Online Entertainment = Poverty Alleviation?

A few of you may remember hungersite.com, the original click-to-donate website launched in 1999 based on the simple premise that if visitors to the site click a button on the site (limited to once per day), sponsorship from advertisers would allow the click to translate into a equivalent donation to 1.1 cups of food (via the World Food Program, the UN's food aid branch). I remember bookmarking it and visiting it frequently - however, I was never really sure whether it was really legitimate and really how everything worked. In fact, it has been successful: CharityUSA.com (the site's new owner as of 2001) in 2007 reported that 9.2 tonnes of food had been generated by the site.

More recently, the creator of hungersite.com, a computer programmer named John Breen, has made a similar site with the aim of alleviating worldwide hunger through simple site visits. What makes this site different? Its actually a game. The site, FreeRice.com, structures itself as a simple vocabulary game, with different levels. Breen fashioned the site after watching his son study for the verbal section of his SAT. It's much easier if you just check it out then if I try to explain it - so give it a go. For the competitive ones out there, I got up to level 29 before it started getting a bit difficult.

What sets FreeRice apart from the dozens of traditional charity sites (i.e. ecologyfund.com, therainforestsite.com, and gearthatgives.com) that rely on click-through advertising revenue and proceeds from merchandise purchses, is that it leverages the popularity of casual online games. In an article about the site in the NYTimes, author Rob Walker explains why this is notable:

With tens of millions of regular players, “casual games are among the stickiest, most-sought-after content online,” according to a white paper posted on the site of the International Game Developers Association. The core texts of casual gaming are solitaire and Tetris. It’s a safe bet that a great deal of casual gaming occurs in the workplace, where it’s more discreet than paddle ball.

The combination of simplicity and addictiveness of FreeRice is what has made it a success in capturing traffic from both office workers and students (college kids have even taken to competing against eachother on Facebook on the FreeRice app), and ultimately in its rice donation totals:

• October 7, 2007 - FreeRice launches with 830 grains of rice donated on its first day
• November 10, 2007 - FreeRice breaks the one-day 100,000,000-grain milestone with 122,377,240 donated grains
• November 28, 2007 - With continued sponsor support, FreeRice doubled the number of grains donated for each correct definition from 10 to 20.
• December 17, 2007 - FreeRice breaks the one-day 300,000,000-grain milestone with 358,559,540 donated grains
• December 19, 2007 - 10,000,000,000 grains donated in total
• January 20, 2008 - 15,000,000,000 grains donated in total
• February 25, 2008 - 20,000,000,000 grains donated in total

*Bangladesh, Cambodia, and Uganda are among the countries which have received food aid financed from FreeRice.

Walker notes that FreeRice is a triumph because it 'converts passivity into engagement,' and that it illustrates the power of one man (Breen) to change the world. Add to that the fact that Breen did this in his spare time and takes no salary or fees for his time. created not by a team of expert tech-marketing consultants, but by a guy in his spare time.

I believe another reason that FreeRice is a success is how it illustrates the power of technology. Here, we see that Breen took simple technology and really utilized it in a creative way to harness the power of the internet masses and tangibly help the poor and hungry in the world.

Companies and Philanthropy: Debating "Creative Capitalism"

A lot of hoopla is always made whenever large and public companies dip their toes into the philanthropic pool - whether it be Gap's debatable 'Product Red' Campaign or Starbucks' "fair trade" coffee practices. To the extent that this hoopla is positive, it is often undeserved; after all, the real impact of such campaigns is usually so minuscule that they arguably become nothing more than disingenuous marketing ploys. So what sort of companies actually make a difference? The answer might be Tech companies - Google and Microsoft are just a tad more involved, and with their ambitious strategy (of hoping to leverage not only their huge fortunes but also their best and innovative talent), they seem to be more promising.

Google has big goals - in 2004, founders Sergey Brin and Larry Page expressed their hopes that Google.org (the philanthropic division of the company) would one day "eclipse Google itself in overall world impact." Yet its impact is so far only the infantile stage. Hired two years ago, Dr. Larry Brilliant took 18 months to set and cement Google.org's overarching strategy: 5 core initiatives in three areas: fighting climate change, economic development, and building an early-warning system for pandemics. These initiatives were chosen with Google's inherent strengths and capabilities in mind - after all, [Google.org is] focused on what it can do “uniquely,” said Sheryl Sandberg* in a NYTimes article, "if you do things other people could do, you’re not adding value.” Sandberg and Google seem confident of Google.org, but Brilliant remains cautious:

In the 1960s Dr Brilliant bought into the anti-corporate zeitgeist, but “I must have been wrong,” he says. Now he believes that companies can play a big part in solving the world's problems. Is Google.org, with its innovative mix of for-profit and non-profit strategies and political advocacy, within a corporate structure that denies it some of the tax and regulatory advantages of a traditional foundation, a new model for how a big firm should engage with society? “Let's see how we do first,” says Dr Brilliant. (Economist Article 1/19/08)

