Deutsche Welle Online: Comment on Barbadian Debt as Typical Caribbean Small Island Problem

from the on-line English version of the paper at <>

[Just a minor caveat that there is no evidence that German financiers are necessarily balanced assessors of development options for oceanic small islands. . . . but they probably DO reflect the view of a lot of powerful people in the world banking community. bp ]


Drowning in debt — Barbados’ predicament offers a warning for small island nations

Barbados has been struggling with weak economic growth over the past decade, putting strains on its public debt and deficit. The ailing economy offers a cautionary tale for other small island nation states in the region.


Barbados, an island nation in the North Atlantic, doesn’t usually garner the attention of international media, particularly when it comes to its economy. With a population of about 285,000 in 2016 and total economic output amounting to just over $4.5 billion (€3.9 billion), according to World Bank data, the country’s size and role in the global economy is very limited.

Nevertheless, over the past decade the Barbadian economy has been struggling with severe debt and deficit problems. Growth suffered a sharp contraction in the wake of the 2009 global financial crisis and has remained weak since then.

In 2016, according to the World Bank, the economy expanded by a mere 1.6 percent. Weak growth figures have further strained Barbados’ public debt, putting pressure on foreign exchange reserves and helping to spark repeated downgrades of the island’s credit rating.

Read more: Rebuilding tourism after Irma

Highly vulnerable

Barbados currently has the fourth-highest debt-to-GDP ratio in the world after Japan, Greece, and Sudan with the country’s figure standing at 175 percent. A delegation of the International Monetary Fund (IMF) recently visited the Caribbean nation and described its economy as being in a “precarious” situation.

Insured against the Storm

Barbados’ recently elected Prime Minister Mia Mottley this week announced a raft of measures to tackle the problems and put the nation’s economy on a firmer footing.
The proposals are estimated to cost around $660 million and include new fuel taxes, a 50-percent hike in commercial premises’ water bills and a new health service contribution amounting to 2.5 percent of an individual’s income, among other things.

Motley, who was elected in May as Barbados’ first female prime minister, also announced that the country would seek a restructuring of the public debt and temporarily suspend payments due on debts owed to external commercial creditors. She said that the previous administration, under Prime Minister Freundel Stuart, left almost $7.5 billion in debt.

“We will protect the most vulnerable, but we will all have to make sacrifices for our country. Today we move forward together in a new spirit of openness and with a new covenant of hope and opportunity. I ask our domestic and external creditors to accompany us on this journey of rescue, rebuilding, and transformation,” Mottley was quoted by local media as saying.

But the prime minister now faces the tough challenge of balancing her campaign promises with the difficult fiscal reality. Her government, experts say, has to take measures to boost growth and expand the tax base while containing public expenditures and protecting the most vulnerable sections of society from economic distress.

A region-wide problem

Barbados is not alone in the region when it comes to facing economic problems. Many Caribbean nations are going through a similar phase, experiencing troubles emanating from their high debt and deficit levels.

The origin of many of their woes dates back to the late 1990s. Between 1975 and 1997, a deal between the European Union’s forerunner, European Economic Community, and Caribbean countries gave the latter privileged access to the European market.

The arrangement was intended to bolster economic development in the Caribbean. But the United States argued that it broke free trade rules and filed a complaint with the World Trade Organization in 1997, and won.

As a result, Europe had to change its rules, hurting the Caribbean nations’ growth prospects. To finance growth and investment, these countries then increasingly relied on debt.

The region has been hit by a number of hurricanes over the past two decades, forcing them to undertake debt-driven disaster recovery efforts, in turn weakening their finances further.

To put its economy back on track, observers say Barbados is making all the right moves but the road to recovery will be a long one. If Prime Minister Mottley can make good on her campaign promises while rectifying external and internal debts, analysts underline, Barbados might be out of the red and into calmer economic waters sooner rather than later.


    Strongest-ever Atlantic storm

    Hurricane Irma has killed dozens of people and injured many more since the record-breaking storm roared over the French Caribbean islands. With its powerful winds having topped 185 miles (295 kilometers) per hour, Irma is the strongest storm ever recorded in the Atlantic Ocean, according to the US National Hurricane Center based in Miami.



