Financing Poverty Alleviation: A Keynote Address by John Danilovich at the 2007 Global Philanthropy Forum Conference held at the Googleplex in Mountain View, CA. Introduction by Sheryl Sandberg.
John J. Danilovich
Ambassador John J. Danilovich began his duties as Chief Executive Officer for the Millennium Challenge Corporation on November 7, 2005, continuing a distinguished career of more than thirty years in both the public and private sectors.
Prior to his appointment by President Bush as CEO, Ambassador Danilovich served as the American Ambassador to the Republic of Costa Rica from 2001 to 2004, and then Ambassador to the Federative Republic of Brazil.
Ambassador Danilovich is a businessman and private investor with a strong background in foreign affairs. A native Californian and resident of London for many years, he was active in the international shipping business for over two decades and served as director of companies in the shipping, property, publishing and investment fields.
Ambassador Danilovich served on the Board of Directors of the Panama Canal Commission from 1991 though 1996 and chaired the Commission's Transition Committee prior to the transfer of the Canal to the Panamanians. Ambassador Danilovich has been a Director of the Stanford University Trust, a Trustee of the American Museum in Britain, a Director of the U.S.-U.K. Fulbright Commission, and has served in leadership positions for several charitable organizations.
The Ambassador graduated from Stanford University with a bachelor's degree in Political Science, and received a master's degree in International Relations from the University of Southern California (London). Ambassador Danilovich is a member of the Council on Foreign Relations, an Associate Fellow of Pierson College (Yale University), a Knight of Malta and the recipient of several national and international awards including the Choate Alumni Seal Prize.
Sheryl Sandberg joined Facebook in March 2008 as chief operating officer. In this role, she is responsible for Facebook’s business operations, including sales, marketing, business development, human resources, public policy, privacy, and communications.
Ms. Sandberg joined Facebook after six years at Google, where she served as vice president of Global Online Sales and Operations. In that role, she built and managed Google’s online sales channels and managed global operations for Google’s consumer products.
Ms. Sandberg was also a leader for the company’s philanthropic efforts. She created the Google Grants program, which donated over $240 million dollars of advertising to nonprofits worldwide. The Economist called her “the unseen driving force behind the creation of Google.org,” Google’s philanthropic arm, where she served as a founding member of the board and led the search for its executive director, Larry Brilliant.
Prior to joining Google, Ms. Sandberg was the chief of staff for the United States Treasury Department, where she helped lead its work on forgiving debt in the developing world. Before that, Ms. Sandberg was a management consultant with McKinsey and Company and an economist with the World Bank, where she worked on eradicating leprosy in India. Ms. Sandberg currently serves on the boards of The Brookings Institution, Women for Women International, The Ad Council, Leadership Public Schools and eHealth.
Ms. Sandberg received a BA summa cum laude in Economics from Harvard University. She received an MBA with highest distinction from the Harvard Business School. In 2007, Ms. Sandberg was named as one of the 50 Most Powerful Women in Business by Fortune.
