Philanthropy Research

by Moya K. Mason

There has been very little research done on the connection between personal philanthropy and government aid. Does how much a country gives affect its citizens in regards to how much they give? There is no way to give a definitive answer to that question. Americans privately give at least $34 billion overseas -- more than three times U.S. official foreign aid of $10 billion (2001), but these numbers include migrant remittances (money that migrant workers send to their own families overseas). I do have stats in this report on Aid from Private Voluntary Organizations, 2001, and other interesting information.

1. Patents, Private Charity and Public Health
by Rajashri Dasgupta

The diseases are in the developing South, but the money and the patents are locked in the post-industrial North. The world's poor are in a free fall.

"As governments of the developing world retreat from their welfare responsibilities and hive off public health functions to the private sector on advisement from international high finance, are we to begin depending on the charity and munificence of the multinational tycoons? When CNN founder and media magnate Ted Turner announced a billion dollars for humanitarian projects of the United Nations, everyone ooohed and aaahed without calling to account the many billions that are being wrested away from the social sector by governments of the developed and developing world.

Bill Gates, richest man in the world over in Seattle, then went one up on Turner and everyone else by endowing the largest philanthropic organisation ever, the Bill and Melinda Gates Foundation. Last year, outperforming the US government on this front, he donated USD 300 million to charitable causes, primarily aimed at 'reversing' the health crisis among the world's poor. This fund targets global threats such as malaria, tuberculosis and AIDS, and Gates' giving adds up to more than 25 percent of the total support given by the West towards health in the developing countries. What is the crisis in the globalised economy that governments both down here and out there, turn away so offensively from their public health commitments, leaving the field free for philanthropy and private benevolence-but most importantly to the rapacious market?

Since 1978, by the United Nations' reckoning, the number of countries that are 'least developed' has shot up from 28 to 48. This means that one country per year has slipped down the development ranking during the last two 'development decades'. The assets of the three richest people in the world are more than the GNP of the 48 least developed countries, and the three richest officers of Gates' Microsoft have more assets (upwards $140 billion) than the combined GNP of the 43 least developed countries. Meanwhile, health care eludes the poor who constitute 50 percent of the population of the least developed 46 poorest countries. About two billion people in the world live on less than a (US) dollar a day, and more than 800 million people have total lack of access to any form of basic health care. Nearly three billion do not have access to safe drinking water and appropriate sanitation.

The contributions by Turner and Gates underline the increasingly important role wealthy private individuals and philanthropists are playing in international development, but the fundamental question has not been asked with any sense of urgency-should private forces, however benevolent, be even permitted to draw up and drive the international health agenda, as is beginning to happen? Can donations and whimsical price reductions of patented drugs, so-called private-state partnerships and corporate-community welfare programmes ever be viable, sustainable substitutes to the long-term responsibility of the state to protect, promote and ensure the right to health care? In the process of privatisation, not only of public health programmes, but also of public health funding, are organisations which have led in the past, such as the World Health Organisation (WHO) being further sidelined?

"Private charity is an act of privilege, it can never be a viable alternative to State obligations," said Dr James Obrinski, of the organisation Medicins sans Frontier, in Dhaka recently at the People's Health Assembly (see Himal, February 2001). In a nutshell, industry and private donations are feel-good, short-term interventions and no substitute for the vastly larger, and essentially political, task of bringing health care to more than a billion poor people."

2. Firms Lift Charities in 2002
http://www.csmonitor.com/2003/0623/p11s02-wmpi.html
The Christian Science Monitor
Stacy A. Teicher

When the going gets tough, Americans keep giving - to the tune of nearly $241 billion.

Charitable donations for 2002 set a new high, rising 1 percent over 2001's total in current dollars, according to Giving USA, a report released Monday by the American Association of Fundraising Counsel's Trust for Philanthropy in Indianapolis. The estimated $240.92 billion in gifts equaled 2.3 percent of US gross domestic product.

Although once it is adjusted for inflation the amount represents a 0.5 percent decline since 2001, it still shows "the resilience and pervasiveness of giving in our culture," says Leo Arnoult, chair of the AAFRC Trust.