 Insuring against extreme weather in the Caribbean

Extreme weather events linked to climate change can cause major damage — destroying homes and livelihoods. Caribbean islanders have seen some of the worst effects. Could climate insurance help? (15.05.2018)

Rebuilding tourism after Irma

It’s been over a week since hurricane Irma ripped through the Caribbean – but for paradise islands overwhelmingly dependent on the tourist trade, the damage is far from over. (14.09.2017)

New model bucks Jamaican package deals

A Jamaican town tries to beat all-inclusive packages with local food and marine reserves to keep tourist dollars from leaking offshore. (21.10.2012)

Hurricane Irma rips through Caribbean and US southeastern states

Hurricane Irma cut a swathe of destruction as it roared through the Caribbean and southeast US. Tropical islands were turned into piles of rubble while some 6.5 million people in Florida have been left without power. (07.09.2017)


Insured against the Storm

The Jamaica factor in Germany


Posted in Development, Governance, Small Island

Among Real Problems Largely Ignored at an Important Forum

Lost in the static over Trump histrionics <from the Seychelles News site > —

President of Seychelles shocks G7 meeting with photos of ocean trash

Victoria, Seychelles | June 11, 2018, Monday @ 14:21 in National » GENERAL | By: Betymie Bonnelame | Views: 1794

The team on Aldabra is no match for the great amount of trash washing to shore on Aldabra. (Seychelles Islands Foundation)

(Seychelles News Agency) – The President of Seychelles, Danny Faure, shocked the leaders of the Group of Seven (G7) nations with photographs of the damage being done to the island nation’s Aldabra atoll by plastic pollution and other types of litter coming from the rest of the world, State House said on Sunday.

Faure told the roundtable of small islands developing states at the G7 summitin Quebec, Canada that Seychelles and other small island countries already had enough of a challenge managing their own waste, and didn’t need to take on the rest of the worlds.

Aldabra — a UNESCO World Heritage Site in Seychelles – is a remote atoll and the team is no match for the amount of trash washing on its shores. An Aldabra clean-up project was launched last month and will culminate with an expedition to be led by the Queens’s College from the UK to remove tonnes of ocean trash.

Faure added that the islands “needed assistance with handling the vast and increasing amounts of marine litter washing up on and polluting their beaches and coasts from way beyond their shores.”

The roundtable included island leaders from Haiti, Jamaica, the Marshall Islands and Seychelles to discuss the challenges of small islands developing states. (State House, Facebook) Photo License: CC-BY

The leaders of the G7, which includes Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, agreed that President Faure had graphically made his point.

The roundtable included four island leaders from Haiti, Jamaica, the Marshall Islands and Seychelles, an archipelago in the western Indian Ocean, to discuss the challenges of small islands developing states(SIDS).

Faure was also invited to a special session on oceans at the G7 summit by the Canadian Prime Minister Justin Trudeau since Canada holds the presidency for 2018. The session was held under the theme ‘healthy, productive and resilient oceans and seas, coasts and communities.’

In his address at the session on oceans, Faure spoke about Seychelles’ innovative financing for the blue economy and ocean sustainability.

When Seychelles graduated to a high-income country in 2015, instead of complaining about losing grant funding, Faure said the island nation turned to pioneering new innovative sources of financing. This included a first-of-its-kind debt swap for ocean conservation and climate adaptation and the forthcoming and equally novel blue bonds.

“However, try as we might, such new sources of finance will not be enough to meet our sustainable development and climate action obligations under the 2030 Agenda, the Paris Agreement and the SAMOA Pathway for SIDS,” he told the G7 leaders.

Faure called on the G7 and multilateral partners to agree on a SIDS-specific resilience index that takes into consideration small island countries’ unique vulnerabilities to external shocks, be they climate change or economic.

“Islands can no longer afford to see ourselves as dots lost in a sea of blue. We are sentinels, the guardians of two-thirds of our Blue Planet’s surface. We must act accordingly,” added the Seychelles’ President.

Faure also called on Prime Minister Justin Trudeau and Canada to play a prominent and proactive role in high seas negotiations that begin at the United Nations in New York this September.

Posted in Beaches, Coral Reefs, Governance, Small Island

The Boomers’ Fail

Ron Morgan called my attention to this profound critique of modern social/political deficits by David Brooks from the NY Times, May 29th.


The Strange Failure of the Educated Elite

By David Brooks
Opinion Columnist

May 28, 2018

CreditBrian Snyder/Reuters

Once upon a time, white male Protestants ruled the roost. You got into a fancy school if your father had gone to the fancy school. You got a job at a white-shoe law firm or climbed the corporate ladder if you golfed at the right club.

Then we smashed all that. We replaced a system based on birth with a fairer system based on talent. We opened up the universities and the workplace to Jews, women and minorities. University attendance surged, creating the most educated generation in history. We created a new boomer ethos, which was egalitarian (bluejeans everywhere!), socially conscious (recycling!) and deeply committed to ending bigotry.