So good afternoon everybody. That may or may not work. Good afternoon, I was told if I startedeveryone would magically sit down and we could get our afternoon on time. So good afternooneverybody, I am Sheryl Sandberg from both google.com and google.org and it's my pleasure to havetwo welcome's this afternoon. The first is to welcome you as part of your continuing welcome toGoogle, to participate in what we call the Google Grants program. Larry, Sergey, Larry Brilliant and Iwanted to extend an opportunity to get free advertising on Google to all of the non profits that are herewith us today. The Google now we also got the Google Grants program we have extended it toabout 2000 non profits worldwide, we have given away about $140 million in free advertising andmost importantly we have worked with our grantees to help them use the power of the web to broadentheir reach. Jane will be helping us sent an email to all of you giving you the details of how to sign up.As you can imagine there is a fairly long wait list for this program but we will expedite the process forthe organizations that are here today. And we hope it makes helps you grow your grow your reachand grow your impact.The second welcome the second welcome I am pleased to be able to do today is to welcome you tothe next part of our agenda, financing poverty alleviation. All of us are here because we care about theWorld's poor and we know that there is no easy answer to improve the lives of the two billion peopleliving on less than $2 a day. We know it will take a combination of things to make a real difference. Itwill take the right government rules, the right government laws, the right momentum for the privatesector. It will also take aid both in the form of private philanthropy and in the form of government aid.And one of the challenges we all face is that in neither of these two areas are we doing what we couldor should be doing. Google.org just commissioned and completed a study of private philanthropicgiving in United States. We published the findings last week in an Op-ed in The Wall Street Journaland we will be publishing the full study on our website in about four to six weeks.And despite the facts that Americans as private citizens are the most generous in the world, giving over$250 billion annually which is a large number compared to any other kind of giving, unfortunately onlyeight percent of that goes to international causes of any kind. And if you pull Americans they will tellyou that their primary reason for their private donations is to help people that are not as well off asthemselves, but only a third of their donations touches anyone in need anywhere in the world. If we aregoing to make a difference Americans need to follow the example of people like Steve and Jean Caseand not just identify as part of their local communities giving to their local institutions, their churches,their universities, institutions that provide important public goods but don't help alleviate globalpoverty. We need to help Americans to find themselves not just as Americans but as citizens of theworld building a broader global community. Government aid faces the same problem. If you pullAmericans they will tell you that 15 to 30 percent of the US Federal Budget goes to help nations, othernations in need. The reality is a very small percentage, less than 20 times that. In fact the totaldeveloped world gave a paltry 0.3 percent of global national income to development. Now thosenumbers are still big. And so one of the things we are focused on is raising that number and alsomaking it most effective as possible. And that's where our next speaker comes in.I am very pleased to introduce Ambassador John Danilovich to the stage. He became CEO of theMillennium Challenge Corporation in November 2005 after a very distinguished career. He served asAmbassador to Brazil and Ambassador to Costa Rica from the years 2001 to 2005 before that a verysuccessful career in the international shipping business. He served on the Boards of Directors of thePanama Canal Commission, a Director of the Stanford University Trust and a Director of the US-UKFulbright Commission among many other activities. But most importantly he is one of the leaders inthe world at trying to make government aid effective, by giving recipients the right incentives to do theright things to help their own populations. Ambassador we are pleased to have you here.Thank you very much Sheryl for that very generous introduction. I greatly appreciate it. I am gratefulto have the opportunity to speak to such a distinguished audience of philanthropists, entrepreneurs,public, private and corporate executives and representatives of various foundations and to tell youabout the work that the Millennium Challenge Corporation is doing to combat poverty throughout theworld. Reflecting the President's vision and Congress's bipartisan support, a unique combination at thebest of times, and recognizing the responsibilities we have as part of the developed world to assistthose in the developing world, the Millennium Challenge Corporation was established by an act ofCongress in 2004 to offer an alternative to US foreign development assistance. The MCC model isbased on the American ideals of compassion for those in need together with accountability andresponsibility. And it provides sizable development assistance grants to partner countries that practicesound policies, supporting good governance, investments and health and education of their citizens andeconomic freedom. Countries that are actively engaging and pursuing their own development bydevising and implementing their home grown strategies for poverty reduction through economicgrowth and countries that demand less nothing less than measurable and tangible results in lives ofthe poor.Today the MCC has awarded development grants, what we called compacts, to 11 partner countriesthroughout the world totaling in $3 billion. Another $310 million has been awarded to 13 othercountries in threshold agreements to help them address policy weaknesses, to push them over thethreshold towards compact eligibility. Though we are committed to development assistance,development