A “smart campaign” is a familiar term in the context of microfinance that seeks to help the poor. It is about being fully transparent in the pricing, terms and conditions of all financial products. It is about working with the poor clients so they do not borrow more money than they can repay or use products that they do not need. It employs respectful collection practices and adopts high ethical standards in the treatment of the poor beneficiaries. It gives clients a way to address their complaints so they can be served more effectively. It ensures beneficiary data remains private. It protects clients, businesses, and the industry as a whole, through a set of seven core Client Protection Principles, or the minimum standards that clients should expect to receive when doing business with a microfinance institution. These may be briefly enumerated as under:
- Appropriate product design and delivery: Providers will take adequate care to design products and delivery channels in such a way that they do not cause clients harm.
- Prevention of over-indebtedness: Providers will take adequate care in all phases of their credit process to determine that clients have the capacity to repay without becoming over-indebted.
- Transparency: Providers will communicate clear, sufficient and timely information in a manner and language clients can understand so that clients can make informed decisions.
- Responsible pricing: Pricing, terms and conditions will be set in a way that is affordable to clients while allowing for financial institutions to be sustainable.
- Fair and respectful treatment of clients: Financial service providers and their agents will treat their clients fairly and respectfully.
- Privacy of client data: The privacy of individual client data will be respected in accordance with the laws and regulations of individual jurisdictions.
- Mechanisms for complaint resolution: Providers will have in place timely and responsive mechanisms for complaints and problem resolution for their clients and will use these mechanisms both to resolve individual problems and to improve their products and services.
While these principles make sense in the context of conventional micro-credit providers, there have been major variations to the conventional model, such as, Community-Driven-Development (CDD) models, finance-plus models etc. that systematically use donor funds and grants as major components. Interestingly, when we focus on individual donors (who are statistically found to provide the bulk of donor funds globally), we may have to think in terms of not just protecting the clients, but the donors themselves. Without “smart” principles in place governing individual donations, the flow of such funds to projects are likely to be adversely affected.
What makes an individual donor apathetic and indifferent to a cause or a project? A “smart campaign” for individual donor funds must address such adverse factors.
My search for answers led me to introspect. Here are the possible reasons why I may not be keen to donate to an institution seeking various forms of charity for a project seeking to benefit the poor and the needy.
- I am inclined to conceal my act of donation. I do it to seek the pleasure of my Creator and the principle of purity of intention demands that one’s left hand does not know what one’s right hand is giving. The institution seeking my donation on the other hand, “markets” its record of accomplishment. It perhaps does so to instill trust and confidence among donors. But frankly, this is unpalatable to me.
- Those guys also spend a fortune in aggressive marketing and promotion!
- I am not comfortable with the idea that the institution may share this information (my being a donor) with other stakeholders or use it, with the outcome that I continue to be haunted by these donation-seekers, repeatedly, month after month, year after year.
- I “feel good” when the beneficiary acknowledges my support, prays for my well-being, blesses my family and so forth. This humane touch is absent when I donate to institutions. They are very impersonal indeed.
- I “know” about the needs of my immediate family or clan members, neighbors and what-have-you. It is a case of direct mapping of my donations to their needs. Regarding institutions, well, I have no idea about who is the ultimate beneficiary of my contribution. They seem to have an “impersonal and objective” criteria for selection of beneficiaries.
- I don’t believe in recording my acts of benevolence or involving witnesses or asking my family member in need to sign a written document. Won’t my needy relative feel hurt, since this is also symbolic of my lack of trust in his/her honesty, integrity and good intentions?
- My needy relative needs assistance urgently, today. S/he is not comfortable approaching those well-dressed managers sitting in comfortable cabins, go through their grill and drill and wait for days, and weeks.
- My needy relative is extremely reluctant to approach an institution for assistance as s/he doesn’t want people to know about his/her penury.
- At the end of the day, I am accountable to Allah swt for my obligation to help the poor and the needy. How can I trust a third party (the institution) to be my agent in the performance of my divine obligation? How do I ensure that the institution is not flouting the Shariah rules regarding use of donor funds?
- How do I ensure that my contribution is not ill-spent?
There could be other reasons beneath my reluctance in “giving” to institutions. However, let me pause here.
So, any institutional charity has to address my above concerns, all of them. And this throws up the relevant principles for a “smart” campaign for individual donors.
- It has to place “honest and integrity” above all, and must be seen to be honest.
- It must ensure the “privacy” of the donor and the beneficiary, not sharing or using their identity related info without their consent.
- It must demand minimum paper-work and ensure “processing efficiency“.
- It should ideally provide for a P2P or donor-beneficiary transaction for complete “transparency“.
- It must inculcate a “humane culture” among its staff and ensure “fair and respectful treatment of the beneficiary“.
- It must seek “moderation” in its administrative, operational, and promotional expenditure.
- It must engage and communicate – proactively and on a continuous basis – with its donors; provide feedback on the progression and impact of their contribution; and ensure “accountability” for its actions.
- In case of Islamic donors, it must ensure “compliance of Shariah” norms pertaining to use of charity funds.
- And, it must ensure “compliance with conditions imposed by the donor” in utilization of funds.
At the same time, are there any compelling reasons why I should donate to institutional donors and allow them to manage my charity? Does institutional management of all forms of charity make more sense than individual management of charity? The answer is a resounding yes.
- Institutional management of donor funds will result in the creation of “sustainable” charities.
- Pooling of donor funds will facilitate financing of larger projects for alleviation of poverty.
- It will facilitate efficient and effective allocation of donor resources through scientific planning and tools of implementation.
- And yes, it will certainly curb the vulgar display of affluence that often goes with long queues in front of houses of rich individuals, especially in poor countries.
By Mohammed Obaidullah