December 9, 2013; IIP Digital

According to the Index of Global Philanthropy and Remittances, published by the Hudson Institute’s Center for Global Prosperity, private dollars to developing countries far exceeded aid from governments in 2011. At the U.S. State Department, leaders are aware enough to have set up a working group on philanthropy to promote private giving. It would be odd if State were unaware of the importance of private philanthropy, given that the spouse of current Secretary of State John Kerry, Teresa Heinz, chairs the board of trustees of one of the nation’s largest private foundations, the Heinz Endowments (plural because it is actual two foundations).

However, digging into the excellent report that CGP, under director Carol Adelmann, regularly issues, it is self-evident that not all dollars are the same. Government aid, private philanthropy, private investment, and remittances sometimes serve very different purposes and reach populations in need somewhat variably due to challenges in cross-border financial flows and, in the cases of many developing nations, the restrictions they put on indigenous and international nongovernmental organizations.

It shouldn’t be difficult to whet anyone’s interest in plowing through the data in the Index to encounter findings such as these:

  • Private capital flows in terms of philanthropy, remittances, and capital investment from the 23 developed donor nations of the Development Assistance Committee to developing countries accounted for roughly 80 percent of the $577 billion total in 2011.
  • Of the total $322 billion in private financial flows in 2011, $196 billion was in the form of remittances (making it the largest component of private capital from developed to developing countries) and private philanthropy totaled $59 billon.
  • In terms of official development assistance (ODA), the DAC countries generated $134.04 billion in aid and four so-called “emerging” economies—China, India, Brazil, and South Africa—added another $3.66 billion. On some projects, Brazil, India, and South Africa cooperate through the India-Brazil-South Africa (IBSA) Trilateral Initiative launched in 2003 to generate increased South-South development assistance.
  • The U.S., with $30.92 billion in official development assistance, was the largest ODA donor country, followed by Germany ($14.09 billion), the United Kingdom ($13.83b), France ($13.0b), and Japan ($10.83b), but in terms of ODA percentage of gross national income (GNI), only five of the DAC nations hit the United Nations’ suggested target of 0.7 percent—Sweden (1.02 percent), Norway (1.0 percent), Luxembourg (0.97 percent), Denmark (0.85 percent), and the Netherlands (0.75 percent). The U.S. was at 0.20 percent.
  • Sub-Saharan Africa was the largest recipient of ODA, approximately $45.6 billion. Aid to the Democratic Republic of the Congo grew from $3.5 billion in 2010 to $5.5 billion in 2011, making it the second-largest single recipient of development aid. Aid to Haiti dropped from $3.1 billion in 2010 to $1.7 billion in 2011, closer to the nation’s pre-earthquake levels.
  • For the U.S., the CGP counts public and private development assistance to developing countries as $278.5 billion, with official government aid constituting at $30.9 billion, foundations $4.6b, corporations $7.6b, private and voluntary organizations $14.0b, universities and colleges $1.9b, religious organizations $7.2b, U.S. remittances $100.2 billion, and private capital flows $108.4 b. CGP also adds in $3.7 billion as the value of volunteerism directed at developing countries from the U.S.
  • Although Asian countries are worldwide the largest recipients of remittances, Latin American and Caribbean nations are the largest beneficiaries of remittances from the U.S. sources, roughly $44.3 billion, of which more than half ($23.2 billion) goes to Mexico.

This very useful report nonetheless generates questions. Given that the “BRIC” countries (Brazil, Russia, India, and China) are described as generating philanthropic and government aid to development countries, it is noteworthy that this issue of the Index added Brazil, China, India, and South Africa to the analysis, but not Russia. One might also question how much aid there is in some of the corporate and other private capital investment in developing countries that the CGP counts. Nonetheless, this is a meaty document well worth the attention of anyone who wants a better understanding of public and private capital flows reaching developing countries.—Rick Cohen