Most donations come from individuals (76 percent of the total), and some nonprofit sectors were hit harder last year than others. Gifts to human- services organizations were down about 10 percent - making budgets tighter for youth development, shelters, disaster relief, employment counseling, and other social programs. "You'd think with increased need for such services, pockets would open," Mr. Arnoult says.

Human-services groups rely on small gifts from a broad swath of the population and the struggling economy led many people to give less last year. In contrast, other sectors, such as the arts, experienced increased donations, since they tend to attract wealthier patrons who aren't as vulnerable to economic downswings.

Donations to educational institutions were also down, but only by 1 percent. Arnoult sees this as a temporary dip tied to the stock market.

The largest upswing was in gifts to nonprofits that offer refugee assistance, disaster relief, or other aid abroad - little surprise given Americans' new level of attention to foreign affairs. Donations reached $4.62 billion in this category, up nearly 12 percent from 2001.

Overall, 46 percent of nonprofits said they received less than in 2001; 49 percent received more; and 5 percent saw no change.

Corporate giving is notable as the only source that reported substantially higher giving than in 2001. Firms gave more than $12 billion last year, a 10 percent jump. Much of the increase, Arnoult says, is due to better reporting of in-kind gifts, such as a pharmacy's donations to a community health center, or a restaurant's donation of food to a homeless shelter.

But the increase in corporate giving isn't just a matter of improved accounting. Partly it's a ripple effect from multi- year pledges made after the Sept. 11 attacks. In addition, firms have given away increasing shares of pretax profits since the late 1990s, the report says. In 2002, their donations averaged 1.8 percent of profits. Despite the increased generosity, corporate giving represents only 5 percent of total philanthropy - not enough to counteract the pronounced drop-off in funds for human-services organizations.

The annual Giving USA report is based on analysis of tax and other data, plus a survey of nearly 2,000 organizations. It is researched for the AAFRC Trust by the Center on Philanthropy at Indiana University.

Looking ahead, it's unclear what effect the new tax cuts will have on people's generosity.

"Some people say a lower tax rate gives people more discretionary money to give," Arnoult says, "but some say a lower tax rate takes away some of the incentive to give."

As fundraisers wait for the economy to strengthen, Arnoult advises them to sharpen the focus of their campaigns. "They need to go to the people who care about their missions instead of spending [too much] time on acquiring new donors," he says.

3. Aid and Comfort
By Carol Adelman, Hudson Institute
08/21/2002

At the upcoming World Summit on Sustainable Development in Johannesburg next week, the U.S. will again be pilloried for being stingy on foreign aid. U.S. government aid as a percentage of GNP does indeed rank last. Denmark, Norway, the Netherlands, Luxembourg and Sweden are lauded for being on top.

But the figures, counting only public sector contributions, are deceptive. Americans help others abroad - just as they do domestically - primarily through private donations, foundations, corporate and university giving, religious offerings, and direct help to needy family members. Scandinavians and other Europeans give abroad primarily as they do at home - through government.

So, at the guilt-fest in Jo'burg, the U.S. delegation should tell the real story of American generosity abroad. While there are no complete figures for international private giving, conservative estimates from surveys and voluntary reporting are impressive: Americans privately give at least $34 billion overseas -- more than three times U.S. official foreign aid of $10 billion.

Latest Figures

International giving by U.S. foundations totals $1.5 billion per year, according to the latest figures. Even this shortchanges the "mega-donors" such as the Bill and Melinda Gates Foundation, because its biggest outlays came after the latest figures were tabulated.

Corporate philanthropy has also become a significant part of the total. Once disallowed by U.S. courts, charitable giving by U.S. businesses now comes to at least $2.8 billion annually. And cooperation between corporations and foundations has become common: When Merck gave $50 million for an HIV/AIDS program in Botswana, it was matched by the Bill and Melinda Gates Foundation.

This doesn't begin to touch the work of America's NGOs, whose missions help the needy around the world. Groups like Catholic Relief Services and Save the Children give a whopping $6.6 billion in grants, goods and volunteers. Religious overseas ministries contribute $3.4 billion, including health care, literacy training, relief and development. Even the $1.3 billion U.S. colleges give in scholarships to foreign students is more than Australia, Belgium, Norway, or Switzerland gave in total foreign assistance in 2000.

