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Compassion Is the Work of a Nation, Not Just a Government

Carol Adelman

Hudson Institute’s Center for Global Prosperity (CGP) has just launched its sixth annual Index of Global Philanthropy and Remittances, a summary of the magnitude and sources of private giving to the developing world. CGP measures philanthropy from foundations, corporations, private and voluntary organizations, universities and colleges, volunteers, and religious organizations and is the sole source of these financial flows from U.S. and other donor countries to developing countries.

Since its launch in 2003, CGP has helped to reframe the discussion on foreign aid by showing that the full scale of countries’ generosity is measured not just by government aid, but by private philanthropy, volunteerism, as well as successful public-private partnerships. We highlight the central role of the private sector, both for-profit and not-for-profit, in creating economic growth and prosperity through seminars, publications, conferences, the media, case studies in the Index, and blogging on hot topics in development aid, philanthropy and remittances.

The 2011 Index showed that U.S. philanthropy to developing countries reached $37.5 billion in 2009 (latest year for available data) exceeding U.S. government aid of $28.8 billion. Philanthropy remained remarkably stable during the first full year of the recession, even increasing slightly from the $37.3 value in 2008. Remittances from the United States to developing countries reached an estimated $90.7 billion in 2009, down from $96.8 billion in 2008. This money, sent from migrants living in developed countries to their families and hometown villages, however, was still the largest U.S. financial flow to the developing world in 2009, exceeding even private capital investment of $69.2 billion. The table below further breaks down these flows.

Private flows outnumbered ODA not only in the U.S., but in the global context as well. In the chart below, philanthropy and remittances from all developed to developing countries were nearly twice as much as government aid. Remittances at $174 billion and philanthropy at $53 together amount to $227 billion, significantly higher than ODA at $120 billion. All private financial flows comprised nearly 80 percent of the developed world’s total economic engagement with developing countries. This reflects the growth in private endeavors, through philanthropy, remittances, and capital investment, which are now dominant in developing countries, a significant change from thirty years ago.

In addition to publishing numbers, we highlight trends, unique projects, and partnerships which are delivering aid in newer, faster, more efficient, and more sustainable ways. Featured in this year’s Index, for example, is the Latin American non-profit organization, Lumni, which has raised private capital for loans to over 1,200 students who then repay them through a fixed percent of their salaries after graduation. Another project we highlight, Kilimo Salama, or “safe agriculture,” is an innovative micro-insurance program where small farmers in Kenya insure their crops against drought by handling premiums and payouts through mobile phones and solar-powered weather stations. This initiative, supported by the Syngenta Foundation with partners including Safaricom, CNFA-AGMARK, and the Kenyan Meteorological Department, is a prime example of how public-private partnerships can deliver successful and sustainable results.

CGP will continue to encourage developed countries everywhere to assume full responsibility for measuring their countries’ private giving and success stories. At the same time, all countries need to reduce the legal and regulatory barriers to giving that are preventing philanthropy from growing and fighting global poverty.

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