Global Philanthropy and Inequality

by |May 17, 2016

Every time there is an international crisis, whether caused by extremists, natural disasters or political turmoil, many people that are able, eagerly donate and contribute to the cause. However, this eagerness did not always translate into actions that benefited those who suffered from disasters. Prior efforts typically focused on educational or religious institutions as the recipients of donations. Yet, recent trends now point towards global philanthropy becoming the new norm.

The 2010 Haiti earthquake, in which an estimated 230,000 people were killed, resulted in unprecedented funds for the Red Cross totaling $32 million, with $10 contributions sent via text message from the United States. The Council on Foundations defines global philanthropy as a mix of civil society, community, religious, voluntary and non-governmental organizations, distinguished by their capacity to tap private initiative and contributions for the public good.

Global philanthropy aims to reduce inequality in developing countries through many forms. Contributions by individuals to the Red Cross for disaster relief represent one manifestation of global philanthropy. The efforts of global foundations, typically based in the United States or Europe, to distribute grants in developing countries is another. And one other area where we are witnessing growth is the emergence and expansion of indigenous philanthropy in developing countries.

All of these varying forms of philanthropy are designed to leverage capital, typically financial capital, in order to address varying forms of inequality. Despite these pursuits, inequities persist; and, going forward, the different manifestations of global philanthropy will be challenged to increase impact and achieve a demonstrable shift in areas such as poverty, health, access to opportunity, and beyond.

International grantmaking via individual contributions has increased dramatically in the past two decades, at a rate faster than domestic grantmaking. In 2014 alone, Americans donated $15.1 billion to international affairs, which represented four percent of total giving. Official Development Assistance data from the Organization for Economic Co-operation and Development highlights U.S. private philanthropy accounting for 17 percent of the net economic engagement with developing countries, amounting to $37.5 billion.

The 2013 Ebola outbreak, which rapidly spread across West Africa, also prompted over $155 million in funds to fight against the pandemic. This in fact highlights another trend in global philanthropy: On average 65 percent of international donations tend to support health causes. Other trends showcase the enormous amount of effort being brought forth to battle not only health crises, but also inequities. Many researchers, institutions and others now point to the gap between rich and poor threatening international peace and security.

Indeed, one of the 2030 Sustainable Development Goals developed by the United Nations is to “reduce inequality within and among nations.”

Regrettably, philanthropy has very little time to prepare for the Sustainable Development Goals. Peter Laugham, incoming president and CEO of the Hilton Foundation, suggested that the goals will require traction within two years or the agenda could flounder. Given the challenges facing many foundations to adjust quickly, a resulting factor will bring corporate philanthropy into a leading role. For example, the Committee Encouraging Corporate Philanthropy found in its latest report that Fortune 100 companies are spending more on international community and economic development than any other area. Some are even suggesting that the Sustainable Development Goals could result in a golden age of socially orientated business.

The 17 Sustainable Development Goals (SDGs) were adopted in September 2015 with the purpose to end poverty, protect the planet and ensure prosperity for all. Goal #10 directly addresses the reduction of inequalities.

The 17 Sustainable Development Goals were adopted in September 2015 with the purpose to end poverty, protect the planet and ensure prosperity for all. Goal #10 directly addresses the reduction of inequalities.

Other individuals have also begun making significant strides to increase philanthropy’s reach. Just take the case of billionaire business magnates Warren Buffet and Bill Gates. In 2010, these leading philanthropists traveled to India and China, two of the fastest growing economies in the world, to pitch their popular idea of the “Giving Pledge.” This global initiative encourages the world’s wealthiest to make a pledge to contribute at least 50 percent of their fortunes to charity.

Unfortunately, as is the case with many international endeavors, their initiative proved more difficult to apply to developing countries than they may have anticipated.

“Philanthropy in the first world and in the third world are two different things,” said Yusuf Hamied, chairman and managing director of pharmaceutical company Cipla. “In India our charity is not about writing fat checks.” Indeed, according to a November 2010 Barclays Wealth report titled, “Global Giving: The Culture of Philanthropy,” there is a new breed of “go givers” who want to contribute their time, too. In this respect, the wealthy in Ireland and India were found to be the most generous with their time.

In China, Feng Gang, professor of sociology at the Zhejiang University, felt similarly. “China has two issues in terms of philanthropy,” he said. “First, all of China’s philanthropy organizations are managed by a few government-related agencies. No institutions can receive any donation without certain approvals. And private organizations in philanthropy are not allowed to operate. Second, with several corruption scandals, many entrepreneurs have serious concerns about the credibility of these agencies; they would rather donate on a one-to-one basis. The foremost challenge for China’s philanthropy is to open it to private organizations, with the government playing a management role, and to build up trust among different parties.”

In general, traditional customs around the world suggest that philanthropy is associated with community caring, giving and support. So, what does this mean in terms of addressing global inequality? Philanthropic activity in Southern countries means new institutions and initiatives are being created to do just that. Africa has seen a steadily increasing number of foundations established by wealthy individuals, former heads of states, professional athletes, musicians and other celebrities, raising the hope that in the long run more resources can be mobilized from local capacities. One inspiring example comes from Sudan, where Mo Ibrahim used part of his fortune from the sale of Celtel, a mobile phone company, to set up a foundation which focuses on good governance, eradicating poverty and promoting development.

The Mo Ibrahim Foundation produces an annual Index of African Governance and awards the Prize for Achievement in African Leadership to a former African head of state. Additionally, foundation fellowships provide opportunities for young African leaders to study in institutions in Africa and the United Kingdom—supporting, for example, the attendance of 40 additional female students at the University of North Sudan.

TrustAfrica and the African Women’s Development Fund  are examples of two other types of foundations. The former, supported by the Ford Foundation, promotes the conditions for democracy and equitable development and has a program focusing on African Philanthropy. The African Women’s Development Fund is a fundraising and grantmaking initiative started by three African women to support the women’s movement in Africa.

Mo Ibrahim, a Sudanese billionaire, launched the Mo Ibrahim Foundation in 2006 to address inequality and make leadership and governance central in African development.

Other examples include both the Alvar Alice Fundación in Colombia, which funds Paz y Bien, a grassroots organization that works with young people who are victims of urban violence and forced displacement, and the Dalit Foundation, founded in 2003 and based in New Delhi, which works to eradicate caste discrimination in the Indian subcontinent.

Overall, it appears one can be hopeful that the creation of foundations in Africa and elsewhere will give local communities a greater voice in determining development priorities for their needs. The variations in culture, politics and history from one country to the next will influence how philanthropy is implemented. The many barriers to global philanthropy such as corruption, elusive tax rates and the introduction of repressive laws against civil society organizations will also need to be mitigated so as not to be a hindrance to philanthropic endeavors. As countries accumulate the resources and greater stability that comes with social and economic development, global philanthropy will shift and begin to address inequalities in a more strategic and harmonizing way.


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