CSOs and State 20, Gawad Kalinga and Housing for the Poor

Below are some thoughts from Benito Claudio, a friend of my former professor in UP Diliman in the 80s, Dr. Doy Romero. This was posted last week by Benito and sir Doy in fb and  was read by many people. I like this very successful civil society initiative, Gawad Kalinga (GK). It is very successful that it is being replicated in other Asian countries, and there are GK offices in  the  US, Europe, other countries. Reposting this with my comments below. The images I got from the web and adding them here.

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Doy I speak from my personal participation in three project sites of GK where about 400 houses were built in two sites and about 80 houses and a school were re roofed after a super typhoon in another site. I led a team of volunteers twice to re roof about 80 houses and rebuild a school and provide learning materials and two teachers for a year.

I volunteered in the other two sites. What was so noticeable in the site where we re roofed the houses and rebuilt the school was a working community with sense of involvement and belongingness. The project was well planned with common areas for school, livelihood and open spaces. In effect GK built a community not just houses.

This did not happen by chance but by meticulous planning and highly committed implementation by silent and unsung volunteers. Gk has teams of social workers, construction engineers, educators, livelihood trainors and site managers who oversee the community after the houses were built.

"House owners who were obviously poor in material things donated their service as their equity and I believe this provided a basis for ownership and pride. Livelihood volunteers provided the know how to create common plots for vegetables for the community and other entrepreneurial undertakings. Social workers ensure that community members gel.

In short what I am describing is the building of a wholistic communities where the members can live with dignity. It is so inspiring that my fellow employees grouped themselves to pool resources for a house they helped build. Others spent their vacation leaves to individually volunteer.

But all of these pale in comparison to the commitment of the Meloto family. I suggest the commentators start their research there. A foreign government was so impressed with GK that it provided an office in their country so that GK's effort can go international. . . I believe rightly so.

"The poor will always be with us but it was heart breaking to see a widow covering her young famished children with plastic sheathing against a pouring rain under a roofless house. And I wondered why so few people are lifting their fingers to help.

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Sir Doy Romero added his  own thoughts on the subject: 

the GK communities we visited appeared better organized than many of the non-GK resettlements we visited later. We did not see the lamentable condition of government resettled informal settlers that we documented in our study. In the end, we who observe from a distance really will not matter. The poor who need shelter will get them from GK and not from any other provider, if GK it is that is able to galvanize the energy and passion to get them done. 

I thanked sir Doy for those notes  and observations. GK is a clear example of civil society role at the max, government role at the minimum. People and beneficiaries behave differently if the project implementer is government, national or local. They tend to downshift to dependence, complacency and feeling of entitlement. “Money is from taxes and fees, those politicians are courting our votes, so we sit back and wait.” And just wait for the government housing to be turned over to them by some political bigwigs, with glare and flare of  tv cameras and other media coverage.

In a GK and civil society project, money is from donation, not from coercion. Beneficiaries behave differently. “Those talents and engineers are volunteers, not political appointees and hired paid for by taxes. If we do not help here, those volunteers will pack away and find other beneficiaries who are willing to help themselves and the project.”

GK, Rotary Homes, Books for the Barrios, etc. These initiatives build not only wholistic communities but also mature, self-reliant and non-corrupt, non-entitlement-minded people, especially the poor.

I have a friend from UP, now based in California. He regularly donates to GK and GK updates him and other donors of new projects, how funds are used, etc. He is satisfied so he keeps giving. But he told me that the moment he sees or reads and confirms wasteful use of funds or other shenanigans, his donation will abruptly end.

This threat of fund/donations discontinuity, plus any criminal charges to be filed, is the best regulator of civil society organizations like GK. It’s not the SEC or Congress or BIR that forces transparency and accountability, but the private donors who give in cash or in kind.

One implication here, it is possible to abolish some government housing agencies like the National Housing Authority, in exchange for some tax cuts somewhere. The poor do not care much who can give them free or subsidized, nice housing, whether civil society or government. If dynamic civil society like GK, Rotary Homes, etc. can do the job at little or zero cost to taxpayers, government should step back from more housing bureaucracies and more taxation.

* Digression 1: About relocation of M.Manila squatters to secluded municipalities in Bulacan, Rizal, Cavite and Laguna. A better option is high rise, vertical housing for the informal settlers within M.Manila. Beneficiaries will pay of course, not free, no subsidy. Otherwise, there will be one million more migrants from other provinces seeking free condo in MM. Beneficiaries can pay because they can retain their current jobs and income, the cost of transportation to work is lower, and they will have peace of mind of having ownership of the place where they live. Those who are too poor to pay even small condo units should not begrudge being  brought to  far away resettlement areas. They can have highly subsidized housing there but they will suffer temporary economic dislocation.

