The Bellagio Initiative

The Future of Philanthropy and Development in the Pursuit of Human Wellbeing

Background Paper
Philanthropy: Current Context and Future Outlook
The Resource Alliance November 2011

Draft

Copyright is jointly held by the three Bellagio Initiative partners: Institute of Development Studies (IDS), the Resource Alliance and the Rockefeller Foundation. IDS is a leading global charity for research, teaching and information on international development. Its vision is a world in which poverty does not exist, social justice prevails and economic growth is focused on improving human wellbeing. IDS believes that research knowledge can drive the change that must happen in order for this vision to be realised. The Resource Alliance has a vision of a strong and sustainable civil society. It aims to achieve this through building skills and knowledge, and promoting excellence. To help organisations increase their fundraising capabilities, the Resource Alliance provides a range of services and resources, including conferences, international and regional workshops, accredited in-depth courses in fundraising and communications, tailor-made training and mentoring, research, publications, newsletters and award programmes. The Rockefeller Foundation has a mission to promote the wellbeing of people throughout the world. It has remained unchanged since its founding in 1913. Its vision is that this century will be one in which globalisations benefits are more widely shared and its challenges are more easily weathered. To realise this vision, the Foundation seeks to achieve two fundamental goals in its work: 1. It seeks to build resilience that enhances individual, community and institutional capacity to survive, adapt, and grow in the face of acute crises and chronic stresses. 2. It seeks to promote growth with equity so that poor and vulnerable people have more access to opportunities that improve their lives. In order to achieve these goals, the Foundation provides much of its support through time-bound initiatives that have defined objectives and strategies for impact. For further information on the Bellagio Initiative: E-mail: contact@thebellagioinitiative.org Web: www.bellagioinitiative.org

B
Bellagio Initiative

About the Background Paper

This paper was developed to provide general context to discussions on the state of the philanthropic sector. Unlike the Commissioned Papers for the Bellagio Initiative, its focus is to present a review of existing literature and it has not been subject to a peer review process. A final version of the paper will be available following the summit of the Bellagio Initiative (November 9th 22nd 2011)

The Bellagio Initiative

The Future of Philanthropy and Development in the Pursuit of Human Wellbeing

PHILANTHROPY :

C URRENT

C ONTEXT AND F UTURE O UTLOOK

[Issues, Actors and Instruments]

[Thisreportattemptstoprovideanoverviewofphilanthropyandthephilanthropicecosystem thathasevolvedovertherecentdecade.Specialfocusofthereportisonoverseasphilanthropy andphilanthropicmoneyfordevelopmentcauses.Thisreportapproachesthestillheateddebate around development and aid from various angles, bringing the perspectives of grantees and recipients of philanthropic development resources to thetable as well as those of funders and donors.Itrepresentsanaggregationofavailabledataonresourcesandmoneyflowsaswellas an extensive qualitative analysis of the philanthropic ecosystem based on indepth interviews withleadingexperts.]

Organised by

Funded by

July2011 TableofContents
Executive Summary ....................................................................................................................... 5 Methodology and Definitions ....................................................................................................... 10 Methodology .............................................................................................................................. 10 Definitions and Abbreviations used ........................................................................................ 11 Introduction .................................................................................................................................. 13 Change, not charity .................................................................................................................. 15 Philanthropy and Development .................................................................................................. 16 Resources of the Global Non-Profit Sector .............................................................................. 16 Does philanthropy punch above its weight?........................................................................ 17 Philanthropic contributions to non-profits smaller than thought ..................................... 17 Philanthropy the dominant source for international NGOs .............................................. 19 Conclusion ................................................................................................................................. 21 Questions to explore ................................................................................................................. 21 Overseas philanthropy ............................................................................................................. 22 Shortcomings of the Hudson Institute analysis .................................................................. 24 Conclusion ................................................................................................................................. 26 Philanthropy smallest contributor to overseas development............................................. 27 Overseas aid by OECD member states has remained flat in 2009 ................................... 29 Government overseas assistance is not longer DAC-centric .............................................. 30 The rise of the Non-DAC states as official aid giving countries ....................................... 32 Costs of coordinating new aid activities have skyrocketed ................................................ 35 Conclusion ................................................................................................................................. 36 Remittances .................................................................................................................................. 37 Remittance flows are large and resilient ................................................................................ 38 A subset of remittances can be considered philanthropic ...................................................... 43

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Improvement of remittances flows .......................................................................................... 43 Conclusion ................................................................................................................................. 44 Diaspora savings .......................................................................................................................... 45 Diaspora giving more ad-hoc than strategic ........................................................................... 47 Backyard giving and ad-hoc giving ......................................................................................... 47 Diaspora bonds ......................................................................................................................... 49 Conclusion ................................................................................................................................. 50 Foreign direct investments .......................................................................................................... 52 Segmentation of Players .............................................................................................................. 53 Segmentation ............................................................................................................................ 53 International involvement of U.S. foundations ...................................................................... 54 The Gates Factor ..................................................................................................................... 62 How much overseas development has the No1 philanthropist essentially done? ................ 62 The advocacy role of the Gates Foundation ............................................................................ 64 Special Analysis U.S. Foundation grants to China ............................................................. 64 Conclusion ................................................................................................................................. 65 European foundations: Expenditure and international involvement ................................... 67 Conclusion ................................................................................................................................. 72 Asian foundations play an increasingly important role in their region................................ 73 The role corporations play for overseas philanthropy............................................................ 74 Corporate giving: Not just lipstick on a pig? ....................................................................... 75 Country Snapshots ....................................................................................................................... 79 Philanthropy in the U.S. .......................................................................................................... 79 Number of community foundations grants falling.............................................................. 80 Education is increasingly on the agenda for Gates ............................................................ 81 Philanthropy in Africa ............................................................................................................. 82 Further research....................................................................................................................... 83

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Philanthropy in Australia ........................................................................................................ 84 How Australia compares to the rest of the world ............................................................... 86 Philanthropy in BRICS states a (very) short overview ....................................................... 88 Brazil ..................................................................................................................................... 88 India ....................................................................................................................................... 89 China ..................................................................................................................................... 90 South Africa........................................................................................................................... 94 Conclusion ................................................................................................................................. 94 New Philanthropy ........................................................................................................................ 95 1. New philanthropic actors ..................................................................................................... 97 Social Enterprises a promising hybrid model .................................................................. 97 A Social Enterprise: BRAC................................................................................................... 98 2. New Financial Techniques ................................................................................................. 100 Microfinance is evolving from credit to inclusive financial services ............................... 100 Impact Investing ................................................................................................................. 100 New financial intermediaries GIIN, IRIS and GIIRS ................................................... 101 Impact Investment Funds .................................................................................................. 101 Diaspora Bonds ................................................................................................................... 104 Social Impact Bonds and the Payment by result approach........................................... 104 Other bond instruments ..................................................................................................... 105 Corporate Social Investing: Creating Shared Values .................................................... 106 Do good, (place your product) and speak about it ............................................................. 108 Impact Assessment ............................................................................................................. 110 Critique of impact assessment ........................................................................................... 112 Conclusion ............................................................................................................................... 113 3. The micro-level approach ................................................................................................... 114 Collaboration in overseas giving a special analysis ...................................................... 117

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The importance of local grant-making institutions .......................................................... 120 Balancing the power relationship ...................................................................................... 121 Change the conversation at board level ............................................................................ 121 Drivers and Inhibitors ............................................................................................................... 122 The Future of Philanthropy....................................................................................................... 126 Recommendations................................................................................................................... 126 1) Engage in political advocacy .......................................................................................... 126 2) Collaborate more often ................................................................................................... 126 3) Develop and strengthen your (own) facilitators ........................................................... 127 4) Move towards inclusive decision-making with your stakeholders .............................. 128 Literature ................................................................................................................................... 129 Appendix ..................................................................................................................................... 133

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EXECUTIVE SUMMARY
Thisreportisrelativelybroadinscopeandattemptstobeclear,easytounderstand,andtobe ofuseforallpractitionersinthefundraisingandphilanthropyfield.However,itcannotclaimto be exhaustive and to cover each one of the examined topics sufficiently. Its aim is to raise questionsandprovideabasisfordiscussionfirstandforemost. The special focus on overseas philanthropy and philanthropic money for development causes brings certain challenges with it, as it is a topic that is not easily summarised in a couple of bullet points and conflicting opinions are as present as in any discussion that deals with the interaction of the developed and developing world. This report attempts to approach the debate around development, aid and philanthropic money with open eyes and, as far as possible, from all various angles bringing the perspectives of grantees and recipients of developmentmoneytothetableaswellasthoseoffundersanddonors.
Philanthropy,GovernmentOfficialDevelopmentAssistanceandRemittancestothedevelopingworld,$billion, 2009,(Base:OECDcountries) Source:HudsonInstituteforGlobalProsperity:TheIndexofGlobalphilanthropyandRemittances2011

Our analysis will show that, while the importance of philanthropy for the nonprofit sector overall (e.g. areas such as health, education, housing) is smaller than expected, it is the dominantsourceofincomeforthosenonprofitsectororganisationswhichareinternationally active. Data from 2009 suggests that philanthropic resources for international development were in excess of $53 billion, thus constitute a considerable stream of private money for development causes. However philanthropic resources make up the smallest share out of all

