Innovative philanthropy transforming aid to developing countries

Private giving and investment from all donors to developing countries now accounts for over 75% of developed countries’ entire economic dealings with the developing world.

And, government aid or ‘Official Development Assistance’ (ODA) is now a minority shareholder in the growth and development of poor countries.

These are the findings published in the third annual Index of Global Philanthropy, produced by the US-based Hudson Institute’s Center for Global Philanthropy (CGP).

The report found that in the US, for 2006, private philanthropy and remittances that migrants send back to families in their home countries constituted four-and-a-half times US official aid abroad. This is up from three-and-a-half times in 2005. In 2006, the US gave $34.8bn in private philanthropy and $71.5bn in remittances as compared to $23.5bn in ODA.

Working with partners in several countries, CGP continues its efforts to provide a more comprehensive picture of international private giving from donor countries, and in the UK partnered with Charities Aid Foundation (CAF) for a second year. CAF provided a comprehensive private giving number for the UK, which was US$1.61bn in 2006.

The Index also provides examples of how the traditional ‘donor-to-recipient’ model of foreign aid is being challenged and changed through public private partnerships, in which savvy government aid agencies are changing their foreign aid business model to leverage official aid with new private programmes run by foundations, corporations, charities, universities, and religious organisations.

It also documents new trends in giving such as cause-related marketing, fair-trade movements, and internet giving, which are democratising philanthropy.

“It’s an exciting time for philanthropy,” says Carol Adelman, director of the CGP, “as we watch how new and diverse private players are creating new business models for foreign aid. But most importantly, it’s about how poor people are helping themselves through partnerships that are locally owned, transparent, and accountable - with better, more lasting results than government aid has had in the past.”

• To read the latest Index of Global Philanthropy, click here.