There's another way that the U.S. contributes as well, one that speaks volumes about this country's real gift to the world. As Mexican President Vicente Fox says, the "real heroes" are immigrants who send money to families back home. Personal remittances from the U.S. to developing countries came to $18 billion in 2000 and provide, in Mexico for example, the third largest source of foreign exchange. U.S. Treasurer Rosario Marin, who sends money to her aunt in Mexico, calls remittances "one of the most important transactions between our two countries."

Some international economists have seen that such remittances should be considered a central part of any development strategy. But overturning the status quo won't be easy: Former president Jimmy Carter has said he hopes these remittances and other private donations won't be used to excuse what he considers American stinginess on foreign aid. Yet such private giving is a much faster and more direct way of helping. Remittances don't require the expensive overhead of government consultants, or the interference of corrupt foreign officials. Studies have shown that roads, clinics, schools and water pumps are being funded by these private dollars. For most developing countries, private philanthropy and investment flows are much larger than official aid.

This is good news to them, and to most Americans, who are skeptical of official foreign aid. While the public supports U.N. and government aid for humanitarian crises, only 9% want our foreign aid to increase while 47% want it cut.

The skepticism is sound: The three historical purposes of foreign aid - humanitarian relief, security assistance, and economic development - have been uneven in their degrees of success. Government humanitarian relief efforts have generally gone well, delivering food, medicines and shelter during crises. But other forms of assistance are not so reliable.

Consider security assistance: Foreign aid has helped solidify bases agreements, gained allies during the Cold War, and rallied support for the Gulf War and the war against terrorism. Yet, we are learning that the roots of terrorism have been nurtured by governments of some of our largest aid recipients, particularly Egypt, which receives $2 billion annually.

Likewise the impact of U.S. foreign aid on economic development. Our aid has trained thousands of foreign students and built thousands of kilometers of roads, bridges and sewage systems. Yet, without economic and political systems to sustain these investments, the investment has no long-term effect.

While foreign aid should continue to help countries in humanitarian relief, it must turn to partnerships with the private sector. Our best efforts on an official level will come through building lasting institutions in the countries we wish to help - not lasting government contracts with Beltway consulting firms.

Official aid, at its best, should aim to work itself out of a job by encouraging local philanthropy and self-sufficiency. Our aid can foster open markets and societies abroad by supporting institutions which seek to liberalize politically and economically -- training in the rule of law, government transparency, free press, and intellectual property. We must abandon the "donor" mentality and begin to consider ourselves a partner and a matchmaker for the developing world.

Answer Criticisms

In Johannesburg, the U.S. delegation can answer the criticisms they will face with four additional key points. First, that our government gave more foreign aid, in absolute terms, than any other country in 2001, topping second-ranked Japan. Second, the U.S. has long provided the most foreign direct investment in developing countries, which creates real sustainability in economic development. Third, the U.S. provides the bulk of the world's R&D, which saves millions of lives with improvements in food and medicines. And, finally, we give far and away the most militarily, which helps make the world safe for economic growth and democracy.

Americans are a most generous people, clearly the most generous on earth in public - but especially in private - giving. For too long already, the percentage of U.S. official development assistance has hidden the real extent of giving which exemplifies the American spirit. We have much to explain, but nothing to apologize for, in Johannesburg.

Dr. Adelman was assistant administrator of the US Agency for International Development from 1988 to 1993. A version of the article appeared in the Wall Street Journal.