July2011
money flows such as official government development assistance or remittances (see above chart). Remittances, as it turns out, have moved out of the shadow of being migrant money sent home to become a potential force of good, depending on each governments political will powertoreducemoneytransferrates.Byreducingrates, additionalmoney forthose migrant families can be freed up. Domestic governments can further leverage the $ billions that have been saved by migrants abroad by introducing diaspora bonds or other financial buyin instrumentsthatallowdiasporacommunitiestoinvestintotheirhomecommunitieseasier.The idea has been raised that issuance of these kind of social impact bond instruments could be done by a trusted intermediary organisation instead of the home government, as trust in administrativebodiesisoftenlowerthaninlarge,internationalNGOs. Theextraordinaryrolethenonprofitsectorplaysforinternationaldevelopmentresultsinaset ofmultipleactorswhichneedtocooperatebetter.Philanthropicresourcesfordevelopmentare dominatedbyU.S.foundations,whichchanneltheirgivingprimarilythroughglobalfunds,rather than directly to developing countries. In 2009, U.S. foundations have given an estimated $6.7 billionto internationalcauses. Philanthropic expenditureofEuropeanfoundations is farlower compared to their U.S. counterparts, despite holding more assets on average. International involvementbyEuropeanfoundationsisestimatedtobearoundhalfabilliondollars(in2007). ItalianfoundationshavethelargestaggregatedassetsinEurope,whileBritainleadsthewayby ahugemarginintermsofaveragesizeofagrant(domesticandinternationalgrantscombined). Only a small number of foundations have offices in the worlds poorest countries, however, increasedcollaborationwithlocalgrantmakinginstitutionscanbeseen. Foundations have in contrast to nongovernmental organisations and governments often quitespecificinterestsandadifferentfocustojustsupportinghumanitariancauses.Theentry oftheBill&MelindaGatesFoundationwasagamechangerbothintermsofthesizeofgrants given and their concern with the long term impact of their money. Besides new billionaires forming a new philantrocapitalism movement, philanthropic actors themselves are slowly changing, with new (and female) philanthropic actors and young entrepreneurs seeking high engagementinphilanthropicendeavoursandatangibleimpact. IntheU.S.,corporationshavegiven$15billiontocharityin2010,whichmanifeststhesmallest share out of all private giving (Other: foundations, individuals, bequests). Recorded corporate giving usually includes not only cash, but also inkind donations (products and management time) which, essentially, boost the overall recorded amount while disguising the minor role thatmultibilliondollarcorporationsplayinmanypartsoftheworld.Researchhasunderlined thatthemostoftencitedgoalofacompanysphilanthropyisenhancingcorporatereputation. Leaving those marketingrelated issues aside for a moment, the role and importance of corporatephilanthropystronglydiffersbetweencountries,dependingontheoverallcultureof givingofasociety.ThemajorityofgivinginBrazil,forinstance,happensthroughcorporations, and entrepreneurs play a crucial role for the support of communities across the country. However, it should be noted that corporate philanthropy similar to philanthropy by
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foundationsdoesimplyaspecificfocusandagenda(bythecompanyfounder,chairman,board or shareholders) which might lead to the exclusion of funding for controversial issues like humanrights,certaindiseaseprevention,raceorgenderrelations. BRICS countries such as Brazil, India, China and South Africa are seeing growth in philanthropy, and especially local philanthropic actors. The notion of reliance on local organisationsandplayers,insteadofwaitingforforeignmoneytocomein,hascreatedthriving philanthropiclandscapeswithuniquecharacteristicsandparticularopportunities. Not only in transitional countries and emerging economies have new types of philanthropy flourishedandevolvedbutalsointhedevelopedworldandthesocalledNorth.Anewbreed of philanthropic actors, new financial techniques and a new microlevel approach both domestically and abroad have resulted in a rather new landscape of philanthropy. Regarding international development, innovations such as microfinance have been triggered by exactly thosethreechanges:1)newphilanthropicactorssearchingsynergieswithbusiness,andanew typeofinstitution,thesocialenterprise,2)theimplementationofnewfinancialtechniquesand 3)anewmicrolevelapproachthatfocusesoncommunitiesaslevelofaction.Microfinancehas successfullygonethroughdifferentstagesofdevelopingfromaloaninstrumentintoawholeset of inclusive financial services, and a current new instrument is likely to go through a similar processmuchfasterimpactinvesting.Impactinvestmentinstrumentshavepotentialforhuge returnsandassetsareestimatedtobeworth$400billionandmore.Whileexpertsstressthat impact investing funds are not the silver bullet and more of a complement to traditional philanthropy, impact investment funds such as the Acumen Fund are successfully supporting businessmodelsatthemicrolevelindevelopingcountrieswhileworkingtheirfundataprofit andreturnforinvestors.However,impactassessments,i.e.proceduresthatallowevaluatingthe business model of a social enterprise, and therefore naturally form the basis of any social investment, have certain shortcomings which are difficult to eliminate many especially smallerinstitutionsstrugglewithshowingtheirlongtermimpact.Thekeyproblemisthatwhile aphilanthropistshorizonandfundingmilestoneisusually23years,anonprofitorganisation oftencangiveonlypiecemealimpactdemonstrationswithinthosefirstyears. Large organisations are much more capable of developing, using and/ or implementing new waysofmeasuringtheimpactoftheirprograms,andindustryexpertsstressthatlargerplayers shouldleadtheway indoingso intheir fieldofactivity.Thereisnodoubtthataglobalorat least multinational framework will be established based on current efforts and pilots such as the UK Charity Foundations information portal. Caution should always accompany these evaluationefforts,andqualitativeassessments(incontrasttoquantitative)ofprogramsshould probablyoutweighthoseattempts. Tosumup,manyobserversspeculateonthedevelopmentpotentialofphilanthropicactorsand especially private foundations, comparing it with the official development aid provided by governmentsthroughbilateralormultilateraldevelopmentinstitutions.Basedonfindingsfrom the research, insights from philanthropic and fundraising experts and their best practice

July2011
examples, the following recommendations on how to leverage existing philanthropic endeavourscanbemade: 1) Engage in political advocacy: Many experts who were consulted for this report have highlightedthenecessityforphilanthropiststoadvocateforchangemoreprominently.Political campaigning, lobbying and advocacy is crucial for NGOs, too. For high impact NGOs, simply deliveringagoodserviceisnotenough;theyneedtocampaignforpoliticalactioniftheyreally wanttodrivemassivesocialchange. 2)Collaboratemoreoften:Socialchangeisamultisectorundertakingrequiringcooperation between business and central government, local government and NGOs and everyone in between.Itisproventoworkanditgenerallyworkswithmoreimpactasinstitutionsareableto achievesystemicchange.Engaginginadvocacyandlobbyingasdescribedabovealsoextendsto thebusinessworld.NGOsandphilanthropistswithasocialchangeagendaareadvisedtomake markets work (for them). Successfulnonprofits do not rely on traditional giving, but instead workwithbusinesses,generatingincomeandsupportlinkswherepossible. The biggest obstacles for more collaboration between business, government, NGOs and philanthropists are preconceptions of the other players involved, as well as the bureaucratic hurdles and budgetary (time) constraints of the public sector. When looking at developing countriesinparticularandcollaborationbetweenplayerswithintheecosystemofdevelopment philanthropy, the frequent power imbalance between donor and grantees needs to be addressed.Inparticular,toavoidadonordrivenagenda,whichintheworstcaseignoresthe NGOsuniquestrengthsandalsoweaknesses,localplayersneedtobeconsulted.Existingpower imbalances between (often) foreign players and local players can be addressed by consulting local advisory boards, setting up completely independent boards in a particular country or havinglocalplayerssittingonthefoundationboard.Keyistochangetheconversationatboard level. 3) Develop and strengthen your (own) facilitators: Collaboration not only faces limitation throughpersonal(andagendalinked)motivationsandsystemichurdles(bureaucracy)butalso the(multiactorrelated)problemofspeedandscale.Successfulsocialinnovationshavespread only slowly, if at all. In business, entrepreneurial firms that do well grow fast; but social entrepreneurship does not yet have a Microsoft or a Google. With encouragement from the stateandotherleadingplayers,socialentrepreneursbestideascanbespreadfasterandwider. Grantmaking institutions in developing countries, ideally the first point of contact for foreign actors, need to massively scale up their efforts to develop local philanthropy, NGOs and non profitnetworks. 4) Move towards inclusive decisionmaking with your stakeholders: Examining the best practicecasesforcollaborationaswellasthosewhereobstaclescouldnotbeovercomeandthe initiativefailedsubsequently,oneaspectemergesasthekeyforlonglastingimpact:Community
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involvement. Numerous practitioners, recent research as well as best practice examples underlinethenecessityforcollaboratingeitherwithlocalNGOs,thecommunityorcommunity foundationstomakesurethewholeinitiativegetsascloseaspossibletoitsactualstakeholders andrecipientsrespectively. Furthermore, development experts have highlighted that the whole process of community involvement has to clearly move beyond mere consultation and involvement and towards inclusivedecisionmakinginstead. Communityinputiswhatallinitiativesintheareaof Those institutions most social change philanthropy have in common. sensitive to their Communityinputintothegrantmakingprocessisa stakeholders are the ones consistentthreadacrossallsocialchangeprograms, andwhilemostofthosefundsarequitesmall,their that will live impactisextendedthroughcollaborativeprocesses thatprovidebenefitsbeyondthegrantdollars. Philanthropy Expert, Australasia

July2011

METHODOLOGY AND DEFINITIONS

Methodology
Philanthropyisavagueandbroadlyusedtermthatincludesdifferentmoneyflowsfordifferent people.Thereforeitisnecessaryattheoutsettopresentaconceptualdiscussionofwhatthe termphilanthropyincludes.Whilethisreportdoesnotaimtodrawfirmlinesaboutwhatis andwhatisnotincluded,itinsteadsummarisesanddisplaysthegeneraldiscussionaboutwhere to go looking for the boundaries. Thus this report presents and examines three types of financials flows, those that are clearly included in philanthropy (grants from foundations, corporate charitable giving and individuals), those that clearly arent (e.g. foreign direct investments) and those that are in a grey area and generally a source of contention (such as remittances, membership dues to religious organisations as well as Governments official overseasdevelopmentassistance). When looking at academic research and other available research sources, the two most important distinctions are whether membership fees to religious institutions are included in philanthropy or not religious giving is in many countries a major contributor to daytoday welfare services, however based to a large extent on fees from their members and not particular targeted giving. Secondly, the issue of volunteering and whether figures on the economicimpactofvolunteeringareincludedornot,ifavailableatall. Philanthropy in this report is understood as individual giving, foundation giving or corporate giving.Insomecases,thisreportreferstophilanthropyasprivategivingwhichimplicitlyrefers to those three sources if not mentioned otherwise. For more definitions, see the list the followingpage. Data on philanthropy still relies to a very large extent on estimates. This report has based its mappingexercisemainlyontwodatasets.Thefirstsetisthesinglemostextensivedataseton theglobalcivilsocietysectorfromtheCentreofCivilSocietyStudies(CCSS)attheJohnsHopkins University (Washington, U.S.A). However, while its figures allow a clear overview of the civil society sectors of particular countries, it cannot be easily broken down into domestic and international philanthropy. For a closer look at philanthropy with international development focus a second dataset was used, the Hudson Institutes Centre for Global Prosperitys (Washington, U.S.A) annual report on Global philanthropy and remittances. This report constitutes the most recent attempt to estimatethe size of internationalphilanthropic giving. OtherdatasetsusedweremainlysourcedfromtheOECDandtheWorldBank.Allsourcesare indicatedaccordingly. All$figuresinthisreportareU.S.$unlessotherwisestated.Allresearchhasbeenconducted betweenJuneandJuly2011.