You’d think all this would have made the U.S. the best governed nation in history. Instead, inequality rose. Faith in institutions plummeted. Social trust declined. The federal government became dysfunctional and society bitterly divided.

The older establishment won World War II and built the American Century. We, on the other hand, led to Donald Trump. The chief accomplishment of the current educated elite is that it has produced a bipartisan revolt against itself.

What happened? How has so much amazing talent produced such poor results.

A narrative is emerging. It is that the new meritocratic aristocracy has come to look like every other aristocracy. The members of the educated class use their intellectual, financial and social advantages to pass down privilege to their children, creating a hereditary elite that is ever more insulated from the rest of society. We need to build a meritocracy that is true to its values, truly open to all.

I’m among the many who have been telling this story for 20 years. And I enjoy books that fill in compelling details, like Steven Brill’s “Tailspin,”which is being released Tuesday.

But the narrative is insufficient. The real problem with the modern meritocracy can be found in the ideology of meritocracy itself. Meritocracy is a system built on the maximization of individual talent, and that system unwittingly encourages several ruinous beliefs:

Exaggerated faith in intelligence. Today’s educated establishment is still basically selected on the basis of I.Q. High I.Q. correlates with career success but is not the crucial quality required for civic leadership. Many of the great failures of the last 50 years, from Vietnam to Watergate to the financial crisis, were caused by extremely intelligent people who didn’t care about the civic consequences of their actions.

Misplaced faith in autonomy. The meritocracy is based on the metaphor that life is a journey. On graduation days, members for the educated class give their young Dr. Seuss’ “Oh, the Places You’ll Go!” which shows a main character, “you,” who goes on a solitary, unencumbered journey through life toward success. If you build a society upon this metaphor you will wind up with a society high in narcissism and low in social connection. Life is not really an individual journey. Life is more like settling a sequence of villages. You help build a community at home, at work, in your town and then you go off and settle more villages.

Misplaced notion of the self. Instead of seeing the self as the seat of the soul, the meritocracy sees the self as a vessel of human capital, a series of talents to be cultivated and accomplishments to be celebrated. If you base a society on a conception of self that is about achievement, not character, you will wind up with a society that is demoralized; that puts little emphasis on the sorts of moral systems that create harmony within people, harmony between people and harmony between people and their ultimate purpose.

Inability to think institutionally. Previous elites poured themselves into institutions and were pretty good at maintaining existing institutions, like the U.S. Congress, and building new ones, like the postwar global order. The current generation sees institutions as things they pass through on the way to individual success. Some institutions, like Congress and the political parties, have decayed to the point of uselessness, while others, like corporations, lose their generational consciousness and become obsessed with the short term.

Misplaced idolization of diversity. The great achievement of the meritocracy is that it has widened opportunities to those who were formerly oppressed. But diversity is a midpoint, not an endpoint. Just as a mind has to be opened so that it can close on something, an organization has to be diverse so that different perspectives can serve some end. Diversity for its own sake, without a common telos, is infinitely centrifugal, and leads to social fragmentation.

The essential point is this: Those dimwitted, stuck up blue bloods in the old establishment had something we meritocrats lack — a civic consciousness, a sense that we live life embedded in community and nation, that we owe a debt to community and nation and that the essence of the admirable life is community before self.

The meritocracy is here to stay, thank goodness, but we probably need a new ethos to reconfigure it — to redefine how people are seen, how applicants are selected, how social roles are understood and how we narrate a common national purpose.

Follow The New York Times Opinion section on Facebook and Twitter (@NYTopinion), and sign up for the Opinion Today newsletter.

A version of this article appears in print on May 29, 2018, on Page A23 of the New York edition with the headline: The Strange Failure of the Educated Elite. Order Reprints | Today’s Paper | Subscribe

Posted in Civil Society, Futures, Governance

“Bizarre Spikes” Becomes a Standard Feature of Climate Change — not just in the Arctic

Check it out — an opinion piece from E&E in February of 2018.

from Medium <>

Michael K. Spencer 

Arctic Alarms Climate Scientists with Bizarre Temperature Spike



In a world of misinformation, fake news perpetuated by algorithms, walled gardens and digital immersion, people sometimes lose touch with the real world. We read the news as a kind infotainment, but what if we’re missing the news that really matters?

Cape Town is struggling with a water shortage that could end in disaster this year, and recently, record warmth in the Arctic this month is sending experts into new rants on the start of an unprecedented warming event.