4. The US and Foreign Aid Assistance
http://www.globalissues.org/TradeRelated/Debt/USAid.asp

As an aside, it should be emphasized that the above figures are comparing government spending. Such spending has been agreed at international level and is spread over a number of priorities. Individual/private donations may be targeted in many ways. However, even though the charts above do show U.S. aid to be poor (in percentage terms) compared to the rest, the generosity of the people of America is far more impressive than their government. As discussed further below, the government spending has tied agendas that have often been detrimental to the recipient. Private aid/donation in contrast has been through charity on individual people and organizations though this of course can be weighted to certain interests and areas. Nonetheless, it is interesting to note for example, per latest estimates, Americans privately give at least $34 billion overseas -- more than three times U.S. official foreign aid of $10 billion:

Source: Dr. Carol Aderman, Aid and Comfort, Tech Central Station, 21 August 2002. (Aderman admits that there are no complete figures for international private giving. Hence these numbers may be taken in caution, but even with caution, these are high numbers.)

The interest on this section though is on government aid, because that is less specialized than private contributions and it is internationally agreed, and importantly, reflects foreign policy objectives of the donor government in power, which can differ from the generosity of the people of that nation.

Private donations, especially large philanthropic donations and business givings, can be subject to political/ideological or economic end-goals and/or subject to special interest. A vivid example of this is in health issues around the world. Amazingly large donations by foundations such as the Bill and Melinda Gates Foundation are impressive, but the underlying causes of the problems are not addressed, which require political solutions.

5. Private Purses Open Wider for Overseas Aid
http://www.theage.com.au/articles/2003/12/14/1071336812216.html
December 15, 2003

When World Vision ran a campaign recently asking Australians to sponsor needy children overseas, it received sponsorships for 13,534 children, easily surpassing its target of 10,000.

Last financial year ordinary Australians gave $347 million to provide food, education, medicine and clean water for children in the poorest countries of the world - 15 per cent more than they gave two years ago.

The conventional wisdom is that in response to September 11 and more recent threats of terrorism, Australians have turned inwards, becoming more focused on domestic concerns and more resentful of outsiders. The reality, according to a new report by Australia's largest charitable organisation, World Vision, is very different.

Since September 11 there has been a wave of support among Australians for the world's poor. Private donations to all non-government aid agencies working overseas rose 15 per cent, compared with 6.5 per cent for domestic charities. The number of people donating regularly to World Vision has risen 40 per cent. Oxfam Community Aid Abroad has had a 20 per cent increase. Giving to Plan increased by 30 per cent.

The Australian Council for Overseas Aid says 750,000 Australians give regularly to overseas aid agencies and 1.67 million donate occasionally or take part in fund-raising events such as Oxfam's Walk Against Want or World Vision's 40-hour famine.

But as the World Vision report Island Nation or Global Citizen? notes, individuals are reacting one way while the Government and institutions of the society are reacting in another.

Australia's level of overseas development assistance has dropped during the term of the Howard Government to a record low of 0.25 per cent of gross national income. It is now less than half the level it was in the 1970s. On a list of wealthy countries with overseas development assistance commitments, Australia fell a further two places this year, to 14th out of 22, behind smaller and less wealthy Finland, Ireland and Belgium.

Although the Federal Government announced an increase of $79 million in this year's budget, most of the new funding went towards processing refugee applicants on Nauru and accommodating refugees in Australia. When this "non-aid spending" is taken out, the commitment is closer to 0.24 per cent of gross national income, the report says.

Last year donors to World Vision gave more to Africa ($62 million) than the Government did ($61.4 million in this year's budget).

Opinion polls have long shown majority support for foreign aid. The proportion of people who agree that "aid can improve the lives of people in poor countries" has risen by up to 26 per cent in the past three years. But the report notes that while "the concerns of young people are increasingly focused globally, their confidence in local institutions meeting these needs is consistently low."

A spokesman for Foreign Minister Alexander Downer said Australia's development aid is "generous and well targeted". It had just announced, on top of its AusAID budget, an investment of $800 million over five years to Papua New Guinea, the largest recipient of Australian aid. He said Australia's vital role was in the Asia-Pacific area.

The increased generosity of ordinary Australians reflects a growing awareness that "in a world of plenty it is no longer tolerable that children and families should die of hunger and poverty-related diseases", says the Australian Council for Overseas Aid's policy director Jim Redden. "There is also a growing recognition that poverty and frustrated expectations could be a dangerous breeding ground for violence and terrorism."