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July2011 Definitions and Abbreviations used

PhilanthropyGenerallydefinedastheprovisionofprivateresourcesforsocialpurposes1;Philanthropygenerally excludes government aid, government grants or government donations, thus sources of philanthropy are usually categorised as either 1) individuals, 2) foundations and 3) corporations; in some cases, this report refers to philanthropyasprivategivingwhichimplicitlyreferstothosethreeaforementionedsources Philanthrocapitalism A term referring to a new type of philanthropist (and their charitable giving arms) who donates multimillion dollar grants to development causes in a very strategic manner with longterm impact a key consideration DomesticphilanthropyStrategicgivingtocauses/institutionsinthehomelandorresidentcountryofanindividual, foundationand/orcorporation,usuallywiththepurposeofsupportingdomesticcauses.Evenwithinacountrywith anextensivenetworkandinfrastructureofinternationalorganisations,acertainshareofdomesticphilanthropystill accountsforinternationalgiving(asinternationalorganisationsfundraisedomesticallyandgiveabroad) International or overseas philanthropy Strategic giving to causes/ institutions abroad or domestic institutions whichdealwithinternationaldevelopmentinitiatives PrivategivingSeeabovephilanthropy IndividualgivingGivingbyindividualsincontrasttograntsordonationsbyfoundationsorcorporations PrivatefinancialflowsorprivatemoneyflowsUsuallyreferstomoneystreamsintodevelopingcountriesthatare somehow accounted but not official government aid transfers, i.e. remittances, (explained below), philanthropy or foreigndirectinvestments(explainedbelow) Bilateralaid/moneyflowsBilateralinthiscontextreferstomoneyflowsbetween(two)particulargovernmentsin contrasttoofficialgovernmentassistance(explainedbelow)whichoftengoesthroughmultilateralaidagenciessuch astheUnitedNationsprograms Nongovernmentalorganisation,orNGOAnonprofitorganisationindependentfromanygovernment,organised onalocal,nationalorinternationallevel Social enterprise A business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholdersandowners Remittances Transfers incashorin kindfrom migrants to resident householdsin the countries of origin.Usually theseareongoingtransfersbetweenmembersofthesamefamily,withpersonsabroadbeingabsentforayearor longer. Remittance data are taken mostly from credits to the balance of payments data file of the International MonetaryFundasreportedbycentralbanks.Mostcentralbanksuseremittancedatareportedbycommercialbanks, but leave out flows through money transfer operators and informal personal channels. Formal channels include money transfer services offered by banks, post office banks, nonbank financial institutions, and foreign exchange bureausandmoneytransferoperators

Seehere:Martin,Maximilian(2011):FourRevolutionsinGlobalphilanthropy.ImpactEconomyWorkingPaper, Vol.1,here: http://www.sanitationfinance.org/sites/www.sanitationfinance.org/files/11_Martin_Four%20Revolutions%20in%20G lobal%20Philanthropy_IE%20WP_1.pdf,page3,(AccessedJune2011)

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DiasporasavingsSavingsbymigrantsineithercashorbankaccountsheldineithertheirresidentcountryortheir homeland DiasporagivingShareofremittancesthatisgiventocharitablecauses;difficulttoquantify BackyardoradhocgivingDonationsofsmallamountsmostlyincashorinkinddonationsgiventocharitiesand communitygroupsorevenindividuals DiasporastockThenumberofmembersofadiasporacommunity,e.g.allMexicanslivingintheU.S. OrganisationforEconomicCooperationandDevelopment,orOECDGroupof34(highly)developedcountriesthat engageineconomiccooperationanddevelopment Development Assistance Committee, or DAC Group of 23 countries within the OECD that engages in joint internationaldevelopmentefforts Foreign Direct Investment or Foreign Capital Investment, or FDI Investment that is made to acquire a lasting managementinterest(usually10percentofvotingstock)inanenterpriseoperatinginacountryotherthanthatof theinvestor(definedaccordingtoresidency),theinvestorspurposebeinganeffectivevoiceinthemanagementof the enterprise. It is the sum of equity capital, reinvestment of earnings, other longterm capital, and shortterm capital as show in the balance of payments. FDI includes intercompany debt (Source: World Bank, Global DevelopmentFinance2006;Washington,DC) OfficialDevelopmentAssistance,orODAGrantsorloanstocountriesandterritoriesonPartIoftheDACListofaid recipients (developing countries) which are: (a) undertaken by the official sector; (b) with promotion of economic developmentandwelfareasthemainobjective;(c)atconcessionalfinancialterms[ifaloan,havingagrantelement (q.v.) of at least 25 percent]. In addition to financial flows, technical cooperation (q.v.) is included in aid. Grants, loans and credits for military purposes are excluded. Transfer payments to private individuals (e.g. pensions, reparationsorinsurancepayouts)areingeneralnotcounted(Source:OECD,DACGlossary) GrossDomesticProduct,orGDPThesumofgrossvalueaddedbyallresidentproducersintheeconomyplusany producttaxesandminusanysubsidiesnotincludedinthevalueoftheproducts(Source:OECD) Gross National Income, or GNI GNI is GDP less net taxes on production and imports, less compensation of employeesandpropertyincomepayabletotherestoftheworldplusthecorrespondingitemsreceivablefromthe rest of the world (in other words, GDP less primary incomes payable to nonresident units plus primary incomes receivablefromnonresidentunits)(Source:OECD) CenterforCivilSocietyStudies,orCCSS,attheJohnsHopkinsUniversity(Washington,USA)Researchcentrethat examinestheglobalnonprofitsector Center for Global Prosperity at the Hudson Institute (Washington, USA) Research institute that publishes an annualreportonoverseasphilanthropyandremittances

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INTRODUCTION
Thisfirstsection ofthereport intendstoprovide anestimateofthetotal amountoffinancial assistance that flows from the more welloff to the less well off countries i.e. covering philanthropy but also individual governments official development assistance, migrant remittances,etc.(SectionheadingPhilanthropyandDevelopment,page16).Atthispoint,itis importanttopointoutthedifficultybothconceptuallyandpracticallyofseparatingdomestic from international philanthropy. This occurs both in the nonprofit world when foundations provide grantstodomestic nonprofits that then use these funds for international purposes and in the government sector, when governments provide either grants or contracts to domesticnonprofitorganisations. Furthermore, this report will mainly look at so called institutionalised philanthropy, with the solereasonforthatbeingtheavailabilityofdata.Itisworthnotingatthisstagethatarather largeshareofphilanthropyisunaccountedfor. Asecondsectionofthereportwillcloselyexamineprivatefoundationsandtheirinternational involvement (Section heading Segmentation of players, page 53) while a third part of the reportfocusesonamorequalitativeassessmentoftheGlobalphilanthropiclandscapebasedon threekeyinnovationareasactors,instrumentsandthelevelofaction(SectionheadingNew Philanthropy,page95). AsTheEconomistmagazineputitearlierthisyear,Willallthatgivingbythebillionairesandthe thousands[...]withfarsmalleramountsofmoney,actuallydoanygood?2Thecruxwithallthe moneyliesinthefactthatwithincreasingresourcescomeplayers,tooresultinginamoreor less crowded market place for development. At the same time, the challenges in global developmenthaveneverbeengreater. From a philanthropists perspective, these challenges have triggered a new phase of philanthropy.Tounderlinethisnewphase,JudithRodin,thecurrentpresidentoftheRockefeller Foundation,has splitphilanthropyinto three phases: Philanthropy1.0referstothescientific philanthropyofCarnegieandRockefeller.Philanthropy2.0referstotheshift,aftertheSecond WorldWar,tobuildinginstitutionssuchasNGOsandcivilsocietyorganisations.In2007,Rodin predictedanewphase:Philanthropy3.0inresponsetotheeffectsofglobalisation.3Thisnew
2

TheEconomist(May122011):Thelessonsofphilanthropy:Givingforresults,seehere: http://www.economist.com/node/18679019,(AccessedJune2011) AshighlightedintheSTEPSpaperbyBrooks,Sally,Leach,Melissa,Lucas,HenryandMillstone,Eric(2009):Silver Bullets,GrandChallengesandtheNewPhilanthropy,STEPSWorkingPaper24,Brighton:STEPSCentre,seehere: http://anewmanifesto.org/wpcontent/uploads/brooksetalpaper24.pdf,page9,(AccessedJuly2011)

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phaseofphilanthropycouldbedescribedasashiftfromcorrectingfortoconnectingtothe marketandrepresentsachangenotonlyinfocusbutalsoinlogic.4 Whether the rhetoric of Philanthropy 3.0 and the phenomenon of Philanthrocapitalism has leadtowidespreadchangesinpracticewithinthesectorisopentodebatebutitishardtoreject thefactthatphilanthropyhasincreasedbothinvalueofdonationsaswellasthesheernumber oftransactions,playersandtargetedcauses. Some researchers suggest that the way we give, work and live might be fundamentally reshaped.Business,asMaximilianMartinputit,willmovebeyondasheerfocusonprofitand philanthropy will move beyond grantmaking. Martin sees a new form of organization and economy evolving which he calls Impact Economy.5 Several businesses exist which operate profitablyhowevernotentirelyforprofitonly(suchasforinstancetheAcumenFund,seemore on Impact investing on page 101) however it remains to be seen whether these kinds of venturesarebecomingwidelyusedinvestmentvehicles. Fromalocal,regionalorglobalperspective,theentryoftheBillandMelindaGatesFoundation into the national and international arena of giving has raised the bar significantly in two key areas:Oneisthesizeoftheirendowment,andsecondistheirfocusonlongterminvolvement andimpact. With government spending under tremendous pressure and new global challenges (environmental, social and political) as pressing as ever, the opportunity and need for intermediaryplayersbetweenbusinessandgovernmentwillonlyrise.Thekeytrendsthatare beingrepeatedlydiscussedandunderlinethisideaofaneweraofcivilsocietyinclude: Growthinglobalindividualwealth Globalthreatssuchasclimatechange,waterscarcityandcontinuinginequality Socialinnovationandanewtypeofgiving(socialenterprises,socialinvesting) A further withdrawal from aid and charitable causes by governments, which requires moreprivatewealthunlocked Changesintheglobalpowerstructure(atanationstateandgovernmentallevel)anda reshufflingofwhogiveswhat

STEPSpaperbyBrooks,Sally,Leach,Melissa,Lucas,HenryandMillstone,Eric(2009):SilverBullets,Grand ChallengesandtheNewPhilanthropy,page12 5 Seeabove,page3

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July2011 Change, not charity

Philanthropy,ingeneral,hasthepotentialtoscaleupregarding A. Theinstrumentsused, B. TheareasofInvolvementand ThroughA+B C. Its potential impact on society and philanthropy becoming an instrument of socialchange These major trends are occurring within a global ecosystem of philanthropy characterised by enormous fragmentation, unequal power relationships, and therefore volatility. New actors, new channels and new instruments call for legitimisation and accreditation and, even more importantly,fornewmodelsofcollaborationbetweentoooftenunequalpartners. The above last bullet point Philanthropy becoming an instrument of social change is a concept we will explore further in this report. "Social change philanthropy", is a specific term used to describe grantmaking that aims to address the root causes of social and economic inequalities. This report will highlight several examples of such philanthropic actors and
institutions,andwillscrutiniserelatedconceptsthroughoutthereport.

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PHILANTHROPY AND DEVELOPMENT

Resources of the Global Non-Profit Sector

This section and the following chapters on overseas philanthropy, remittances and diaspora savingsetc,haveincommonthatitpresentsthevolumeofphilanthropicresourcesmorethan theactualusageofthem.Whereverpossible,ananalysisoftheusageofphilanthropicmoney hasbeenaddedandhighlightedaccordingly.