In late February 2018, the North pole was warmer than parts of Europe. There are Twitter accounts (@Zlabe) of climate scientists worth following in the story of arctic warming. Why does this matter? Because it influences all of us, all the people alive on Earth. Arctic warming, water shortages, they will go hand in hand in the coming decades. There’s reason to believe, global warming could accelerate faster than many of our simulations.

An extraordinary heat wave pushed temperatures at the northernmost tip of Greenland was as high as 6.1 C this weekend. And the sun won’t rise for weeks. (The Star)

Flooded by extremely mild air on all sides, those southern winds are wrecking havoc on what’s supposed to happen at this time of the year. Something very strange is occurring, it can be summarized as the following: The #Arctic is warming at twice the rate of the rest of the world. 

The cold weather in Europe led in early 2018 to extremely high arctic temperatures. The likes of which we have not seen before. Put another way:

It’s the Middle of Winter and the Temperature at the North Pole Is Above Freezing

About one week ago, the Arctic was so massively unusual, it was stewing in temperatures more than 45 degrees above normal. The Arctic sea ice around Svalbard is at a record low for the date. It has been well below average all winter.

The sun won’t rise at the North Pole until March 20, and it’s therefore supposed to be close to the coldest time of year, however the hot spike was intense. Droughts leading to water shortage crisis like Cape Town, and in late February, mean temperatures of+3.9°C in the arctic signal sweeping changes have perhaps come sooner than expected. This where the climate average for the date is -16.3°C. These aren’t normal variations!

The northernmost weather station in Greenland saw temperatures soar above freezing on 9 days this month so far. Sea ice near there disappeared. Unheard of for February.

How do you have the arctic perpetual night, but still above freezing? Certainly as the Arctic ice melts more significantly the light reflected will accelerate global warming. We now know this ice will disappear, within our lifetime. Perhaps as soon as 2035 or 2040.

Sea ice fell to its lowest level since human civilization began more than 12,000 years ago.

Human beings left Africa in waves, one of the primary ones being around 55,000 years ago, yet man-made climate change that we’ll witness could trigger changes that might threaten the very way we live.

Residents in Cape Town are awaiting “Day Zero,” when water supplies in the city’s reservoirs drop below 13.5%. Mayor Patricia de Lille estimated recently that the day will likely be April 21, now revised to June or July of 2018.

If you think these events are not related, you would be probably mistaken. Just as humanity is closing in on a technological singularity when technology and our ability to self-engineer ourselves could threaten our survival, we may also be entering an ecological environmental press that could push us to rapid progress, or actually a humanity extinction event. Let’s not even talk about the debt-bubble our global economy is in.

As a futurist, I think about all of these forces and their relationship upon our psyche. Yet in an era of Netflix, mobile immersion and video game zombieism, one has to wonder if we’ve lost touch with the very aspects of what made us most human for the last few thousands of years? The majority of humanity, won’t even be aware of arctic warming or the issues in Cape Town. Most people will still be living locally, without a deep concern for the state of the species. Without a recognition of what colonizing Mars actually means.

The Arctic could be a sauna and it wouldn’t even make the news.

The Arctic does not usually look like this, warning this image may not be understood by most viewers.

It was in in Utqiaġvik, previously known as Barrow, where a paradox occured, temperatures soared to a record high of 31 degrees, 40 degrees above normal. What does it mean?

So it goes — yet another anomalous winter in the #Arctic. Will Twitter care, human beings already impossibly irresponsible, emphatically lacking in sustainable agility — already we hardly can even formulate what’s to come for our children and grandchildren. The shift, almost beyond our imagination. Climate change skeptics, raging on.

Warm intrusions in February, in the Arctic! Par for the course now each year for Zack Labe, a climate scientist working on his PhD at the University of California at Irvine.

Even the most battle hardened cynic would find it hard to dispute the disappearance of arctic ice.

Hmmm, well I’m not a climate scientists. But this is kind of clear.

Temperatures over the entire Arctic north of 80 degrees latitude have averaged about 10 degrees above normal since the beginning of the calendar year of 2018.

There’s no viral meme to entertain us of what this actually means for the planet Earth. There’s no clear understanding of the consequences, or what comes next. It’s not the end of the world, but The Arctic Ocean once froze reliably every year. Those days are over. Perhaps for the first time in 1,500 years.