There are two big differences in Microsoft's (or Bill Gates') approach: first is that the Gates Foundation is completely separate from the company (except that all the money used to initially fund it was from the success of the company) and second is that it is a lot farther along and a lot larger (its annual budget is around $70MM). Recently, Gates made a speech at the World Economic Forum in Davos, Switzerland where he talked about the need for 'creative capitalism' - a new form capitalism that encourages companies to think beyond market opportunities. In a really interesting WSJ article about the speech, author Robert Guth draws links between Gates' outlook on philanthropy and capitalism and Grameen Bank founder Muhammad Yunus' similar arguments regarding the incentive issue:

Gates adds his high-profile name to the ranks of those who argue that unfettered capitalism can't solve broad social problems. Muhammad Yunus, the Bangladeshi economist who won the 2006 Nobel Peace Prize for his work providing small loans to the poor, is traversing the U.S. this month promoting a new book that calls capitalism "half developed" because it focuses only on the profit-oriented side of human nature, not on the satisfaction derived from helping others.

It is undeniable that Yunus and Gates have done a lot of good for the world. And many would also argue that there is quite a lot of strength to their theories about why the world is in the state it is in and how we can change it. Yet despite all the grand hopes and progress, it must be noted that there is an educated stance against such forms of philanthropy. Such a stance is best illustrated in a snappish but well-reasoned column published last month by respected economist William Easterly in the WSJ, Why Bill Gates Hates My Book. In the article Easterly reasserts his long-running claim that there is simply no evidence that grand aid schemes actually lift people out of poverty, and that old-fashioned capitalism is still the best and only cure:

Mr. Gates seems to believe that the solution is to persuade for-profit companies to meet the poor's needs by boosting the "recognition" of corporate philanthropy. But the dossier of historical evidence to suggest this would work is as thin as Kate Moss on a diet. First of all, the recognition motive has proven to be awfully weak compared to the profit motive. Otherwise we would have had a lot more than the $5.1 billion of annual American corporate philanthropy to the Third World (as of 2005, which has the most recent reliable figures). That was four one-hundredths of 1% of the $12.4 trillion of U.S. production for the free market. Is it really the poor's only hope that the Gap will donate a few pennies per sexy T-shirt for AIDS treatment in Africa?

Sure, let those who have become rich under capitalism try to do good things for those who are still poor, as Mr. Gates has admirably chosen to do. But a New-Age blend of market incentives and feel-good recognition will not end poverty. History has shown that profit-motivated capitalism is still the best hope for the poor.

It is quite likely that Easterly's cynicism is well founded - his 'simple economics' arguments are as compelling as they are clear. However, the fact that Easterly is able to bring up legitimate questions to the approach of Gates' and others in fighting poverty and other world problems does not negate the endeavor as a whole. So, as naive as it may be, I'm going to have to argue that we should give this 'creative capitalism' concept a chance. What can I say? I'm an optimist.


Recent related news:
Gates Foundation to give $306MM to Assist Poor Farmers
Gates Foundation Head to Leave Longtime Post

*At the time, Google's VP of Global Online Sales and Operations, who was recently appointed as Facebook's Chief Operating Officer.

IT Helps the Homeless in Oklahoma City

In response to the previous entry about IT helping Indian farmers, Alex mentioned a recent article he found which highlights how a Management Information System is being used in Oklahoma City to help the homeless (see Group uses technology to identify OK homeless). The article talks about how an ID system was put in place by the Homeless Alliance, a nonprofit agency which works off of funding by the government. The system helps agencies know who is registered as a homeless, allowing a better allocation of limited resources by avoiding duplication of services.

Another interesting tidbit was that the system was originally conceived to protect against a feared tuberculosis outbreak by requiring card-holders to get a TB test. City centers then required a 'shelter clearance' confirming that the test was taken before admitting a person for the night. I guess in some ways the use of this system seems a bit harsh and cruel (since it would prevent the 'double-dipping' of someone who probably needs services and would also prevent entry in the case of the TB scenario if one had not gotten the test). But I also think that this analytical approach makes sense because it seems to benefit and protect the homeless in Oklahoma City as a whole in the long-run. As the Executive Director of the Homeless Alliance Dan Straughan says in the article, this is an approach that focuses on combating the "systemic" issues.

Adam's article is also important because it illustrates an issue that doesn't get talked about that much, which is poverty in America. Obviously this issue is marginalized since in relation to countless other countries, the United States has relatively low rates of poverty; nevertheless, poverty is still very much present here today. The measurement of the homeless in the United States is of course a very inexact science, but the closest estimate we have comes from the NSHAPC (National Survey of Homeless Assistance and Providers and Clients), which found in 1996 that annual homeless prevalence was between 1.58 to 3.49 million.

Another source of relevant information is the U.S. Census Bureau, which has pretty recent numbers on poverty. On the right is a chart that summarizes the poverty rate since 1969. Click the diagram to see a bigger version. The site also breaks it down by different demographic groups, poverty rate, number in poverty, and poverty line. Of course, of great importance and controversy is the method of measurement, which, depending on whether one agrees with it or not, makes or breaks the numbers.

What's Next for the Oklahoma IT ID system: The Homeless Alliance is expanding its ID program to assist 19 counties in northwest Oklahoma. There are approximately 6,000 homeless people in the state.

**Thank you Alex for the comment and article!**