Keyfindings:

Philanthropycontributesamuchsmallersharetothetotalnonprofitsector(all
areas: social services; health; culture; international development; etc) than commonlyunderstood

Fornonprofitorganizationsactiveininternationaldevelopment,philanthropic
moneywastheNo1sourceofrevenue(38percent)intheearly2000sandhas increasedeversince

Gamechanging investments into internationally operating NGOs have been

madeoverthelastdecade

The growth in the number of NGOs and the emergence of new philanthropic
playersindevelopmenthasimplicationsoncostandefficienciesasanincrease inactorsfromdifferentbackgroundsincreasesthecostofcooperation

For less developed countries, private funds and nongovernmental initiatives

playavitalroleforwelfareservicesandpovertyalleviation.Comparedtothose countries, the United States, the UK and others with highly developed and thriving nonprofit sectors rank relatively low based on their share of philanthropic revenue for the total sector (e.g. U.S. 13 percent; UK 9 percent; JapanandGermany3percent;seeTable17,Appendix)

16

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Does philanthropy punch above its weight?
Thereisalotmoreresearchtobedonetoillustratethepowerofindividualgivingascompared to government aid. A lot of it goes uncounted and probably always will. In Pakistan, which is knowntobeanationofverycharitablepeople,privategivingbyordinarycitizenswasestimated tobefivetimestheamountofinternationalaidgrantscomingintothecountryaroundtheyear 2000.6 Institutionalised players such as for instance foundations have, as will be shown over the following pages, contributed far less to the welfare of a people (both domestically and internationally) than commonly anticipated. While this assessment might still technically be correct,theimportanceandweightoffoundationsforglobaldevelopmentcauseshasincreased drastically since the entry of the Bill and Melinda Gates Foundation and others into the aid arena.

Philanthropic contributions to non-profits smaller than thought

TheevaluationapproachoftheJohnsHopkinsCentreforCivilSocietyStudies(CCSS)identifies thesourcesoffundingofnonprofitinstitutionsacrosstheworld,i.e.fundingbrokendownby1) government,2)philanthropy(individuals,foundationsorcorporations)and3)feesandcharges receivedthroughmembershipduesandsalesofservices.7 From the Johns Hopkins CCSS project and its findings based on data from the early 2000s although not complete or entirely up to date can be concluded the approximate size of the global nonprofit sector and also identify the role which philanthropyplays at a national level acrossthesurveyed34countries.
Salamon,Lester(2004ed.):GlobalCivilSociety,DimensionsoftheNonprofitSector,Volume2,KumarianPress, pagexix(Foreword).ThisanecdotehastobeputintocontextasitreferstoatimebeforetheSeptember11attacks, whenaidtoPakistanespeciallyfromtheU.S.waslowcomparedtotoday
Noteonthedatacategorisation:Therevenuesofcivilsocietyorganizationscomefromavarietyofsources.The CCSSteamhasgroupedtheseintothreecategories:fees,whichincludesprivatepaymentsforservices,membership dues(includingreligiousgivingtocongregationsandchurches),andinvestmentincome;philanthropy,which includesindividualgiving,foundationgiving,andcorporategiving;andgovernmentorpublicsectorsupport,which includesgrants,contracts,andvoucherorthirdpartypaymentsfromalllevelsofgovernment,includinggovernment financedsocialsecuritysystemsthatoperateasquasinongovernmentalorganizations.Seemorehere:Salamon, Lester(2003):GlobalCivilSocietyAnOverview,CenterforCivilSocietyStudies,here: http://www.wingsweb.org/download/global_civil_society.pdf(AccessedJuly2011)/Toallowacoherentdata accumulationacrosscountries,thesystemofnationalaccounts(orSNA)neededadjustment.Theteamsurrounding professorLesterSalamonhasdevelopedaframeworkforevaluationwhichhasbeenacceptedbytheUnitedNations astheuniversallybeststandardforcountrycomparisonandisnowawaitingimplementationinmorecountriesacross theworld.Outof32countrieswhichhaveimplemented(orpledgedtoimplement)thesedatastandardsonlyeleven havepublisheddetailedaccountsaccordingtothesestandards(by2010).Australia,Canada,BelgiumandtheU.S. haveproducedupdates.Thisresearchprojectisongoing;allreferencesofCCSSdatainthisreportarebasedon34 countriesifnotstatedotherwise
7 6

17

July2011
A key finding from the CCSS data is that philanthropic contributions (donations, gifts, grants) of individuals, foundations or corporations are much less important for the nonprofit sector in any of the surveyed countries than previouslythought.
Figure1:Sourcesofnonprofitrevenue,(34countryaverage)

CCSS data for 40 countries indicates that nonprofit institutions represent $2.2 in operating trillion 8 expenditures. Private philan Source:JohnsHopkinsUniversity(CCSS),ComparativeNonProfitSectorProject(2010) thropy has an estimated share of14percent.Othersourcesof fundingaregovernment(36percent)andfeesandcharges(50percent).9 Philanthropys 14 percent share includes giving to charitable causes both domestically and overseas, which further underlines the overall minor role of philanthropic giving for the non profitsector.However,since2000,newphilanthropicplayershaveenteredthearenaorsimply steppeduptheirgameconsiderablypursuingbothdomesticandinternationalagendasofaid anddevelopment. Table17intheAppendixprovidesabreakdownbycountry,thereforeallowingacloserlookat developing vs. developed countries. It reveals that overall the civil society sector is relatively larger in the more developed countries. The CCSS team has concluded that the civil society organisation workforce in the developed countries is, on average, proportionally more than threetimeslargerthanthatinthedevelopingandtransitionalcountries.Thisisso,moreover, evenwhenaccountistakenofvolunteerlabourandnotjustpaidemployment.Thisrelatively limited presence of civil society organisations does not, of course, necessarily mean the absence of helping relationships in these countries. To the contrary, many of these countries have strong traditions of familial, clan or village networks that perform many of the same functionsascivilsocietyinstitutions.10
ForthemostuptodateCCSScalculations(astheresearchprojectisongoing)onwhichthisparticularchartisbased, seeSalamon,Lester(June2010):PuttingtheCivilSocietysectorontheeconomicmapoftheworld,AnnalsofPublic andCooperativeEconomics,Volume81,Issue2,(pages167210),page187
9 8

Seeabove,page189

Salamon,Lester(2004ed.):GlobalCivilSociety,DimensionsoftheNonprofitSector,Volume2,KumarianPress, Vol.2,page18

10

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July2011
As the CCSS concludes in its 2004 analysis, Civil society sector development has taken a somewhatdifferentcourseinthedevelopingandtransitionalcountriesofAfrica,SouthAsia,the MiddleEast,LatinAmerica,andCentralandEasternEurope.Insomerespects,thedevelopment ofthecivilsocietysectorinthesecountrieshasbeenmorerobustinrecentyearsthaninanyof the other regions covered here, the product of expanding communications technologies, frustrations with state centred approaches to development and new efforts to empower the ruralpoor.Despitethis,however,civilsocietyorganisationsstillengageasmallerproportionof theeconomically activepopulationsinthesecountries than inthe moredeveloped regionsof theworld. Onereason forthismay be theruralcharacter ofthesesocietiesandthe resulting retentionoftraditionalformsofsocialassistancerelyingonclanandfamilyrelationshipsrather than voluntary organisation. To the extent that such relationships still operate, the need for moreinstitutionalisedstructures,whetherformalorinformal,isreduced.Withhistoricallysmall urbanmiddleclasspopulationsandlargenumbersofmarginalisedruralpooraswellasmodern authoritarianpoliticalregimes,thesecountrieshavenothistoricallyprovidedafertilesoilforthe growthofcivilsocietyinstitutions.11 Besides the lower than allcountry average volunteer component as well as the lack of paid employeesinthesecountriescivilsocietysector,anotherdistinguishingfeatureistherelatively low level of government support available to the sector. Therefore, as shown in Figure 1 previous page, even with volunteer time included, fees remain the dominant source of civil societyorganisationrevenue.AccordingtoTable18inAppendix,thisisthecasefor18ofthe34 countries. What is more, thedeveloping and transitional countries continuetohead this list, withanaverageof50percentoftheirincomefromfees,comparedtoonly34percentamong thedevelopedcountries.12

Philanthropy the dominant source for international NGOs

The second relevant finding of the CCSS study is that despitephilanthropys limited role for theoverallnonprofitsector,it is thedominantrevenuesourceof incomeintwononprofit fields,religionandinternationalassistance.Ininternationalassistance,governmentsupportis averyclosesecond(34percentfromgovernmentvs.38percentfromphilanthropy).13Table1 nextpagefurtherclarifieshowtheactualrevenueineachareaissourced.Overallthetrendisto anincreasedshareofphilanthropyasrevenuesourceforthenonprofitsectorcomparedtoa decreaseinresourcesfromgovernments.

Salamon,Lester(2004ed.):GlobalCivilSociety,DimensionsoftheNonprofitSector,Volume2,KumarianPress, Vol.2,pg47
12

11

Seeabove,page35 Seeabove,page13

13

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July2011
Table1:Sourcesofnonprofitrevenue,(33countryaverage),revenuesourcebyarea 33countryaverage Religious International Foundations/Philanthropicintermediaries Environment CivicandAdvocacy SocialServices Culture/Recreation Health Development/Housing Education Professional/Union Source:JohnsHopkinsUniversity(CCSS),ComparativeNonProfitSectorProject(2004) Government 14% 34% 15% 29% 33% 43% 20% 50% 30% 38% 6% Philanthropy 53% 38% 33% 30% 26% 19% 15% 14% 13% 12% 5% Fees 33% 28% 52% 41% 40% 38% 65% 36% 57% 50% 89%

20

July2011
Philanthropyasarevenuesourceforthenonprofitsectorcomparedacrosscountriesrevealsa striking difference in relative size and importance of philanthropic money for nonprofits. The overallsizeofthenonprofitsectorfortheyearsaround2000wasapproximately$1.3trillion. Table 17 in the Appendix lists 34 countries researched in the CCSS project and countries are ranked by the percentage share that philanthropic resources constitute for their nonprofit sector. This ranking method automatically lists less developed countries at the top. The non profitsectorindevelopingcountriesistraditionallysmallerthanindevelopedcountriesmainly duetolessgovernmentsupport,thereforeprivatefundsandnongovernmentalinitiativesplaya vitalroleforwelfareservicesandpovertyalleviation.Comparedtothosecountries,theUnited States,theUKandotherswithhighlydevelopedandthrivingnonprofitsectorsrankrelatively lowbasedontheirshareofphilanthropicrevenueforthetotalsector(e.g.U.S.13percent;UK9 percent;JapanandGermany3percent). OnekeypointthattheCCSSprojecthasoutlinedisthesizeofthevolunteerforceinaparticular countryanditsimpact on theoverall sizeand(economic)value ofthesector. Table 18inthe Appendix shows the same countries as in Table 17 but including the monetary value of volunteertime.Theresultofincorporatingthevolunteerforceisthatseveralcountriesrisein therankingcomparedtotheirpositioninTable17.Foraneconomicevaluationofphilanthropy of a particular country, volunteers and their time spent for a cause needs to be taken into account. Table 18 also underlines that the U.S. is by far not the country with the most active volunteerforce.Theimpactofvolunteerforcesforparticularcountrieswillbeexaminedinmore detailinthenextchapter.

