EU: Philanthropy dominates dealings with developing world

Private giving and investment from donor countries to developing nations account for more than 75% of developed countries entire economic dealings with the developing word, according to the Hudson Institute?s Index of Global Philanthropy 2008. The Index is the only comprehensive source on the scope and magnitude of private giving to the developing world.

The findings show that government aid, or ?official development assistance? only constitutes a small amount to the growth and development of poor countries. Philanthropy is being transformed as technology opens the door to speedier, less costly forms of giving and inspires people of all ages and incomes to get involved. Wealthy corporate leaders and foundations are urging innovative approaches, from social entrepreneurship to combining for-profit and charitable enterprises. New tax laws are encouraging philanthropy in Europe and elsewhere.

Foreign aid model changing
The Index also provides examples of how the traditional "donor-to-recipient" model of foreign aid is being changed through public-private partnerships. This is happening through some government aid agencies changing their foreign aid business model to link with new private programmes run by foundations, corporations, charities, universities, and religious organisations.

The study also highlighted new trends in giving such as cause-related marketing, fair-trade movements, and internet giving. New styles of giving are being backed by wealthy businessmen. Ashoka financially supports "social entrepreneurs" in developing countries ? people who address social problems in entrepreneurial ways. The Acumen Fund aims to prove that "small amounts of capital combined with large doses of business acumen can build thriving enterprises that serve vast numbers of the poor." It invested in a firm that uses innovative technology to purify and deliver affordable water to half a million people in India.

European initiatives include Inter Milan, the professional soccer team with a program for Lebanese children, and the Fair Trade Foundation, through which British universities and students commit to fair-trade foods and products on campus.

Remittances
Official development aid from the 22 donor nations decreased from 68.4 billion euros in 2005 to 67 billion euros in 2006. The importance of money sent home by migrant workers is clear: developing nations received 79 billion euros in remittances from donor countries in 2006, boosting family incomes, and spurring economic growth and democratization, the report says.

"What I find exciting about private giving is that it's reinventing foreign assistance," says Carol Adelman, director of Hudson's Center for Global Prosperity, "and e-philanthropy is [creating] 'ordinary Oprahs' around the world."

But there's no sign yet that this dramatic change means a significant increase in resources for developing countries. Part of the reason may be the incomplete reporting of private giving, which is a work in progress in many countries. The most positive note for poor nations appears to rest instead in the surge in remittances sent by migrants to their families. "They are tackling a big job no one else has wanted to tackle," says Melissa Brown, associate research director of the Center on Philanthropy at Indiana University. "It's a huge data-collection problem."

The Index offers no global total for philanthropy, but estimates that investment and philanthropy together reached 135 billion euros in 2006.

More info
www.hudson.org