We’ve been measuring arctic sea ice extent by satellites since the 1970s. Fifty years later, we’re witnessing an event. It could have feedback loops which transform the way we live. Closest to the North Pole (>80°N latitude), #Arctic temperatures are the highest on record for the month of February in this data set. This is not News, as humans who follow their apps know it, this is the Earth we are talking about, the very ball of life that has sustained even our ability to destroy such massive amounts of biodiversity and forests in a few thousands years that aliens from other planets must be debating our danger to the cosmos. We’re clearly, not a normal species.

Humans might be on top of the food-chain on this enduring planet, but we are not without our fragility. The top of the world is turning from white to blue in summer as the ice that has long covered the north polar seas melts away, and we did it! We brought this upon ourselves. How many more Cape Towns will there be, and how soon? How many climate change migrants will be forced to leave their homes? How many more frequent weird storms shall appear?


We’ve witnessed a lot of species go extinct on our watch, probably more than most of us even realize. The biodiversity that existed before we colonized areas, before we probably made Neanderthals and Denisovans go extinct after some splendid and isolated origies, well — we deserve some credit. Our crisp cities are growing into mega-complexes while the natural world dies; as forests retreat and all the usual things we rarely think about.

We rarely do acknowledge the feedback loops or how we would cope if global warming triggered a mini ice-age. We plan for nuclear war from Russia or North Korea, but not that. A day may come when the Earth’s livability may make colonizing Mars seem like a really good idea.

Arctic sea ice was at its lowest extent on record this past January, according to the National Oceanic and Atmospheric Administration. This February of 2018, we witnessed another arctic warming anomaly that will probably seem very weird, perhaps that is, until 2019.


Posted in Climate Change, Futures

Book about Providencia or New Providence, or ¿Santa Catalina?

from the New York Times Book Review section for Sunday, 13 May 2018 —


Pirates, Runaways, Smugglers and the Occasional Aristocrat


Review By Michael Pye                                                  May 11, 2018


The Lost History of the Mayflower’s Sister Ship and Its Rival Puritan Colony

By Tom Feiling
402 pp. Melville House. $28.99.


Providence lies off the coast of Nicaragua.    Credit    Simonetta Giori

The island of Providence is still on the map, but you just might not notice. It’s a speck of land in the Caribbean, off the coast of Nicaragua, with lovely blue waters and good lobster, a fueling stop for the speedboats rushing cocaine to the mainland. It was once a holy settlement founded by English Puritans, then it was Spanish for centuries and since 1928, as Providencia, part of far-off Colombia. It’s a place that’s now out of almost everybody’s way.

Naturally, being obscure, Providence has a raucous history that mostly isn’t officially documented. In the early years, its founding preachers could be “angry” and “vile,” but then the settlement was reorganized by rather jollier Puritans, one of whom liked Irish whiskey and Welsh conjurors. Later there were pirates, runaways, smugglers and the occasional aristocrat. Also a man who blamed himself for a crown prince’s suicide, an Englishman who may have been the first in the Americas to raise a quiet voice against slavery and, it was rumored, a fugitive Pablo Escobar.

All this is in Tom Feiling’s lively, baggy “The Island That Disappeared,” which belongs to the higher class of clever scrapbook, bolstered with the best sources and very fluent storytelling. If the narrative can seem ramshackle, that’s the nature of its subject: Why try to hold history together with map references when the really interesting events tend to happen in the margins? Feiling further muddles things by bringing in other islands when it suits him, which doesn’t help. But he has one huge advantage: the rich 17th-century records of the original Providence Island Company, which tried to found a Promised Land South to rival the famous one in Massachusetts. Although its settlers arrived on the sister ship to the Mayflower, relations between the two settlements were rather fraught.


God’s favor wasn’t obvious. Woodworm got into the tobacco, which was the colonists’ lone hope of a cash crop. On one occasion, the outnumbered English defenders were reduced to cutting up organ pipes from a ruined church and throwing them at the Spanish. The island’s settlers quickly realized there was money in being pirates — or, if you prefer, special forces in the godly war against Spain. And so the place began to divide disastrously between the holy and the military. At home, meanwhile, the company’s members were involved in the English Civil War, which interrupts Feiling’s story to no great purpose and helped to wreck Providence.

The island was taken by the Spanish and became Santa Catalina, [? bp] was then lost by them and taken back again; but now Feiling’s story changes. It’s no longer about the Promised Land. Providence has become just one more island where people wash ashore. Feiling tracks some of those extraordinary individuals and makes them live, but now his facts don’t fit his larger aim, to show in microcosm “how the Western world came into being.”