Conclusion
Whiletheimportanceofphilanthropyforthenonprofitsectorissmallerthanexpected,itisthe dominantsourceofincomeforinternationalNGOs.Theextraordinaryrolethenonprofitsector playsforinternationaldevelopmenthascertainimplicationsforthecooperationbetweenactors in the area of overseas development, NGOs join forces with government agencies and businesseswhichisanissuethatwillbeexploredfurtherthroughoutthisreport.

Questions to explore
Ashighlighted earlier,theaccountofthenonprofitsectorovertheprevious pagesaswellas upcoming chapters is in most instances limited to an analysis of the volume of resources and focuses lessontheactualusageof funds.For further analysis, itwouldbemostconclusiveto evaluateoperationsonthegroundmoreclosely.Researchhasunderlinedthatlargeamountsof the nonprofit funds are used up for salaries and there is rarely enough money for capital improvements,whichgoesalongwayinexplainingwhynonprofitshaveahardtimekeeping upwithtechnologyforinstance.

21

July2011 Overseas philanthropy

Keyfindings:

Analysishardtoperformduetolackofcoherentreportingprocedures Overseas philanthropy is estimated to be approximately $53 billion (for 23

major world economies) according to the Hudson Institutes Centre for Global Prosperity

The UK and the U.S. are leading players in private giving to overseas causes
(individuals,foundationsand corporations)duetoboth theirparticularhistory andcultureofgivingandthenumberofcharitiesworkinginoverseasaid

Beyond the actual volume of giving, the usage of funds is crucial with the
concept of leverage of existing funds and thequestion what impact funds can haveifchannelledrightbeingattheheartofthedebate

Overthefollowingfourpages,themostrecentresearchreportthatattemptstomapoverseas philanthropytheIndexofGlobalphilanthropyandRemittances2011bytheHudsonInstitute forGlobalProsperityisscrutinized.14 ThereportbytheHudsonInstituteunfortunatelyhascertainshortcomings.Ingeneral,dataon private giving to overseas causes is limited and patchy. AngloSaxon countries are usually providing the clearest accounts. As a result, the Hudson Institute clearly looks at the global landscapethroughaNorthAmericanlens,and,duetothechallengesindatacollectioninother regions,furtherreduceditssampleofGlobalphilanthropytoOECD/DACcountries.15However, thisallowscomparisonoffiguresforphilanthropyforeachcountrywiththeirgovernmentaidto theoverseascountry,i.e.theDACofficialdevelopmentassistancebyOECDmemberstates. As will be shown in this section, the Hudson Institute analysis firstly neglects to take into accounttheimpactofvolunteeringforallcountries(excepttheU.S.)andtherebyunderstates thetruevalueofphilanthropyinseveralcountries.16Secondly,itincludesreligiousgivingforthe U.S.initsdefinitionofphilanthropybutislessmuchclearonthisregardingtheothercountries.
HudsonInstitute,CenterforGlobalProsperity(2011):TheIndexofGlobalphilanthropyandRemittances2011,see here:http://www.hudson.org/files/documents/2011%20Index%20of%20Global%20Philanthropy%20and% 20Remittances%20downloadable%20version.pdf,(AccessedJune2011)
15 14

FordefinitionsofOECDandDAC,seepage11ofthisreport

TheCCSSteamsurroundingProf.LesterSalamonwillsoonlaunchapublicationonglobalvolunteeringin2011 commissionedbytheInternationalLabourOrganisation(ILO)whichforthefirsttimeallowsacrosscountry comparisonofvolunteerforcesandtheircontributionbasedonsounddata

16

22

July2011
Thirdly,thegeneralfocusonDACdonorsonlydoesnotrepresentanadequatesampleforthe analysis of overseas aid anymore as nonDAC donor states have entered the aid arena with sizableaidflowsoutsideoftheDACscheme.17 Globaldataonphilanthropystillreliestoaverylargeextentonestimates.TheHudsonInstitute usedavailableOECDfiguresonprivategiving(asreportedbymembercountriestotheOECD) but also examined 13 of the 23 countries below in more detail to take into account other sourcesofdatatoassesstherealvalueofprivategivinginthosecountries.Itturnedoutthatthe figuresreportedtotheOECDbygovernmentsourceshugelyunderestimatetheactualvalueof donationstooverseascauses.Figure2isshowingthosereassessednumbersonly.

Figure2:Overseasprivategiving,OECD/DACcountries,$billion,20082009 Total(OECD/DACcountries)

52.5
0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.3 0.4 0.4 0.5 0.5 0.6 0.7 0.7 1.0 1.3 1.4 6.3

Greece

Portugal Luxembourg Finland NewZealand Denmark Austria Korea Ireland Sweden Norway Belgium Spain Switzerland Japan Italy Australia Netherlands France Canada Germany UnitedKingdom U.S.

37.5

Source:HudsonInstituteforGlobalProsperity:TheIndexofGlobalphilanthropyandRemittances2011

17

TheDACvs.NonDACdonorstatesandsurroundingissueswillbeexaminedinthischapter

23

July2011
Shortcomings of the Hudson Institute analysis
The 2011 Hudson Institute report displays a detailed analysis of U.S. overseas philanthropy, while for almost all other countries (as per Figure 2 previous page) the analysis is incomplete andunderrepresentsthetrueamountofphilanthropyinagivencountry.However,theHudson Institutedoesnotclaimitsanalysistobeexhaustiveandcomprehensive. ThemainshortcomingoftheHudsonInstitutesaccountisthatfortheU.S.around$3billionout ofthe$37.5billionofprivategivingareaccountedforbyvolunteers(i.e.theestimated$valueof volunteer time spent).18 None of the other countries include this calculation. The volunteer labour force is undoubtedly a crucial variable to take into account when looking at the economicalpowerofthecivilsocietysector. Secondly,forthecaseoftheUnitedKingdom,theHudsonInstitutesreportpointsoutthatthe dataforalldonationsobtainedbycharitieswhichareworkingabroadinaidandfaminerelief excludes donations by foundations, corporations and churches. Data on foundations is not coherently included for any other country except the U.S. either, thus the actual value for severalcountriesisexpectedtobeconsiderablyhigher,too. Thirdly,whencomparingaccountsofprivategiving,onehastobearinmindthatsomeinclude religious giving, others dont. The Hudson Institutes analysis includes religious giving for the U.S., which is to a large extent not targeted giving for a particular cause but merely a membershipdue.Allmembershipduesareexcludedfromphilanthropyfromforinstancethe analysisoftheCCSSteam,foraparticularreasoninsteadtheyincludeitinfees(asexplainedin footnote 7 on page 17). However, Hudson has included it. Therefore, when comparing the Hudson account of U.S. private giving with those of other countries, one has to take into accountthatEuropeancountriesforinstancehaveaverydifferentreligiouslandscape.Several countriescollectchurchtaxes,forinstance.InthecaseofGermany,thisaddsapproximately9 billioneachyear.TheGermanchurchtaxisnotobligatory(sonotataxintherealsense)butcan beconsidered as a membershipfee to theProtestant(2009:4.4 billion) andCatholicChurch (2009:5billion)andthereforeconstitutesaparticulartypeofreligiousgiving.19 The$37.5billionofU.S.philanthropytodevelopingcountriesincludesnearly$14bnofreligious giving.20Therefore,asa2008McKinseyreportalsopointedout,thebillionsinGermanchurch

TheHudsonInstitutehasincludedbothnumbersofvolunteersworkingabroadandvolunteersonU.S.soilworking atorganizationsactiveoverseaswhichboostsnumbersdisproportionately,seeHudsonreportpage29 Thisincomemakesupbetween60and80%ofthetotalrevenueoftheregionalchurchassociationswhichare,ata localandregionaldomesticlevel,hugelyinvolvedintodeliveringsocialcareservices.Toavoidpayingthefeeaperson wouldhavetoformallyleavethechurchwhichisaphenomenonthathasstartedoccurringonlyrecentlyamongst youngerGermans Forthedetailedbreakdown,seetheHudsonInstitutesreportIndexofGlobalphilanthropyandRemittances2011; AccordingtoTable1onpage9,approximately$15billionforreligiousgivingarecomprisedof$7.2billiongivingto

20 19

18

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July2011
taxes are another variable that has to be taken into account when comparing philanthropy globally.TheGermanexamplerepresentsauniquewayofreligiousgivingcomparabletothe billionsofAmericandollarsthataregiventoreligiousorganisationsactiveoverseas.21 ThefiguresonprivategivingreportedtotheOECDbyitsmemberstates(usedfortheHudson Institute2011report)aresupposedtoincludeanyprivatefundsgiventooverseasactivitiesof anynongovernmentalorganisation,thusincludereligiousinstitutions,too.Nonetheless,these figuresreportedtotheOECDfallshortofafullaccountofthisContinentalEuropeanmodelof religiousgiving,asthereisnouniversalframeworkimplementedforreportingthesenumbers. ReligiousgivingthroughchurchtaxesdoesnotonlyapplytoGermanybutalsotoItaly,Spain, SwedenandFinland. BasedontheaboveoutlinedshortcomingsoftheHudsonInstitutesAnalysisithelpstoatleast displaytheimportanceofvolunteertimeforafewselectedEuropeancountries.Table2onthe nextpagedisplaysthefiguresfromCCSSwithandwithoutthefinancialvalueofvolunteertime to illustratethestrong effectit hasand howdifferentthe effectisbetweencountries. Within Western European welfare systems volunteering forms a major pillar of the nonprofit sector andiftakenintoaccountwouldboostthevalueofthatsectorconsiderably.CCSSanalysis hasrevealedthattheeconomicvalueofphilanthropicsourcestothenonprofitsectorrisesby nearly100percentforSwedenwhenvolunteeringtimeisconsidered.ForNorwayandFrance, thevalueofphilanthropyrisesbyaround70percent.

formalreligiousorganisationswhileanother$6.3billionweregivenbyindividualstoU.S.baseddevelopmentand relieforganisations(i.e.congregations),includedingivingtoPrivateandVoluntaryOrganisationsinTable1
21

McKinseyandCompany(2008):GesellschaftlichenWandelgestalten,GlobalPhilanthropyInitiative,(inGerman)

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Table2:Shareofphilanthropyassourceofrevenueofnonprofitsector,selectedcountries*
Revenueshare of Philanthropy excl.volunteer time 9% 7% 8% 3% 6% 2% 19% 6% 6% 3% 5% 7% 3% Revenue share of Percent Philanthropy change incl. volunteer time 54% +96% 47% 47% 36% 35% 24% 36% 24% 23% 20% 18% 19% 11% +75% +73% +51% +44% +28% +27% +23% +22% +21% +16% +14% +9%

Sweden Norway France Germany Finland Netherlands Spain Australia Austria Italy Belgium Ireland Japan

Source:JohnsHopkinsUniversity(CCSS),ComparativeNonProfitSectorProject(2004)

*Note:Thisincludesdomesticandinternationalphilanthropy

Taking into account the aforementioned limitations of the Hudson Institute dataset and consideringthevalueofvolunteertimeincludedforallcountries,theactualoverseasgiving amountforthese23countriesisexpectedtobeinexcessof$53billion.