Oxfam marketing director Penny Gorman said the media raised awareness of the plight of people in impoverished parts of the world and this inspired people to give. Most funds went to general projects, but occasionally the organisation received large donations from donors with special requests. Last year one person donated $60,000 to build wells in Tigray.

"They see it on television, they see it through media, but more and more Australians are also traveling and are seeing for themselves what's happening in most of the regions that we work in," she said.

Plan has had 6500 new child sponsorships in the past year, and says there has been a significant increase in the number of people under 25 getting involved. Plan marketing director Pamela Sutton said Asia and Africa had each attracted 40 per cent of the sponsorships.

The World Vision report also criticises the lack of generosity of the business sector. While more corporations talk about social responsibility and the "triple bottom line", corporate giving has fallen, it says.

According to Brian Babington, a partner in consultancy firm Corporate Good Works, no big company based predominantly in Australia contributes to charities working overseas.

6. Privatised Aid and NGOs
http://www.flonnet.com/fl2026/stories/20040102000806400.htm

In the matter of foreign aid, the U.S. government and its non-governmental allies export the idea of the "third way", which promotes "civil society" or private development at the expense of the struggle for greater state involvement in delivering social justice.

In the November/December 2003 issue of the influential United States Council on Foreign Relations' journal Foreign Affairs, Carol C. Adelman published an essay with the provocative title, "The Privatisation of Foreign Aid: Reassessing National Largesse". Adelman, a senior Fellow at the conservative Hudson Institute, contests the idea that the U.S. is miserly with its foreign aid. From the data on U.S. government donations, it is clear that the U.S. government gives one of the lowest percentages of its gross domestic product (under 0.1 per cent) in foreign humanitarian aid. Despite this, Adelman points out, private residents in the U.S. remit close to $35 billion to other countries, and that this "privatisation of foreign aid" should be the indication of the American largesse. The world of private donations and of non-profit organisations, Adelman argues, forms "the new landscape of foreign aid."

Adelman grossly exaggerates the amount of foreign aid ($35 billion) to point out that the U.S. is actually very generous. What she includes in the figure are the enormous remittances from migrants to the U.S. (many of whom are not citizens) who send money to their families. For South and Central America alone, the Inter-American Development Bank shows that migrants sent $20 billion last year - the largest financial investment in the region (an additional beneficiary of this are the banks who charge large transfer costs).

If we remove the private remittances sent by individuals to their families, the amount spent by the U.S. government and private foundations overseas is still significant. When you convert a few billion dollars into rupees and dinars, and when you consider that this money enters fields that are otherwise underfunded, the impact of the money is dramatic.

The quibble over the amount of money that the U.S. provides in foreign aid, however, obscures a very important point. The U.S. government and its non-governmental allies export the idea of the "third way" that promotes "civil society" or private development at the expense of the struggle for greater state involvement in social justice. The epoch of ideological competition between capitalism and communism is over, explain the "third way" theorists such as British sociologist Anthony Giddens and the head of the Democratic Leadership Council, Al From. The "third way" wants to "empower citizens" to take charge of society, as the state retreats from regulation and from the task of redistribution. Furthermore, the "third way" asks that we work with the "tolerant traditionalism" of family values, that we, in effect, accommodate ourselves to social prejudices. The U.S. government may not itself export capital for humanitarian development and aid, but it has certainly contributed to the export of this model of "civil society" politics to the entire planet.

The debate on funds is far too complex to summarise here, but what might be useful is to offer a brief history of the creation of the "new landscape of foreign aid" intimated by Adelman.

The "non-profit" sector did not arise in the 19th century with the express purpose of undermining the role of the state. In fact, it had the opposite impact. Take the case of one of the major figures in U.S. voluntary work, the legendary Jane Addams and her Hull House. In 1889, Jane Addams and her associates bought a house in Chicago's West Side, home to recent immigrants from Bohemia, Germany, Greece Mexico, Italy, Ireland, Poland, Russia and the U.S. south. They turned Hull House into a "social settlement", a place of service to the dislocated. Apart from citizenship and English classes, Hull House became a day care centre and kindergarten, an employment bureau, a library, and eventually an art centre (with a theatre, with music and art classes, as well as with an art gallery). Hull House created the Immigrants' Protective League, the Juvenile Protective Association and the Juvenile Psychopathic Clinic, and it led struggles to bring the state into the regulation of social life.