assistance alone is not the answer to alleviating poverty. The answer is using aid as afoundation, a starting point a spring board to attract and leverage what is essential for generatingsustainable and transformative poverty alleviation. MCC's approach does just that. We use our aid toleverage the power of good policies, a country's ownership of its own development and the role ofprivate enterprise, to fight poverty. Let me explain what I mean by each of these areas. First aid aloneis ineffective if a country's policy environment underutilizes or wastes it. For this reason the MCC asdesigned provide aid as a positive reward to countries that have a sound policy framework already inplace. We do not provide aid to a country that promises to enact good policies. We provide aid tocountries because they already practice good policies. Lessons learned after decades of work in thedevelopment arena prove that performance based aid allocation helps maximize aid effectiveness.Therefore we partner with countries that measure above the median on at least half of the 16 objectiveand transparent indicators we use to access a government's performance in the areas of ruling justly,investing in the health and the education of their people and promoting economic freedom. We alsorequire our partner countries to perform above the median on our control of corruption indicator.Currently the Millennium Challenge Corporation is the only donor that ties eligibility for assistance toperformance on a transparent and public control of corruption bench mark. We create scorecardssummarizing a country's indicator performance for our board to use in making the selection ofcountries that qualify for our aid. You can visit our website at www.mcc.gov, to view the indicatorscorecards for all low income and lower middle income countries. Because scores and data drive ourapproach, countries suffering from corruption, poor governance and closed markets do not receive ourassistance. Countries that do not perform well on our indicators are encouraged to improve and tryagain in the next selection round. And many countries are doing just that. And even after a country isselected to participate in our program it must continue to maintain passing scores on their performanceindicators or risk loosing their eligibility. Since we maintain that aid goes further and would beawarded only by us if good policies are in place we are finding that countries are taking it uponthemselves to proactively initiate and accelerate policy reforms.We call this phenomenon the MCC effect, the Dominican Republic for example, launched a campaignto immunize five million of its citizens from measles and explicitly attributed the tremendousundertaking to its desire to qualify for MCC assistance, since the MCC measures immunization rates inour investing in people category. Countries talk to us and even hire experts to help them better assesstheir indicator performance. They engage directly with the organizations supplying the indicator data tomake sure the policy performance is captured accurately. Countries are providing us with detailedreform agendas. It is no accident that some of the most aggressive policy reformers in the world, asmeasured by the World Bank Doing Business Report are MCC eligible. According to that report 24countries specifically sited the MCC as the primary motivation for their efforts to improve theirbusiness climate. Presidents, ministers and government officials regularly call on us or ask ourambassadors in the field, what reforms do we need to make to become eligible for MCC funding? Todate at least 14 countries have established inter ministerial committees and presidential commissions todevice, implement and track reform strategies that address our selection criteria. They share our corebelief that aid is most effective in a policy environment where good governance as well as economicand human development are valued.Second aid alone is ineffective if it fails to enable countries to help themselves. We believe our partnercountries must play the central role in their own development. Our aid and our involvement mustenable countries to build their own capacity, to do for themselves. Therefore we ask our partnercountries to develop their proposals for funding after identifying their barriers to poverty reduction andeconomic growth, in consultation with their civil societies including the private sector. Taking anapproach much like an investor rather than a traditional donor we require that countries themselvescome up with their development strategy and provide their proposals to the MCC, much like a businessplan. If due diligence determines that their proposals are well integrated and comprehensive we notonly ask the we not only provide the funding upfront, but also ask countries to implement theseproposals. And we ask that they work with us to monitor their performance and evaluate impact alongthe way. These expectations have stretched the capabilities in our partner countries and motivated themto develop new capabilities and also to think critically about what policies are needed or whatinstitutions need to be strengthened or created to sustain development. They are building countrycapacity. In Ghana, for example, one of the major obstacles to the successful implementation ofdevelopment projects has been the lack of adequately trained public procurement specialists. Theability to procure goods and services in a transparent and competitive manner ensures the best use ofpublic funds. MCC is funding their procurement capacity building initiative within the Ghanaiangovernment designed to strengthen to effectiveness of various procurement entities. By improving theefficiency of government procurements, substantial resources can be saved in future years, resourcesthat could be directed towards health and education for the poor. Fair and competitive procurement alsostrengthens business confidence and encourages an open environment for innovation. Countriespreviously have not been expected to take on such an ownership role in their own development or totake on the level of responsibility and accountability that the MCC demands. Yet