He may want to talk about the big picture, but the story of Providence wasn’t about the making of “a mighty empire.” It was about God, food and money. When the British of that time talked about empire, they meant Ireland and nothing much beyond the British Isles. It was only later that a British citizen would have the opportunity to feel guilty about such things. And the guest appearance by David Cameron at the end of the book seems bizarrely out of place. Providence’s past would be odder, wilder and more intriguing without being seen through such modern spectacles.

Michael Pye’s most recent book is “The Edge of the World: A Cultural History of the North Sea and the Transformation of Europe.”

Follow New York Times Books on Facebook and Twitter, sign up for our newsletter or our literary calendar. And listen to us on the Book Review podcast.

A version of this article appears in print on May 13, 2018, on Page 16 of the Sunday Book Review with the headline: Puritans of the Caribbean. Order Reprints | Today’s Paper | Subscribe

Related Coverage

 Islands in the Sun                                 Dec. 1, 2016

‘A Tale of Two Plantations,’ by Richard S. Dunn         Jan. 2, 2015            ‘A Tale of Two Plantations,’ by Richard S. Dunn

‘Empire’s Crossroads,’ by Carrie Gibson                  Dec. 31, 2014            ‘Empire’s Crossroads,’ by Carrie Gibson

Posted in Small Island

Tools for Change — Donor Advised Funds

from Slate

[personal note — Kincey and I have a couple of donor advised funds, funded through local Community Foundations. Commercial fund managers like Fidelity are not the only tools that can be used by individuals to set up a Donor Advised Fund. Funds can be quite small: this article says over $5,000.

There’s an IRS information sheet (“DONOR-ADVISED FUNDS GUIDE SHEET EXPLANATION,” July 31, 2008, so this isn’t exactly new news). Neither this Slate article nor the IRS Sheet is as clear as could be about how a Donor Advised Fund works.

1) Find a non-profit donor advised fund manager, like those discussed in this Slate article, and including community Foundations, such as the Anne Arundel Community Foundation, or the Community Foundation of the Virgin Islands. Pay attention to the costs and fees of the fund managers;
2) When you have a $5,000 or more contribution to charity that you want to make (sometimes driven by considering a year when you will have big income, and want to get a tax credit for a charitable contribution, but you’re not sure about exactly how it should be disbursed). donate it to your personal Donor Advised Fund;
3) When you know exactly how and how much you want to donate, advise the organization managing your Donor Advised Fund to give the money to the appropriate organization. That’s it — you’re the donor, and you or your designees are the advisor. bp]
– – – – – – – – – – – – – – – – – – – – – – – –

The Disrupter

How Fidelity and its donor-advised fund are shaking up charitable giving for the better.

By FELIX SALMON                             MAY 11, 2018    9:00 AM

Photo illustration by Slate. Photos by Thinkstock and Spoon Graphics.

This piece is part of the Slate 90, a series that examines the multibillion-dollar nonprofit sector. Read all stories from the Slate 90 here, and view the Slate 90 nonprofit rankings here.

There’s not a lot of churn in the Slate 90. Places like the Smithsonian (No. 1 in the Arts, Culture, and Humanities sector) and the American Bible Society (No. 2 in the Religion sector) have been around for hundreds of years and don’t move a huge amount from year-to-year. Hypergrowth is rare—except in the case of donor-advised funds.

DAFs are vehicles to provide tax advantages for people who GAF. They’re a kind of democratized foundation, available to anybody with $5,000 to give. In recent years, the sector has boomed. And no DAF has grown faster than Fidelity Charitable, the DAF administered by asset management titan Fidelity Investments.

Fidelity Charitable, which was founded in 1991, had an absolutely astonishing $5.4 billion of revenue in 2015, the vast majority of which came from its $4.6 billion in fresh contributions. That is twice the size of the Red Cross, and more than 14 times as much as the Museum of Modern Art. More impressively, revenues rose 23 percent, or more than $1 billion, from the $4.4 billion in 2014 revenues. Go back to 2011, and the amount was just $1.9 billion; in 2005, Fidelity Charitable’s revenues were below $1 billion. In terms of sheer growth, no other institution comes close. Fidelity Charitable, along with the other big DAFs (Schwab Charitable, the Silicon Valley Community Foundation, Vanguard Charitable), is revolutionizing the philanthropic league tables.


Figures are 2015 revenue. Rankings by Slate and GuideStar.