Conclusion
Givingbyindividuals,foundationsandcorporationstooverseascausesinexcessof$53billion constitutes a considerable stream of money to developing countries. In the following section, thisstreamofmoneywillbeputintocontextwithothersignificantmoneyflowstodeveloping countries.

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Philanthropy smallest contributor to overseas development

In this section, several money flows to developing countries are examined to allow putting philanthropic resources into context. However it is worth noting that it is debated to what extentforinstanceforeigndirectinvestmentsconstituteanydevelopmentmoneyatalldue tothembeingmerelybusinessinvestmentsintocompaniesandinfrastructurebyforeignprivate companies.
Keyfindings:

Within private money flows from OECD countries (foreign direct investments,
remittancesandphilanthropy),philanthropyisbyfarthesmallestcontributorto overseasdevelopment

Majority of overseas development consists of private money flows (foreign

direct investments, remittances and philanthropy) compared to official governmentaid

In2009,remittanceswerethesecondlargestfinancialflow Cost of coordinating aid activities of multiple actors

skyrocketed

and donors have

Governmentoverseasaidhasevolvedandtheclubof22traditionalsovereign
donorsthatformtheDAC(DevelopmentAssistanceCommittee)cannolonger claim to speak for the worlds donor (and aid) community, neither can multilateralaidagentssuchastheUnitedNationsagencies

While the role of multilateral aid agencies is changing (due to increasing

bilateralaidflows),therelationshipofphilanthropyandaidhasbeenchanging, too. The distinction between donor and recipient government is much more blurredthatitoncewas

Governmentsoverseasaidasapercentoftheircountrysgrossnationalincome
differssignificantlybetweencountries,withtheScandinavianandvariousmuch smaller countries (Belgium, Luxembourg or Ireland) leading the field ahead of majorworldeconomiessuchastheU.S.A.orGermany

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July2011
Private philanthropy including foundations is the smallest contributor to overseas development.ThebelowFigure3showstheseflowsfortheOECD/DACcountriesincomparison to the estimated total value of private philanthropy. In 2009, remittances were the second largest financial flow behind private capital investment, followed by official government developmentassistanceandphilanthropy.22

Figure3:FinancialengagementofOECDcountrieswiththedevelopingworld,$billion,2009 Source:HudsonInstituteforGlobalProsperity:TheIndexofGlobalphilanthropyandRemittances,2011;WorldBank RemittancesData,2011 *Note:TheHudsonInstitutesestimateis$53billionhoweverexcludesthe$valueofvolunteertimeforallothercountries excepttheU.S.,thereforetheactualfigureisexpectedtobehigher

22

SeeHudsonreport,page3

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July2011
Overseas aid by OECD member states has remained flat in 2009
OfficialDevelopmentAssistance(ODA)fromallOECDDonorAssistanceCommittee(DAC)donor nationsamountedto$120billionin2009,whichwasanincreaseoflessthan1percentinreal terms (accounting for inflation and exchange rate movements) from $122.4 billion in 2008. WhileoverallODAremainedsteady,somecountriesdidhavelargedropsintheirgovernment foreignassistance.OverseasaidaspercentofGrossNationalProduct(GNI)differssignificantly betweencountriesandScandinaviancountriesareleadingbyhugemargins. Asinpreviousyears,theUnitedStatesremainsthelargestdonorbyvolume,with$28.8billion in ODA in 2009. France, Germany, the United Kingdom, and Japan follow fill out the top five contributors of ODA by volume in 2009. Total ODA for these five nations amounted to $74.5 billion in 2009, or 62 percent of total DAC assistance. SubSaharan Africa received the largest proportion of total aid at $42.3 billion, followed by Asia with $38.3 billion. The Middle East, excludingNorthAfrica,received$10.8billion,a$9billiondecreasefrom$19.8billionin2008. IraqisnolongerthelargestrecipientofODA,asitsaidinflowsdroppedfrom$9.9billionin2008 to$2.8billionin2009.In2009Afghanistanwasthelargestrecipientofaidat$6.1billion.23

Table3:OfficialDevelopmentAssistancebyOECDmemberstates Country Sweden Norway Luxembourg Denmark Netherlands Belgium Ireland Finland UK France Spain Switzerland Germany TotalDACcountries Canada Austria Australia NewZealand Portugal U.S.A Greece Japan Italy Korea ODAas%ofGNI 112% 106% 104% 88% 82% 55% 54% 54% 52% 47% 46% 45% 35% 31% 30% 30% 29% 28% 23% 21% 19% 18% 16% 10% ODA,$bn 4.5 4.1 0.4 2.8 6.4 2.6 1.0 1.3 11.5 12.6 6.6 2.3 12.1 120.0 4.0 1.1 2.8 0.3 0.5 28.8 0.6 9.5 3.3 0.8

Table 3 however clearly underlines that there are more than a dozen countries ahead of the U.S. in terms of their pure economiccapabilitytogive(share of ODA within Gross National Income or GNI). Germany as the most powerful economy in Europe (and worlds No4) falls clearly behind its potential development assistance with being just above average (See Total DAC countries middle of list)andbehindFranceandtheUK as well as much smaller and economically less powerful countries such as Belgium and Ireland.

Source:OECD
23

SeeHudsonreport,page8

29

July2011
Government overseas assistance is not longer DAC-centric
As of 2009, the global economic crisis has not caused a decrease in ODA. However, with increasingfiscalpressuresintheUnitedStatesandabroad,theHudsonInstituteconcludesthat ODAmaybeaffectedinthefuture.24Inanycase,ODA,asmeasuredandaccountedforbythe DAC member states, turns out to be a poor benchmark for the emerging global public policy enrichedwithnewobjectives,actorsandinstruments.25ThenonDACofficialdevelopmentflows are of significant size. In 2009, the nonDAC countries and still report their annual overseas assistance to the OECD, reported a total of nearly $7 billion (Table 4: All states, total ODA). Several countries that provide development aid are not captured appropriately. While the objectives, actors and instruments have evolved, the approach to measure government developmentaidhasnt. Indicativefindingsofa2005researchreportby the Overseas Development Institute (ODI) There are too many agencies, suggest that nonDAC donors represent up to financing too many small 12percentofofficialhumanitarianfinancingin anygivenyear.Thesedonorsareengagingina projects, using too many growing number of countries, although they different procedures concentrate the bulk of their resources on a few specific crises, often in neighbouring countries. As Harmer and Cotterrell remarked Article in The Economist The future of in, there is a strong preference for bilateral aid, September 4, 2008 aid over multilateral channels (See Table 4, next page), particularly governmentto government, as well as through national operational agencies like the Red Cross/Red Crescent societies. This preference for bilateral routesreflectsaviewthataidispartofadeeper,mutuallybeneficialpartnership.Italsostems fromadesireforvisibility,andforaidtobedeliveredinatimelymanner.NonDACdonorshave not seen multilateral contributions as offering these advantages. This constitutes a clear challengefortheUNshumanitarianagencies.26

24

SeeHudsonreport,page7

SeeSeverino,JeanMichelandRay,Olivier(2009):TheEndofODA:DeathandRebirthofaGlobalPublicPolicy,CGD WorkingPaper167.Washington,D.C.:CenterforGlobalDevelopment,page7 Harmer,AdeleandCotterrell,Lin(September2005):Diversityindonorship:Thechanginglandscapeofofficial humanitarianaid,HPGReport20,seehere:http://www.odi.org.uk/resources/download/234.pdf,page5(Accessed July2011)

26

25

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Table4:NonDACDonors'NetODADisbursements,CurrentPrices,$million

Allstates,totalODA* BilateralODA Bilateralpercentoftotal ChineseTaipei(Taiwan) Cyprus CzechRepublic Estonia Hungary Iceland Israel Kuwait Latvia Liechtenstein Lithuania Malta Poland Romania SaudiArabia SlovakRepublic Slovenia Thailand Turkey UnitedArabEmirates

2004 3.29 2.90 88% 0.41 0.06 0.00 0.04 0.02 0.08 0.10 0.00 0.00 0.02 1.69 0.01 0.29 0.18

2005 3.16 2.64 84% 0.47 0.00 0.06 0.00 0.04 0.02 0.08 0.22 0.00 0.00 0.05 0.98 0.03 0.01 0.53 0.14

2006 4.59 4.01 87% 0.49 0.01 0.08 0.00 0.08 0.03 0.08 0.16 0.00 0.01 0.12 1.98 0.02 0.02 0.06 0.64 0.22

2007 4.30 3.68 86% 0.50 0.02 0.08 0.00 0.03 0.04 0.10 0.11 0.00 0.02 0.02 0.16 1.53 0.03 0.02 0.06 0.54 0.43

2008 8.06 7.17 89% 0.41 0.02 0.12 0.01 0.02 0.04 0.12 0.28 0.00 0.02 0.01 0.08 0.03 4.96 0.04 0.03 0.17 0.74 0.09

2009 6.63 5.58 84% 0.40 0.02 0.10 0.00 0.03 0.03 0.11 0.22 0.00 0.02 0.01 0.01 0.09 0.03 2.92 0.02 0.03 0.03 0.67 0.83

Source:OECD *Note:Bilateralandmultilateral

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July2011
The rise of the Non-DAC states as official aid giving countries
As reported in the 2010 Global Humanitarian Assistance Report (GHA), the participation of a number of governments outside the DAC has become increasingly prevalent in the last few years.Asthereportstates,somenonDACgovernmentsmayhavebeenprovidingaidformany yearshowevertheircontributionsaredifficulttocountbecausetheydonotfitthedefinitions, conceptsorsystemsdeterminedbytheDACgroup. The response to the Emergency Response Fund (ERF) following the Haiti earthquake demonstratesthisphenomenonofthe27contributinggovernmentsonlythreeofthemwere DACdonorsandoftheremaining24countriesallbutfourreceivedhumanitarianaidthemselves in2008.TheHaitiERFisratherunique:neverbeforehavesomanynonDACdonorspooledtheir emergencyassistancethroughthistypeofincountrymechanismandcertainlytheappearance ofsomanycountriesthatareactuallyrecipientsofaidisalmostmoreunusual(SeeFigure5on page34).27 The report examines that the situation was in many senses exceptional, and some of these governmentswillhavespentmoneythroughotheragenciesratherthanbilaterallybutoverall it highlights that the distinction between donor and recipient governments is much more blurredthanitoncewas.28TheGHAreportfurtherconcludesthatInthelastfiveyearsonly five nonDAC donors have been everpresent in the top ten list of contributors: Saudi Arabia, UAE,Kuwait,RussiaandTurkey.Intermsofvolume,thethreeGulfStateshavebeenparticularly importantandofthoseSaudiArabiasaidhasbeenespeciallysignificant.29

GlobalHumanitarianAssistanceReport(2010),seehere: http://www.globalhumanitarianassistance.org/report/ghareport2010,page49,(AccessedJuly2011)
28