The disruption of rural life and the explosion of industrial cities intensified the suffering of workers and their families. Hull House and other such institutions came to the aid of the survivors of the new age of monopoly, and they fought the state not only to regulate the acts of industrial capitalism, but also to provide succour to the workers. Hull House's efforts led to the creation of the Federal Children's Bureau (1912) and the passage of an anti-child labour law (1916), among other important achievements. In addition, Jane Addams and Hull House worked tirelessly against warfare, which they regarded as wasteful expenditure of the people's wealth. Addams founded the Women's Peace Party (which became the Women's International League for Peace and Freedom). In 1931, Jane Addams won the Nobel Peace Prize.

Confreres of Jane Addams took this same energy and enthusiasm into relief work outside the U.S. In 1881, Clara Barton used her experience of giving relief to soldiers during the U.S. Civil War (where she earned the name "Angel of the Battlefield") and founded the American Red Cross. In its early years, under Barton's leadership, the Red Cross went across the world and put its resources to give support as well as to find the means to help struggles. In 1891, Barton went to Russia to help the famine survivors; in 1896, she worked in Armenia and spoke out against the Turkish massacres; and in the run-up to the U.S. invasion of Cuba in 1898, the Red Cross' ship gave aid to the Cuban insurrectionists and, later, to the U.S. forces. The Red Cross' early campaigns within the U.S. gave support to workers and farmers from the tyranny of the weather and the heartlessness of the government. The efforts of the American Red Cross pushed the state to enter into the field of disaster management as well as to create a fund for emergency relief.

Hull House and the American Red Cross worked to lift the sorrows from the shoulders of the overworked, but more importantly to join the workers' political struggle to make a better world. People like Jane Addams and organisations like Hull House, alongside the well-organised union movement and the burgeoning Left parties, provided the infrastructure for President Franklin D. Roosevelt's New Deal. When Roosevelt tried to reconstruct the economy and put fetters on corporate activities, he took advantage of the social power of Addams, the unions and the Left, to back him up on the streets.

Harry Hopkins, an aide to Roosevelt, once said of this world of Jane Addams and relief: "People do not eat in the long run, they eat every day." In other words, the state had to be involved not just in the management of the long-term economic health of the country (on behalf of big corporations), but it must also work to ensure that the "less fortunate" are fed in the short term.

During the Cold War, the U.S. state transformed the legacy of Barton and Addams. A domestic and foreign policy driven by zealous anti-communism transformed the terrain of political activity. The new Cold War notion of "development" and "aid" removed the politics from social work and made the ills of capitalism into the ills of the poor. If the poor have a problem, U.S. funds and ingenuity can deal with it, but there is no question of allowing an interpretation that sees the perpetuation of poverty in the practices of imperialism.

In his inaugural address in 1949, President Harry Truman laid out four points on the role of the U.S. in the world. The President pledged to support and strengthen the United Nations (Point 1), to promote stability in the world economic system (Point 2) and to make military alliances against the Soviet Union and to export military hardware to these new allies (Point 3). Point 4 of this "Four Points Programme" acknowledged that force alone will not win the day, and that the U.S. would need to help in social and economic development. People live, Truman said, "in conditions approaching misery", so the U.S. must make "the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas."

As a result of Truman's new policy, the U.S. State Department began to promote and regulate foreign aid. The State Department's Agency for International Development (AID) introduced a political test for the organisations that would receive its funds. Whereas most non-governmental organisations (NGOs) and foundations had worked without governmental interference in the past, they now felt chuffed at the new political oversight.

But that tension did not last long. Most NGOs and the foundations went along with AID's broad policy of using "social development" to contain the spread of communism. As Merl Curti wrote in his 1963 classic American Philanthropy Abroad, the Ford Foundation chose to work in South and West Asia because of the region's "proximity to the Soviet Union and Communist China and the opportunity for channeling rising nationalism into constructive humanitarian purposes within a democratic framework". In other words, to promote U.S. ideas of free market capitalism in opposition not only to communism but also to radical nationalism (such as the Arab world's Nasserism).