What are DAFs? They’re a place to park your money, often the proceeds from some significant windfall—$2 million from the sale of your stake in a family business, $12 million in vested stock options at your venture-backed startup—while you’re trying to work out which charitable causes it should go to. You get the frisson of a big tax deduction up front, thus reducing your tax burden today. And you get the satisfaction of spreading out charitable giving over many years. Bonus: If the markets rise, your giving potential can grow accordingly.[]

As a matter of public policy, there’s a case to be made that DAFs shouldn’t exist, partly because they need to place a valuation on illiquid assets before they’re sold, which is not easy to do, and partly because they allow people to simply park charitable funds without giving them away at all. Hell, there’s a pretty strong case to be made that the entire charitable deduction shouldn’t exist. But DAFs in general, and Fidelity Charitable in particular, cause a lot more good than harm. They encourage people to give to charity when their windfall is fresh and before they’ve really had time to get used to it as part of their personal wealth. (Once you’ve donated the money to a DAF, you can move it to a different DAF, but you can’t take it back.) DAFs also make it very easy to take illiquid appreciated assets, like real estate or private companies or CryptoKitties, and turn them into charitable funds without worrying about negative tax consequences. And it makes sense that they would be growing rapidly in an era in which investment returns and capital are outpacing overall economic growth.

To be sure, Fidelity’s interest in Fidelity Charitable is not wholly charitable. While your funds sit in a DAF waiting to be disbursed, they’re invested in the market. And if they’re in Fidelity’s DAF, they’ll be invested in Fidelity’s funds. Fidelity makes its money by investing other people’s money, and it similarly made money by investing the $15.3 billion it had in its DAF in 2015. That’s nothing to sneeze at, even if it is only a tiny, tiny fraction of the $2.5 trillion that Fidelity had under management that year.

But the incentive structure is good. Fidelity makes money by encouraging people to donate money to Fidelity Charitable. And the data suggest that DAFs are not aiming to mimic established foundations, either in longevity or cost structure. DAFs, in fact, generally give that money away pretty quickly: 38 percent of the original dollars donated are gone within a year, and 74 percent is doled out within five years. That’s a hell of a lot better than you see at most foundations, which tend to be set up as perpetuities that give out the bare minimum of 5 percent of their assets each year.

There’s a pretty strong case to be made that the entire charitable deduction shouldn’t exist. But DAFs in general cause a lot more good than harm.

The secret to Fidelity Charitable’s growth is simple: It went to where the money is. It approached financial advisers, many of whose clients’ accounts are already at Fidelity. According to U.S. Trust, some 91 percent of high net worth individuals (those with a net worth of $1 million or more) give money to charity, but only 9 percent of them consulted with a financial adviser about their charitable giving and how best to structure it. So Fidelity founded Fidelity Charitable University, a place where financial advisers can learn about an aspect of wealth management that they often know almost nothing about (and gain continuing education credit in the process). Self-serving? Surely. Good for the total amount of money flowing into charitable causes? Absolutely. In general, the more conversations you have about your personal philanthropy, the more you’re likely to end up giving.

That’s why the growth of DAFs is far from over. Fidelity is the biggest of the lot, and it still only has about 100,000 giving accounts, representing only a tiny fraction of its 26.1 million brokerage accounts. Most Americans still haven’t even heard of DAFs, which means that there’s a long way to go before the DAF joins the 401(k) and the 529 plan as part of most rich families’ financial portfolios.

The DAFs do mean that that there’s a certain amount of double counting in the Slate 90: If a dollar flows into Fidelity Charitable and then into the Red Cross, say, then it’s going to get counted twice. Don’t think of Fidelity Charitable as displacing the other charities on the list, then. Instead, think of it as helping to change the way that Americans give, especially now that President Donald Trump’s tax reform means that there are real tax benefits to what financial advisers refer to as “bunching.”

America’s giving may be becoming a little less passionate, a little more technocratic and bloodless; people are starting to ask more pointed questions about how effectively their monies are spent, and at the same time are willing to give away significantly more money (and quickly) if they are comfortable with where it’s going. DAFs are a central part of this development, which means that for as long as the charitable tax deduction exists, they’re going to continue to grow much faster than the sector as a whole.

Read more about the Slate 90’s methodology.

Posted in Civil Society

One Way to Stop Killing Our Reefs . . . .

from Slate <>


Get Sunburned, or Contribute to the Death of Coral Reefs

Sunscreen producers are putting tourists in a no-win situation.

MAY 07, 20185:55 AM

Photo illustration by Slate. Photo by Thinkstock.

Future Tense is a partnership of Slate, New America, and Arizona State University that examines emerging technologies, public policy, and society.

