14 May 2008
Private Sector Drives Growth in U.S. Assistance to Poor Nations
Private giving with government aid boosts U.S. ranking in annual report
Washington -- Thanks to expanding private sector efforts, aid from Americans to developing nations rose nearly 6 percent during 2006, despite a decline in the amount of official assistance from U.S. government agencies, according to a report by the Hudson Institute’s Center for Global Prosperity.
All told, U.S. public and private sources, including immigrants to the United States sending money back home, provided $130 billion to developing nations -- or more than six times the total support from the next largest donor nation.
Private philanthropy and remittances by immigrants totaled $106 billion, up from $95 billion the year before and more than four times the level of official U.S. government aid in 2006, according to the Index of Global Philanthropy. Private charities, foundations, corporations, religious organizations and universities provided roughly $35 billion in support to developing nations in 2006, compared to just less than $34 billion in 2005. Immigrants sent a record total of nearly $72 billion back to families or projects in their home countries. A year earlier, immigrants sent $62 billion home.
Official Development Assistance (ODA) from U.S. government agencies fell to just below $24 billion in 2006 from roughly $28 billion the year before, largely because of the completion of some debt-relief programs. Debt relief, which is considered development assistance, swelled in 2005 with the forgiveness of large debt obligations owed by Iraq and Nigeria. Globally, ODA from all 22 donor countries fell to roughly $104 billion in 2006 from $107 billion the year before, also because of the effect of debt relief.
The predominance of U.S. private giving over public sector assistance is consistent with the general trend among donor countries. The report says that the private sector is “reinventing foreign assistance through new, creative philanthropy and public-private partnerships.”
Carol Adelman, director of the Center for Global Prosperity, observes: “It is an exciting time for philanthropy as we watch how new and diverse private players are creating new business models for foreign aid.”
The study cited a significant shift in corporate involvement, which increasingly is characterized by “cause-related marketing” in which a company donates a percentage of profits to a specific charity or cause. It estimates that cause-related corporate efforts now raise about $1.5 billion annually. (See "Business Throws Its Weight Behind Special Olympics Summer Games.")
Despite this shift, official assistance still accounts for half or more of total assistance from most Organisation for Economic Co-Operation and Development (OECD) member nations. The United Kingdom, the second largest donor nation, provided almost $21 billion in total assistance in 2006 with about $13 billion of that coming in the form of official assistance. Germany, the number three donor, provided just more than $18 billion in total aid, including more than $10 billion in ODA. OECD represents most industrialized nations.
The level of assistance can be affected by unanticipated events or political developments. For example, the U.S. government and private organizations in the United States provided almost $3 billion in targeted assistance in the first year after the Asian tsunami of December 2004. Assistance totals in 2008 might be affected by support for victims of the recent cyclone in Burma, but Adelman says it is too soon to estimate the amount of such aid.
An examination of aid from the United States shows remarkable diversity. Private charities and grassroots organizations provided $13 billion in support to developing nations, including volunteer time valued at more than $2 billion during 2006. Religious organizations contributed nearly $9 billion. Corporations provided almost $6 billion. Foundations contributed $4 billion. Colleges and universities provided another $4 billion, largely in the form of tuition assistance, scholarships and other educational grants to students from the developing world.
While American assistance far outpaces support from other countries when calculated in total dollars, other nations equal or surpass the United States when donations are considered in relation to the size of national economies and populations.
When measured as a percentage of gross national income, Sweden is the most generous source of official aid, followed by Norway and Luxembourg. The United States ranks 21st in official government aid as a percentage of national income. But when private and official aid is combined, U.S. contributions in 2006 climbed to sixth as a percentage of national income.
On a per capita basis, Norway ranks first, with $768 in total (official and private) aid per person in 2006. The United States is fourth among OECD nations, with $434 in total public and private donations for every American.