27

GlobalHumanitarianAssistanceReport(2010),page15

TheGlobalHumanitarianAssistanceReport2010remarksinregardstothedatasourcethatNonDACdonor analysisofhumanitarianaidreliesondatafromtheFinancialTrackingService(FTS)currentlythemost comprehensiveandcomparabledataavailableonthisgroupofdonors.Donorsandimplementingagenciesreport theirhumanitarianaidexpendituretotheFTSbasedonabroaddefinitionofhumanitarianaidasaninterventionto helppeoplewhoarevictimsofanaturaldisasterorconflictmeettheirbasicneedsandrights.Theaidis:tosave lives,toalleviatesufferingandtopreventtheoccurrenceofanotheremergency;guidedbyprinciplesofhumanity, impartiality,neutralityandindependence;andtoprotectcivilians.ThevoluntarynatureofreportingtotheFTSmeans thatnotallhumanitarianaidfromalldonorsiscaptured(SeeGHAreport,page32)

29

32

July2011
Humanitarian aid from nonDAC donors suffers the same characteristic as any other humanitariancontributions,i.e.bigyearonyearfluctuationsasbelowchartforRussia,China andIndiasuggests.However,notalltheannualfluctuationsareduetolargecontributionsfrom a single donor. In 2005, at least 75% or U.S. $477 million of humanitarian aid from nonDAC donorswasgivenby91countriesinresponsetotheIndianOceanearthquaketsunami(peakin belowFigure4).30Figure4displaysRussia,ChinaandIndiaastheBRICcountriescontribution overthetimeframe20002009whileBrazil(asNo4intheBRICgroup)ismissingduetonot supplyingthesamefigurestotherelevantbody.31
Figure4:RussianFederation,ChinaandIndiaasnonDACdonors,20002009,totalhumanitarianaid,$million Source:GlobalHumanitarianAssistancereport2010,ownanalysis

30

SeeGHAreport,page18 TherelevantbodyistheDevelopmentInitiativebasedonUNOchaFTSdata,seeGHAreport,page31

31

33

July2011
Taking emergency response donations out of the equation, the only sizable overseas involvementbyChinaisgenerallythroughinfrastructureprogramsespeciallyinAfrica. Chinas aid to Africa has been the subject of recent debate. As Severino and Ray describe, because of the type of aid instruments it uses, it is extremely difficult to assess what would count as ODA were China to become an official DACdonor. What is clear, however, is that Beijing has today become one of the major contributors to the financing of infrastructures in subSaharanAfrica. RegardingChinasroleinAfricaitishardtodrawaline.AsTimOdgendescribed,Westernaid, andcriticismofChinasroleinAfrica,hasoftenbeenfartoopaternalisticdictatingtoAfrican countries what they need and how to pursue their goals. However, Odgen concludes, the dealsthatarestruckareoftenjustwiththeexecutivebranchofagovernmentandbecauseofa coherentlackoftransparencythereisreasontobeconcernedthatthedealsbeingstruckby ChinaarenotonlynotsymbioticwithWesternaidbutmayultimatelybeunderminingWestern philanthropysinvestmentingoodgovernanceandhumandevelopment.32
Figure5:DonorcontributionstotheEuropeanRefugeeFund(ERF)inHaiti,2010($million) Source:GlobalHumanitarianAssistancereport2010

ForTimOdgensblogpostonChinaanditsoverseasinvolvement,seehere: http://www.philanthropyaction.com/nc/chinas_role_in_african_infrastructure_development,(AccessedJune2011)

32

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July2011
Costs of coordinating new aid activities have skyrocketed
Asprevioussectionshaveshown,itisnotonlythemeasurementtoolsthatareoutdated,but alsothesheernumberofnewactors,actingseparatelyfromeachotherinsteadofcooperating, thatthreatentomakeaidflowsinefficient.AsSeverino&Raynotes,thecostsofcoordinating the activities of multiple stakeholders with differing agendas have skyrocketed over the last decade.A14countrysurveyshowedthatCambodiareceivesanaverage400donormissionsper year, Nicaragua 289 or Bangladesh 250, imposing a considerable strain on recipient countries thatarenotallequippedtocope.33 The Economist reported in 2008 that Little Eritrea, for instance, deals with 21 official and multilateraldonors,eachwiththeirownprojects,budgetsandwaysofoperating.Ugandahas 27. That is normal. According to the OECD, 38 poor countries each had 25 or more official donors working in them in 2006. The number of aid projects financed by bilateral donors has skyrocketedfrom10,000to80,000overthepasttenyears.34 In some cases, the gains from having more actors involved are outstripped by the losses that stem from policy incoherence and coordination costs. This is stereotypically the case in crisis or post conflictsettingswhereinternationalactorsabound, butlocalgovernmentcapacitiestocoordinatethem are low, Severino and Ray conclude.35 New actors donotonlyinvolvenewgovernmentsthatstepped intotheaidarena,suchasChinaorBrazil,butalso private actors such as the Bill & Melinda Gates foundation.

Fragmentation is the opposite of effectiveness

Lennart Bage, Head of the International Fund for Agricultural Development

Attempts to channel these various streams of new money from new actors, and thereby decrease the volatility of funding and the cost of coordinating, have proven to be partly successful with new financial tools such as setting up (multinational, multiactor) funds, otherwise known as pooled funds.36 Pooled funds have emerged as a significant tool for a wide range of humanitarian actors yet the majority of funding is provided by a relatively small group of donors. The UNs pooled funds rely on the supportofthreemaindonorstheUnitedKingdom,SwedenandtheNetherlands.In2008and

33

SeeSeverinoandRay,page6

TheEconomist(September4,2008):Thefutureofaid:AscrambleinAfrica,seehere: http://www.economist.com/node/12060397/,(AccessedJune2011)
35

34

SeeSeverinoandRay,page6 SeeSeverinoandRay,page10

36

35

July2011
2009, these three donors represented just over 60 percent of the funding from the top ten donors.37

Conclusion
NewcountrieshaveemergedasaiddonorsoutsideofthegroupofofficialDAC/OECDdonors whichaffectedtheroleandimpactofthetraditionalmultilateralagencies,too. Whilst the role of multilateral aid agencies is changing, so are the dynamics between philanthropy and international development. There is a movement away from oneoff grants andgiftstowardsphilanthropyservingasaninstrumentofsocialchange.Whiletherearemany who would argue that social justice philanthropy or social change philanthropy is a particular philanthropic approach/framework that has been practiced in developing countries for a long time, it has nevertheless taken a new form with the increased cooperation between business and entrepreneurs, society and government. Before these new types of philanthropy are examinedanyfurther,acloserlookisgiventothesecondhigheststreamofmoneyflowinginto developing countries, remittances. The aim is to understand the philanthropic share of remittances(Diasporagiving)andthepotentialof(untapped)diasporasavings,too.

37

SeeGHAreport,page47

36

July2011

REMITTANCES

Keyfindings:

Remittances belong to the grey area of money streams to developing countries

thatarenotexplicitlyphilanthropic

Remittancestodevelopingcountriesin2010wereanestimated$325billion Global(recorded)remittancesareforecastedtogrowto$404billionby2013 Asubsetofremittancesisgiventocharity Reduction in the cost of sending remittances would generate a net increase in
incomeformigrants,estimatedat$15billion

ReductionofcosthasproventoworkinthecaseofMexicoandthePhilippines,and
manyothercountrieshavepledgedtoworkonareduction,too

Diaspora

communities are, despite having direct financial impact on their homelands,ofimportantnonfinancialuseregardingknowledgeandnetworks

Remittances are important to take into accountwhenlookingatthenewlyevolving landscape of global streams of finance to developingcountries.Thisimportanceisdue totheirconsiderablesize,aswellasthefact that a small subset of remittances is for diasporagiving,i.e.ofphilanthropicnature, asrecentresearchsuggests.38 Remittances i.e. money sent to their homeland and relatives by migrants represent the largest source of foreign exchangefornumerouscountriesandmake upaconsiderableshareofitsGDPformany other countries.39 However, remittances
38

Theres also a qualitative aspect to remittances. When overseas workers come into the Philippines, they are met with marching bands! The residents will come out especially around Christmas and receive returning overseas workers
Philanthropy Expert, Asia

Sidel,Mark(2008):DiasporaGiving:AnAgentofChangeinAsiaPacificCommunities?,seehere: http://www.asiapacificphilanthropy.org/files/APPC%20Diaspora%20Giving%202008_Overview.pdf,page6(Accessed June2011) TheWorldBank(November2010):IssueBriefMigrationandRemittances,seehere: http://siteresources.worldbank.org/TOPICS/Resources/214970

39

37

July2011
should not be considered as an act of charity. Remittances are instead private transactions and, for reasons of national accounts etc. should be treated by governments like any other sourceofprivateincome.However,duetotheirimmensesizeandtheirimportanceforseveral of the emerging economies, the correct accounting of remittances has been widely discussed overthelastyears.40ThelatestWorldBankreportsuggeststhat Morethan200millionpeopleliveoutsideoftheircountriesofbirth One of the major issues surrounding migration is how to enhance its development impact(includingthatofremittances) Remittances to developing countries are estimated to have increased by 6 percent to $325 billion in 2010. This marks a healthy recovery from a 5.5 percent decline registeredin2009 Remittancesamountedto1.9percentofGDPforalldevelopingcountriesin2009,but werenearlythreetimesasimportant(5.4percentofGDP)forthegroupoflowincome countries Remittances to developing countries are expected to grow at lower but more sustainableratesof78percentannuallyduring201113toreach$404billionby2013

Remittance flows are large and resilient

Figure6:Worldwideremittanceinflows,in$billion,20002010

Figure6depictsthegrowthintheglobal remittance flow, its resilience in the global financial crisis and its recovery in 2010 (estimate). The total flow of remittances is much more stable than foreignaidorforeigninvestmentbecause the income and number of migrant workers changes slowly.41 The chart includes those inflows to high income countries such as France or Germany Source:WorldBank(2011),MigrationandRemittancesData (which are, according to Table 19 in the Appendixinthetoptenofreceivingcountries).Regardingdevelopingcountriesonly,theWorld
1288877981391/Annual_Meetings_Report_DEC_IB_MigrationAndRemittances_Update24Sep10.pdf(AccessedJune 2011) Insomeattemptsremittanceshaveevenbeenallocatedaspartofacountrysforeignaidspendingbysuch reputableresearchinstitutionsastheHudsonInstituteinitsaccountofU.S.Aidpreviousto2011.TheHudson Institutehasrespondedtowidespreadcriticismofthisapproachbypublishingitsannualandmostrecentreporton thesefiguresnowasIndexofGlobalphilanthropyandRemittances2011 Harford,Tim,Hadjimichael,BitaandKlein,Michael(April2005):ArePrivateLoansandCharitableGivingReplacing Aid?,TheWorldBankGroup,seehere: http://rru.worldbank.org/documents/publicpolicyjournal/290Harford_Hadjimichael_Klein.pdf,(AccessedJune2011)
41 40