For years, we were told to apply sunscreen, and apply it liberally. Whether lying on the sand or snorkeling among the waves, slathering up seemed almost a moral obligation—the slimy, shiny price of enjoying the sun. The risks of skin cancer were absorbed into our psyches as deeply as we once absorbed UV rays—SPF 50 or go home. With the invention of waterproof sunscreen in 1977 and the rise of sun-safety awareness, the chemical-y smell of sunscreen became an unmissable feature of the beach vacation.

But since research now suggests that oxybenzone and octinoxate, which show up in almost all major sunscreens, are harmful to the marine ecosystem, we seem to have a moral dilemma on our sunscreen-coated hands: ruin your skin, or ruin the environment. In a 2015 study, oxybenzone and octinoxate were found to contribute to coral bleaching (the scourge that has more or less destroyed the Great Barrier Reef), slow new coral growth, and disrupt marine life. The study found the chemicals in especially high concentrations in popular tourist waters, especially in Hawaii and the U.S. Virgin Islands. In response, some resorts and tour companies have chosen to ban or educate against nonbiodegradable sunscreens, while the National Park Service recommends being “reef friendly” by choosing sunscreens made with natural mineral ingredients such as titanium oxide or zinc oxide.

Now Hawaii, seemingly unwilling to go down the same path as the Great Barrier Reef, has become the first state to ban the sale of sunscreen containing the coral-killing chemicals. The legislation, which still awaits the governor’s signature, won’t come into effect until 2021, giving sunscreen producers plenty of time to switch over to a safer formula. Hawaii’s ban leaves producers with two options: continue offering chemical sunscreens without oxybenzone and octinoxate or switch over to natural, mineral-based sunblocks.

It shouldn’t be on vacationers to choose between skin cancer and feeling responsible for the destruction of our natural wonders.

Producers, however, have seemed unwilling to adapt thus far—in fact, they opposed Hawaii’s legislative efforts. Trade groups representing the cosmetics and over-the-counter-medicines industries—the Personal Care Products Council and the Consumer Healthcare Products Association—have pointed to the other, “real” causes of coral bleaching, scapegoating “global warming, agricultural runoff, sewage and overfishing” for the decline of coral. (One researcher behind the 2015 study, meanwhile, told the New York Times that the effect of the chemicals on coral is “bigger than climate change.”) The Personal Care Products Council has continued to insist that oxybenzone is key to preventing skin cancer; the Consumer Healthcare Products Council went as far as to say that Hawaii’s ban of it compromises “health, safety and welfare” of residents and tourists. In other words, they’re pouring money into lobbying and campaigning rather than developing safer products.

In refusing to tackle this ecological issue head-on, major sunscreen brands have put the onus on environmentally conscious consumers (and resorts) to seek out atypical reef-friendly options. Some companies do offer one or two oxybenzone-free options among their range, but these products still make up the minority of those on the market: The Consumer Healthcare Products Council, in attempting to criticize the new bill, puts this number at less than 30 percent, accusing the new Hawaiian law of banning “at least 70 percent of the sunscreens on the market today.” (Research is mixed on whether mineral-based sunscreens—known as “physical blockers” because they sit on top of the skin—are as effective as chemical-based ones. Some claim they are more effective, protecting against both UVA and UVB rays by deflecting rather than absorbing sun.)

But if we’re going to take environmental preservation seriously, the onus must be on producers, not consumers, to recognize and prevent the damage their products can do. It shouldn’t be on vacationers to choose between skin cancer and feeling responsible for the destruction of our natural wonders—and in any case, too many are unaware of the choice they are making. Hawaii is a start. Hopefully the ban will drive sunscreen producers to finally address this problem—that or stop selling in the Aloha State, which seems unlikely. In developing new products for the Hawaiian market, major brands like Hawaiian Tropic, Banana Boat, and Coppertone can and should apply their efforts to their global markets.

If producers won’t budge on their own, it will be up to legislatures to continue to force their hand with similar laws. My home country of Australia, with its global warming–deadened reef and unfortunate title of skin-cancer capital of the world, ought to introduce such a ban—with a sunscreen market supposedly worth an annual $289 million in U.S. currency, this too will force producers to change their ways. The destruction of the Great Barrier Reef, meanwhile, should be a lesson to other countries with marine-tourism industries. The skin care industry may have a financial incentive to continue using oxybenzone in its products until stopped, but countries have a financial disincentive to allow it: The Australian government has recently launched a $500 million package to try to save the reef, though it may not even work.

Just as governments are starting to place .” Or in this case, slip on a ban, slop on regulations, slap with fines.

Posted in Fun