The cost of condo units can be reduced via drastic reduction of various taxes, fees, permits imposed by national and local governments. Real property tax (RPT) alone by LGUs can be very high, and that contributes to high cost of condo housing.

* Digression 2, on "We should not give up on encouraging government agencies to improve their performance." 

True, but only for agencies that are directly related to rule of law, protection of private property and citizens life, and protection of individual liberty. That means the justice system, the courts, the police, correctional, etc. If there is government failure in this very basic function of government, we can expect government failure in many other agencies that are not even related to rule of law implementation. Like housing, education, healthcare, pension, credit, etc. And that is precisely what's happening now. Government has expanded too much, the taxes, interventions and bureaucracies have expanded but the basic function of protecting our lives and private properties, there is government failure. So peace and order has been privatized, private security guards protecting our villages, shops, malls, schools, offices, airports, seaports, bus terminals, There is widespread and large scale distrust of government peace & order agencies.

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See also:
CSOs and State 10: The Role of Civil Society, June 15, 2010

CSOs and State 16: The Integrity Initiative, December 17, 2012 
CSOs and State 17: UP Pahinungod and Typhoon Victims in Mindanao, December 31, 2012 

CSOs and State 18: Civil Society as Lobbyists for More Government? Cigarette Warning Bill, March 02, 2014 

CSOs and State 19: UP Maroons and UP Alumni, March 24, 2014

CSOs and State 8: Gawad Kalinga, Health NGOs and Taxes

There was a good article two months ago at the Inquirer on the dramatic growth of Gawad Kalinga (GK) in the Philippines. Now there are 2,300+ GK villages in 400 towns in the Philippines according to prime GK advocate. The news report also narrated how some local politicians ride on the GK bandwagon, whether for serious or opportunist reason.

http://newsinfo. inquirer. net/inquirerhead lines/nation/ view/20090719- 216139/Local- execs-into- politics- of-caring- GK-way

I am not sure if those local and national politicians that hitch with the GK bandwagon understand that there is something in GK that is not present in government service: instant accountability.

GK lives off on pure donation, voluntary contribution. Once the donations are gone, GK is gone.

Government on the other hand, lives off on taxation, mandatory and forcibly collected taxation. Such revenues can never go dry, so the bureaucracies can never fade away.

GK people are driven by pure customer satisfaction. Their "customers" are the thousands of private donors who have extra money to give away if they are assured that their donations are well spent and not stolen or wasted. If those donors sense something is wrong, there is the instant result of donation reduction or evaporation. Whereas in government, there is rigid and looongg process of finding out accountability and wrong-doing, if ever.

I know a Pinoy friend from LA, who has been helping GK for the past 6 to 10 years now. He's on the lookout how the projects that he's supporting is going. A single news that he can confirm that the money is wasted in a par ticular GK project, he stops donating to that community, rechannels his contributions to other GK communities or other humanitarian projects. He even tells his other friends who give the same donation, so the news of wrong-doing can easily spread. Although so far, instances of wasteful GK projects are very few and isolated.

It's like Rotary, Lions, Masons, other private charity and civic groups, other civil society organizations (CSOs). They live off on pure voluntary support, membership and contributions. The moment a club or a district misbehaves, the "punishment" in the form of reduced membership may not be instant but can build a momentum.

More serious politicians who strongly believe in the GK spirit should consider drastically cutting the taxes and fees (local or national) that they impose, encourage investor confidence that results in more investments, more entrepreneurship, more job creation in the local community or the country as a whole.
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Civil Society Leaders Embracing High Taxes

In relation to my earlier discussion on taxes on medicines, I posted in our CHAT googlegroups that our think tank, Minimal Government Thinkers, does not solicit or receive any government money (local, national, foreign aid). A think tank or NGO that does not receive any tax money can be a tax activist anytime.

When the WB Philippines proposed -- and reported in the newspapers -- that the excise tax on gasoline (currently around P4.50/liter) should be hiked in order to help reduce the budget deficit, I posted a commentary in this blog and sent it to my various ygroups, cc'd my friends working or used to work in WB Manila. I said that the WB is a parasite for proposing such measure to further raise gasoline prices when many sectors are already debating or fighting each other how to bring down gasoline prices, how to bring down the fares in public transpo, etc. I think the Department of Finance (DOF) also did not entertain their proposal. 

If MG Thinkers receive funding from the WB, IMF, ADB, UN, USAID, AusAid, etc., it's difficult to become a tax activist because ALL of those institutions live off on tax money. Or difficult to attack international bureaucrats because ALL of them are international bureaucracies. 

