Washington — Private philanthropy, investments and remittances in the developing world now far exceed aid from developed country governments. Those private flows are fueling economic growth in recipient countries, according to a new report from the Center for Global Prosperity (CGP) at the Washington-based research group Hudson Institute.
In The Index of Global Philanthropy and Remittances released December 5, CGP reports Organisation for Economic Co-operation and Development data showing that since 2000, more than 80 countries doubled their growth rates compared to just 12 countries that doubled their growth during the 1990s. CGP adds that of total financial flows to developing countries in 2011, more than 80 percent came from private sources. That amounted to $577 billion, or four times as much as aid from governments, it says. Data from 2011 is the latest available.
CGP says that for years economists and development workers have speculated about how much private entities give to and invest in the developing world. "We've finally reached a point where we must have philanthropy as an integral part of efforts to support civil society," Tomicah Tillemann, senior State Department adviser for civil society and emerging democracies, said at the release of the report.
The report warns that even with the positive movements in philanthropy, some countries still put restrictions on nonprofit groups and cross-border financial flows, which limits the benefits that giving can have. By eliminating those barriers and providing incentives to give, governments can allow philanthropy to thrive, CGP Director Carol Adelmann writes in the report's introduction.
She added that CGP hopes its research efforts will help to expand philanthropy to improve lives.
Tillemann said the State Department promotes private giving through various projects, including a working group on philanthropy. The group facilitates meetings between representatives of U.S. foundations and corporations as well as their counterparts in rapidly emerging economies so they can examine ways to create public policies that support private-sector giving. As part of this effort, the department plans to bring philanthropy practitioners from other countries to the United States to learn firsthand about U.S. giving, he said.
Tillemann said the State Department plans to launch a system to allow the sharing of information about countries that take actions against philanthropic groups or grant recipients. The department also works with the Treasury Department to make it easier for U.S. foundations to award grants to civil society organizations in developing countries, he said.
During CGP's release of the report, Alex Thier, an official with the U.S. Agency for International Development (USAID), emphasized that private funders are "the biggest untapped source for sustainable development." He noted that through various partnerships, USAID works to leverage all sources of funding so that its own investments have the greatest impact.
The latest Index of Global Philanthropy and Remittances received support from Canada's International Development Research Centre. It is the first such study to include data on financial flows to developing countries from large emerging economies as well as from developed countries.
The report is available on the Hudson Institute website