the “humanitarian sector” than the “aid industry.”

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