Last week’s release of the 2008 Index of Global Philanthropy by the Hudson Institute, Center for Global Prosperity showed the power that private money is having on the world of philanthropy.  Citing that in 2006 government aid equaled less that 25% of the all economic dealings with developing countries – with private flows making up the majority of the money contributed.

Numbers cited from ODA reflect an on-going discussion that developed countries should do more, to give more – with the U.S. giving the most in real terms in 2006 with $23.5 billion, but as a percentage of their GNI, Sweden, Luxembourg, and Norway lead the list.  The Index tributes the growth of public-private partnerships, rise of social entrepreneurship, increasing prominence of religious organizations, and effect of remittance flows to be the current driving forces in today’s global philanthropy.

Focusing on U.S. economic engagement in developing countries, ODA equaled only 12% of the $192b in total economic engagement in 2006.  Potentially more interesting is that the traditional definition of philanthropy – foundations, corporations, universities, voluntary & religious organizations – only equated to 18% of this total.  Most of the economic engagement was found in U.S. remittances and U.S. private capital flows.

Two striking points emerge from this data:

1) Private flows are important – as many economists have highlighted in discussions over development.  Investing in developing countries is important for sustainable growth.  However, with its $23.5b the U.S. government (and governments around the world) have important roles to play.  Positive emphasis on this type of private investment does not mean that it can accomplish everything – government funding must continue (and must be encouraged to continue).

2) The Index’s correct citing of the rise of social entrepreneurship, venture philanthropy (and a myriad of other terms) is what makes this sector so interesting, right now.  Increasingly, new and innovative ways are being used to to reach beneficiaries in developing countries.  There is power behind private money – and yet, the rigors of accountability are still not firmly in place.  When you consider the very large spectrum of methods for giving, donating, and intervening – coupled with the infinite number of interest areas, it should be alarming that there are no clearly defined rules on what private money must disclose and no clear basis for how to behave.

Carol Adelman (Director, Center for Global Prosperity) talks about the significance of the 2008 Index in the Financial Times  -the need for this type of data and the challenge to improve the trends we are seeing.  From my vantage point, while we can’t yet claim to have the answers to solving all economic and development problems – more data in the area of global philanthropy is certainly welcome.

And to restore any faith you’ve recently lost, the Index provides over seventy pages of the progress being made by dedicated people and organizations to solve the many areas of inequity in our world.

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