Within the U.S., the restrictions on the activity of non-profit organisations came from the revision of the tax code. In 1954, Democratic Senator Lyndon B. Johnson of Texas pushed through an amendment to the tax code that forbade tax-exempt non-profit organisations from "political" activity. Johnson's law entered the tax code to define a special new kind of organisation named for its place in the code, 501(c) (3). Any organisation that conducts voluntary work (examples given include "testing for public safety, literary or educational purposes, or for the prevention of cruelty to children or animals") is exempt from taxation if it did "not participate in, or intervene in (including the publication or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office". This language has been broadly interpreted to mean that non-profit organisations may work to ameliorate the suffering of people, but they must not involve themselves in the fundamental question of political and social transformation: you can feed the hungry, but you cannot organise the impoverished to fight against the system that makes them hungry.

The restrictions on the "non-profit" sector constrain its political possibilities. The U.S. government and the World Bank are now able to encourage freely the growth of this sector. They can only do so because the creative hands of those who receive the funds are officially tied. As McCarthyism and the legacy of the Cold War ensured that the world of the "non-profit" left the field of political change, neo-liberalism currently welcomes NGOs and non-profit organisations to take over large tracts of work that the formally accountable state once did. Health, education, welfare, and other such areas of social life are now given over to the non-profit and private sectors.

Since many NGOs are beneficiaries of U.S. foundations, the fields of health, education and welfare moved from the area of political action into charity. The very best of people who work in this sector, whose own intentions are beyond question, are yet inhibited by the "new landscape of foreign aid", by the privatisation and depoliticisation of civil society.

In 2000, Carol Adelman wrote the following for the European edition of the Wall Street Journal: "Private donors - whether they are charitable philanthropies or profit-seeking corporations - are generally better than governments at targeting money where it's needed most, tracking projects closely, cutting out waste, eliminating fraud and getting real results." But why is that so? The "third way" Democrats joined the "my way" Republicans to slash the regulatory powers of the formally accountable state. Private donors can now appear to be most efficient, even as they have no formal mechanism for democratic accountability. If you do not like the fact that the very rich donate to foundations that then push policies that benefit the very rich, you cannot do a thing about it: it is after all America's largesse to the world.

7. Private Donations for International Development
Micklewright, John
Wright, Anna
12-May-2004

Abstract: Charitable donations by private individuals and firms can help fund the Millennium Development Goals. What are the prospects for increasing donations for international development, whether from small-scale donors, the super-rich (as in the recent gifts by Bill Gates and Ted Turner), or the corporate sector? The paper starts by reviewing how large are the sums currently given in OECD countries (including gifts of time) and the problems development has in competing with domestic causes. It then looks at possibilities for the future, including tax deductions, the new 'global funds', corporate social responsibility and 'cause-related marketing', the use of the Internet, and long-term donor education.

8. The Growing Importance of International Civil Society in Development from Global Development Finance: Harnessing Cyclical Gains for Development by The International Bank for Reconstruction and Development / The World Bank
http://siteresources.worldbank.org/GDFINT2004/Home/20177154/GDF_2004%20pdf.pdf

The growing presence of private groups in international meetings (around the table and on the street), the success of major human-development campaigns, and the growing resources allocated by NGOs all reflect the rise of civil society as a major force in international development.

The Rise of NGOs

Private organizations dedicated to political, religious, or charitable causes are not a new phenomenon. Philanthropic activity in China was strengthened under Buddhism from at least the eighth century, and the Western religious missionary movements date back to the sixteenth century. The modern, secular NGO movement has its origins in the Red Cross, begun in the 1860s. Advocacy NGOs may trace their antecedents to the antislavery movement of the nineteenth century.

NGOs have various goals, activities, positions, and structures. The main sectors of civil society involved in global development finance are development NGOs, environmental NGOs, organized labor, policy research institutes, and religious bodies (principally Protestant and Roman Catholic churches). This diversity makes it difficult to define the universe of NGOs, and thus to measure their size and impact. But despite this lack of precision, there is little doubt that the number of people and organizations involved in international development activities has grown substantially.