One NGO leader narrated their experience. Early this decade, they campaigned for the removal of the tax for one anti-cancer (leukemia) drug. They succeeded, but he added that it did not result in price reduction, rather the prices of such drug kept rising. So he concluded that only the pharma company, not the patients, benefited from the removal of taxes on medicines.

I narrated my other observation. One of my Filipino friends in California (Monchit Arellano) is helping the Books for the Barrios (BftB, www.booksforthebarriors.com). He, his family, some Filipino officemates and friends, solicit and collect hundreds, thousands, of books, even toys, for elementary-level students in the US, pack them in boxes, which are later loaded in shipping containers, transport to the Philippines. BftB Manila receives those containers, and here's the catch:

Those books from America were donated FREE.
Those books will be distributed to public elementary schools in rural areas of the Philippines for FREE.

But when those containers of books from the US reach the Philippine ports, BftB Manila pays for the following:
1. Customs duties around P65,000 -- yes there are taxes for donated and used books!
2. Customs broker around P60,000 -- an agency that deals everything with the Bureau of Customs (BOC).

The BftB Manila staff who narrated me that story last year, said that what's worse, donated medicines and vaccines by volunteer medical missions from abroad, many of them are parked at the Customs area and allowed to deteriorate. Why? Those medical missions and volunteers have money for the airfare of the volunteers and shipment of free drugs and vaccines. But they never expected there are high taxes and Customs brokerage to pay for those donated medicines, so they did not bring money for such. Those vaccines are on refrigerated containers that run on electricity, of course. Since they cannot pay the taxes, and the medicines require continued electricity while the papers and payment are being processed, the BOC personnel disconnect the electricity as electricity charges are being borne by the Bureau. Within hours, those useful, essential, life-saving medicines become useless as they need to be kept at a particular temperature (say 0 or 10 Celsius). When the temperature goes up or down significantly, the medicines become ineffective for their intended patients.

For the imported anti-cancer drugs that the NGO leader above was talking, I think only the import tax (5%) was waived. This tax is collected by the BOC. On top of the import tax, there is the 12% VAT, also collected by the BOC in behalf of the BIR. This bigger tax has to be paid to the BIR even if the import tax or customs duties is waived.

For the pricing of whoever is the pharma company that sold that medicine, when it is the single seller or distributor of that medicine in any country, that is tantamount to a monopoly. A monopolist would tend to abuse its position and price its product at any level it wants to, considering demand elasticity (or responsiveness of consumers to changes in prices), size of the market, and purchasing power of that market. Government is an example of a monopoly. It can set its price at any level (personal income tax at 32%, corporate income tax at 35, down to 30%, travel tax at P1,620, with or without any service to the Pinoy traveler, etc.).

The solution to a monopolistic industry structure is more competition. Allow other players and producers to come in. As I have posted before here, there are hundreds of other multinational innovator pharmas, and tens of thousands of generic pharmas, that are not in the Philippines yet. India alone has more than 22,000 pharma companies. Its biggest pharma company, Ranbaxy -- like Unilab, the biggest pharma co. in the Philippines -- is not even here when Ranbaxy can put up stiff competition to anybody here, both local or multinational pharma.

I opined that the posting by said NGO leader was not to discourage the pursuance of abolishing taxes -- both import tax and VAT -- on medicines. This government hypocrisy need to be stopped. We all want cheaper medicines, so taxes that hike medicine prices, and regulations that kill competition, should be scrapped.

The guy replied, that even if the 5 percent import tax was waived, the anti-cancer drug price did not go down by a corresponding 5 percent. So he reasoned out that if the 12 percent VAT will be removed, then the profit of the pharma company/ies will become even bigger. 

He further argued that when government tax revenues fall, it's the public who will suffer because the government will have lesser money to develop the country.

Typical statist, if not socialist, argument. This logic says that government should tax and tax as much as possible on everything. Anyway the money will be used by the government for the public.

This is actually one perspective being embraced by many civil society leaders who hate free markets and competitive capitalism, they want more government intervention, regulation and taxation. More government responsibility to assume a big Nanny role. So those civil society leaders come to the defense of the State for ever higher taxes, including high taxes on medicines even if the same NGO leaders are supposedly campaigning for "cheaper medicines".

It will not be far that these NGOs receive lots of funding from the government -- national or foreign aid. As I posted earlier in this blog, such NGOs are NOT exactly "non-government". They are more of government-funded organizations (GFOs) although the funding is not direct. Usually through an international NGO that gets foreign aid funding, then channeled to national NGOs.


* See also:
CSOs and State 4: Local Government and Civil Society, August 12, 2008
CSOs and State 5: Subsidiarity, Decentralization and Privatization, September 04, 2008
CSOs and State 6: Stichting Kapatiran and Books for the Barrios, December 07, 2008
CSOs and State 7: Public School Library with Minimal Government, BftB, June 29, 2009