we believe thatcountry ownership is an absolutely pre-requisite if we are serious about leveraging our aid, to make itmore effective in the fight against poverty.Third, aid alone is ineffective if countries are not prepared to continue without it. Through goodpolicies and country ownership we foresee the day when our aid can be replaced by the self sustainingeconomic activity, driven and spurred from within our partner country itself by the private sector. Webelieve that the private sector fuels economic growth and the countries experience such experiencingsuch growth will see the number of their citizens living in poverty decrease. We see MCC's role astransitional as we became the gateway to private sector engagement. Even the most generous Americaninvestment can only be sustained unless favorable conditions exist for private sector enterprise toflourish and to become the engine for driving long term economic growth, because the MCC demandsperformance on indicators, evaluating fiscal, monetary, regulatory and trade conditions including thecost and days to start a business and insist on transparency and a rejection of corruption, we create apowerful incentive for countries to foster a business climate where the private sector can flourish andcan do business. This stimulates home grown entrepreneurship, small business development, increasedtrade and investor opportunities both domestically and for international companies. In our compactwith Benin for example, the access to financial services component is dedicated to improving thecapacity of small world enterprises to respond a new business opportunities by reducing the cost ofcredit and facilitating access to financial services. Within five years we expect that this will generatesubstantial new investment, creating jobs, raising incomes and lifting the lives of the poor out ofpoverty in Benin. By creating favorable business conditions through our compact with Nicaragua,MCC has already helped attract almost $10 million of investment from outside firms, particularlyGrupo Beta, a textile manufacturing firm that will create some 1500 local jobs, and we hope this is onlytip of the ice berg. Like Grupo Beta we want others in the private sector to look closely at what ishappening in our MCC partner countries, because MCC investments create and require viable physical,financial and policy infrastructure. The private sector has a favorable point of entry to initiate orexpand their own commercial activities. I encourage and invite the business community to leverageMCC investments and use them as a spring board complementing or as alternatives for their owninvestments.MCC eligibility and selection have been viewed by business and investors as providing countries witha good government imprimatur, a good house keeping seal of approval and have encouraged andattracted investments in MCC countries. I also invite foundations and companies with compassionatecorporate social responsibility and initiatives to look carefully at MCC programs in countries in whichthey have an interest. In conversations we have had with the Gates foundations and the Rockefellerfoundations for example, we have identified a number of mutual synergies in our fight against povertywhich are very worth exploring further. I have no doubt that we can be more effective, all of us, inachieving our objectives if we work together rather than when we work alone.Aid alone is not the answer to financing poverty alleviation. Aid that encourages and rewards goodpolicies, expects countries to be champions of their own development and engages the private sector bycreating the right conditions is the answer. And this is the approach the MCC is taking to reduce thepoverty among our partner countries. Initial results demonstrate that our approach is working. Ourcompacts are lifting communities out of poverty by stimulating the economic growth, to infrastructureprojects that makes access to markets, schools and health clinics possible, projects to improve thesecurity of land tenure for small farmers, soil conservation programs and improvements to agricultureand irrigation systems, business development initiatives including micro lending credit programs,improvements to water and sanitation services that are so vital to health. Land titles are being awardedin Nicaragua and Madagascar, many to women. MCC expects the women along side men participatefully in creating, implementing and reaping the benefits of our compacts in keeping with our genderpolicy, which Women's Edge Coalition and its President Ritu Sharma Fox, who I see here today, playssuch a significant part in developing. Farmers in Honduras are transitioning from corn and beans tohigher profit crops such as squash and jalapenos. Farming cooperatives in Madagascar are going toGeranium plants that will produce oil and soaps for perfumes excuse me that will produce oil forsoaps and perfumes. Grants are being awarded for the first eight agro business development projects inGeorgia that are creating new jobs, improving technologies and facilitating market access. In BurkinaFaso, "girl-friendly" schools are enrolling some 13,000 students. more than double the number fromthe last academic year, with girls making up more than half of the student population.The Millennium Challenge Corporation embodies government's effective role in applying newparameters and higher expectations to grant funding for development assistance to finance tangibleoutcomes that transform the lives of the poor. MCC seeks to fully leverage our relationships with ourpartner countries committed to sound policies and to engaging the private sector in order to reducepoverty through economic growth in sustainable and transformative ways. This is the solution theMillennium Challenge Corporation offers a solution that is already making progress and showingsigns of success in replacing poverty with prosperity for the world's poorest. Again I want to thankyou for allowing me the opportunity to speak to you today and I look forward to your continuedinterest in and support of the Millennium Challenge Corporation and to answering any questions whichyou may have.Thank you very much.