In the 1970s, NGOs had only a marginal role in development (Fowler 2000). NGOs became more important with the debt crisis of the 1980s, and their numbers have mushroomed in the past decade (Edwards 2001; Zaidi 1999). The Yearbook of International Organizations (Union of International Associations 2001) reports that the number of international NGOs increased by about 50 percent from the early 1990s. Increases have been particularly steep in groups working on global issues, such as human rights, the rights of women, the environment, and poverty. Several forces explain the growth of international NGOs. Globalization has heightened concern among citizens of industrial countries regarding events in the developing world-an altruistic response to better and more timely news from abroad and a reflection of the growing importance of developing countries in the global economy.

The NGO movement also gained from growing concern over the effectiveness of aid and state-led development. Failed aid programs led donors to channel more resources through nonstate actors (Smillie and others 1999). More broadly, the collapse of state-led, one-party systems in Eastern Europe and the failure of state direction of the economy in many developing countries-followed by the direct reduction in the capacity of the state from the debt crisis of the 1980s-encouraged donors to channel funds through NGOs. These developments also stimulated the intense reconsideration of development policies. Greater emphasis was placed on social capital, partnership, and shared ownership as keys to sustainability (Edwards 2001). NGOs were viewed as closely in touch with the needs of the poor (Tvedt 1998), so international NGOs became a vehicle for improving aid effectiveness through their contacts with local NGOs in developing countries.

The end of the Cold War and the global expansion of democratic political systems have increased governments' acceptance of NGOs as legitimate international actors. During the Cold War, the potential for civil society groups to have an appreciable impact on the development debate was limited-disputes between communist countries and the West dominated international discussions, and autocratic regimes repressed dissent in developing countries. But the number of countries with open political systems has increased significantly over the past three decades (Freedom House 2003) as the Soviet Union broke up and political systems in Africa, Asia, and Latin America were transformed. Of the 139 countries with ratings from the early 1970s, 44 moved toward greater freedom as defined in the ratings; only 17 deteriorated. As international bodies and domestic politics moved toward allowing freer debate, NGOs have naturally gained a greater opportunity to participate.

Technological innovations also have supported the increasing influence of NGOs. The Internet has facilitated an explosion of information, greatly expanding the ability of groups with limited resources to communicate with like-minded organizations and the general public. E-mail and the Internet have greatly eased the challenge of organizing mass demonstrations.

NGOs allocate a growing amount of assistance to developing countries, using their own resources and those of donors. Although they provided only 0.2 percent of aid in 1970 (Atack 1999), they now provide, from their own resources, about $7 billion-roughly one-seventh of DAC ODA (table 4.7). NGOs in the United States provided more than one-half of the total and (along with Germany) had the highest level of aid relative to gross national income. Grants by NGOs tend to be higher in countries where charitable contributions are tax-deductible -- Germany and most of the English-speaking industrial countries (Smillie and others 1999).

The amount of aid channeled through NGOs is more difficult to estimate. Fowler (2000) judges that about 50 percent of NGO expenditures come from governments. DAC estimates, based on incomplete reports, are that NGOs may intermediate about $4 billion annually.

The establishment of well-funded foundations by several super-rich individuals accounts for some of the expansion in private donations to international development. The Bill and Melinda Gates Foundation was established in 2000 with an endowment of $24 billion; through June 2003 it had provided more than $3 billion in grants for global health. Global Funds was recently established to fight diseases, attracting money from governments, private individuals, and corporations.

The corporate sector has become another potential source of private aid. Consumer awareness about development makes messages about ethical international behavior a useful marketing tool: firm's reputation for social responsibility has, short, become an important social and economic asset (Micklewright and Wright 2003).

Related Papers

Insight into Foreign Aid
Information on NGOs
Debt Forgiveness
Potential of Information and Communication Technologies (ICTs) for Developing Countries


Copyright © 2017 Moya K. Mason, All Rights Reserved

Back to: Resume and More Papers