38

July2011
Bankforecaststhatflowsareexpectedtogrowatarateof78percentannuallyduring2011 13toreach$404billionby2013(upfrom$325billionin2009).Worldwiderecordedremittance flows,includingtohighincomecountries,areexpectedtoreachnearly$500billionin2012and $536billionin2013. The Latin American diaspora community living in the U.S. is estimated to have the largest diasporasavingsinU.S.Dollarsdue to the relatively higher incomes of migrants in the U.S. compared to other so called corridors. Comparing all countries, Mexico is estimated to have the largest diaspora savings ($47 billion) while intermsofremittancesinflows(see Figure7below)Mexicoisestimated tobeinthirdplaceworldwideafter IndiaandChina.42Availabledataon diaspora communities and their

Communities in developing countries tend to be a little bit more dependent from external resources rather than looking at internal ones. Waiting for the remittances to come defeats the whole purpose of community empowerment
Philanthropy Expert, Africa

Figure7:Remittancesinflowstoptencountries,worldwide,in$billion,2010 Source:WorldBank(2011),MigrationandRemittancesData Ratha,DilipandMohapatra,Sanket(February2011):PreliminaryEstimatesofDiasporaGiving,WorldBankPaper, MigrationandDevelopmentBrief14,seehere: http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934 1288990760745/MigrationAndDevelopmentBrief14_DiasporaSavings.pdf,(AccessedJune2011)

42

39

July2011
estimated$savingswillbescrutinizedingreaterdetailfrompage45onwards). Figure 8 below displays how different the remittance outflows from two highly developed countries can be, depending on their history, geographical location and migration policy especially. The foreignborn population in the U.S., i.e. those who are mainly sending remittances,isprojectedtoriseto$48millionby2025,and$60millionby2050.43

Figure8:RemittancesoutflowfromtheU.S.AandGermany,in$billion,19712009 Source:WorldBank(2011),MigrationandRemittancesData *Year2009isaWorldBankestimate *

TheWorldBank(2011):MigrationandRemittancesFactbook2011,secondedition,page9,seehere: http://data.worldbank.org/datacatalog/migrationandremittances,(AccessedJune2011)

43

40

July2011
Figure9displaysthecontinuousupwardtrendofsendingmoneyhomeforthe53Africanstates. Theclearandsteeprisefrom2005onwardscanbeexplainedwithNorthAfricastillbeingoneof thethreetopemigrantregionsbesidesEasternEuropeandLatinAmerica.44Atthepeakofthe recessionanoticeablebutremarkablyshortblipoccurred.Nigeria,asseeninpreviousFigure7, has Africas largest inflow of 10 billion thus makes up for around 1/3 of all African diaspora inflowsin2010.

Figure9:Africa(53states)remittancesinflows,in$billion,20002010

Source:WorldBank(2011),MigrationandRemittancesData

44

WorldBank(2011),MigrationandRemittancesFactbook2011,page18

41

July2011
Across two regions Africa and China (Figure 10 is also showing the World average) remittancesgrowthratesrevealasimilartrend.RemittancesfromChinaaremostaccentuated. Recovery back to positive growth has started as early as beginning of 2009, which further underlinestheremarkableresilienceofremittanceflows.

Figure10:RecordedremittancesinflowstoAfrica,ChinaandWorldaverage,yearonyear%growthrates,20002010 Source:WorldBank(2011),MigrationandRemittancesData

42

July2011 A subset of remittances can be considered philanthropic

So far, only the volume of remittances has been presented. Their uses, however, are varied. Remittances can be directed towards individuals but also social funds. Further, remittances haveothernonfinancialuses.Thediasporacommunitycanbeimportantinshapingopinionsat home, directing how the funds are spent, and have impact on government, business, and the nonprofitsector. MarkSidel,professorattheUniversityofIowa,writesthatIngeneralterms,thevastmajority ofremittancestoAsiacannotbeconsideredsocialinvestingorsocialphilanthropy.Butasubset of remittances extremely hard to quantify is indeed for diaspora giving.45 Sidel further outlines how that giving has started to become more strategic in its investment targets. Sidel pointsoutthatwhilePhilanthropybymigrantshasbecomeanemergingdriverofdevelopment insomeareasofIndia,southernChina,thePhilippines,andcertainareasofBangladesh,itcould notbeconcludedthatthesedrivers areinfact strategicandfocusedonsocialchange or long termdevelopmenttoasignificantextent.46

Improvement of remittances flows

AnalysisbytheWorldBankhasshownthatcommonissueswithremittancesarethattheyare usually expensive, sometimes slow, sometimes inconvenient and occasionally unreliable.47 WhilereportedlytwothirdsofAfricangovernmentsdonotcollectremittancedata(2007),48the WorldBankslatestinitiativetheGlobalRemittancesWorkingGroup(GRWG),foundedin2009 monitors progress in the areas of reporting on the cost of worldwide remittances while lobbyinggovernmentstoworkhardertolowerthesecosts,too.AstheWorldBankconcludedin 2009: 1. In many remittances corridors the cost of sending remittances is still high relativetotheoftenlowincomesofmigrantworkersandtheirfamilies 2. Reduction in cost would generate a net increase in income for migrants and theirfamiliesinthedevelopingworld,estimatedat$15billion

45

Sidel,Mark(2008):DiasporaGiving:AnAgentofChangeinAsiaPacificCommunities?,page8 Seeabove,page9

46

Cirasino,Massimo(2009):TheWBBISGeneralPrinciplesforInternationalRemittanceServices:Aglobaltoolfora globalgoal,seehere:http://siteresources.worldbank.org/FINANCIALSECTOR/Resources/282044 1257537401267/RomeConferenceRemittances.Cirasino.pdf,page3(AccessedJuly2011) CopelandCarson,JacquelinePh.D.(March2007):KenyanDiasporaPhilanthropy:KeyPractices,TrendsandIssues, seehere:http://www.tpi.org/downloads/pdfs/Kenya_Diaspora_Philanthropy_Final.pdf,page7,(AccessedJune2011)

48

47

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July2011
Inlightofthis,GRWGhaspromotedthe5x5objective,withtheaimtoreducetheaveragecost ofsendingremittancesgloballyby5percentagepointsover5years.InJuly2009,attheLAquila summit, the G8 Head of States endorsed the 5x5 objective and made a pledge to achieve in particular the objective of a reduction of the global average costs of transferring remittances from the present 10 percent to 5 percent in 5 years through enhanced information, transparency,competitionandcooperationwithpartners. There are a few success stories. Mexico and the Philippines managed through government initiativesandstrictregulationtoreducetheiraveragefeestoaround6percenteach(compared toaglobalaveragecostofsendingremittancesfeesof10percent).49Formanyothercountries theaveragechargesonsending$200isstillmuchhigherthan10percent.50Inthecaseofsome interAfricancorridors,suchassending$200fromTanzaniatoKenya,theinterestisnearly25 percent($47.24totalchargeforevery$200asofJune2011).51

Conclusion
TheWorldBanksGRWGinitiativeishighlyinformativeespeciallyforthosegovernmentswhich have large diaspora communities, as any improvement on the rates bears potential for the countryoforigingovernmenttofreeupprivatecapital.Ashareofremittancescanbecomean instrumentof development.However,toalargeextentremittanceswillalways remain within families unless a new form of trusted and locally routed recipient institution emerges. NGOs withstrongtiestoadiasporacommunitycouldpotentiallyfillthatgapanda)fosterremittances levelsandb)encouragepeopletogivenotonlytotheirfamiliesbutalsotocharitablecausesif theremittancefeescanbemoreconducivetodiasporacommunities.

Cirasino,Massimo(2009):Towardsthe5x5Objective:SettingPrioritiesforAction,seehere: http://siteresources.worldbank.org/EXTFINANCIALSECTOR/Resources/2828841239831335682/6028531 1273159501046/GRWG_Presentation_Remittances_Matrix.pdf,page2(AccessedJuly2011) Charges$200isthestandardindicatorformeasuringthepriceofsendingremittancesaccordingtotheWorld BanksworkinggroupGRWG.Theyarealsotracking$500

51 50

49

SeetheWorldBankdatabasehere:http://remittanceprices.worldbank.org/

44

July2011

DIASPORA SAVINGS
Keyfindings:

Annual diaspora savings of developing countries, i.e. savings of migrants, are

around$400billionin2010

Diaspora savings as share of GDP estimated to be 2.3 percent in the middle

incomecountriesandashighas9percentinthelowincomecountries

Diasporagivingisconsideredtobestillmoreadhocthanstrategic Globaldiasporasavingscanbeapotentialmarketfordiasporabonds:through
theissuanceofsuchdiasporasavingsbonds,considerablewealthcanbetapped fortheorigincountriesdevelopment Diaspora savings are savings by migrants in either cash or bank accounts held in either their residentcountryortheirhomeland,andthischapterexaminesthepotentialthesesavingshold fordevelopment. TheregionwiththelargestestimateddiasporasavingsisLatinAmericaandtheCaribbean($116 billion)followedbyEastAsiaandPacific($84billion),EuropeandCentralAsia($73billion)and SouthAsia($53billion).TheestimateddiasporasavingsforSubSaharanAfricais$30.4billion, andfortheAfricancontinentincludingNorthAfricaisnearly$53billion. One of the reasons why the Latin America region has the largest diaspora savings is that its migrants are mostly in the United States and Western Europe, and have relatively higher incomesonaveragethanmigrantsinothercorridors. However,whenexpressedasashareof grossdomesticproduct(GDP)oftheorigincountries,diasporasavingsrangefrom1.3percentin EastAsiaandPacificto4.3percentinNorthAfrica.52

Ratha,DilipandMohapatra,Sanket(February2011):PreliminaryEstimatesofDiasporaGiving,WorldBankPaper, MigrationandDevelopmentBrief14,page2

52

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July2011
Table5:Resourceflowfromallcountriestodevelopingcountries,$bn,19952009

Source:WorldBank,MigrationandDevelopmentBrief14,February2011 Diasporastockistheestimatednumberofglobalmigrantslivingoutsideofthecountry Source:AuthorscalculationsusingtheWorldBanksMigrationandRemittancesFactbook2011andWorld DevelopmentIndicators

ThecountrieswiththelargestestimatesofdiasporasavingsincludeMexico($47billion),China ($32 billion), India ($31 billion) and the Philippines ($21 billion), reflecting their status as countries with significant emigration and a relatively prosperous diaspora (Table 5). However, low income countries such as Bangladesh, Haiti, Afghanistan, Ghana, Ethiopia, Kenya, Somalia andNepal,amongother,alsohavesignificantdiasporasavingsabove$1billioneach.53

53

TheWorldBank(2011):MigrationandRemittancesFactbook2011,secondedition,page14

46

July2011 Diaspora giving more ad-hoc than strategic

Generally, diaspora giving refers to the particular portion of remittancesthatisgiventolocalcharity.Thedistinctionbetween remittances and diaspora philanthropy as Mark Sidel explainscanbeacomplexandfinelineandadistinctionthatcan bemeasureddifferentlyindifferentcountries. Reviewing research literature up to 2008, Sidel concludes that there is little significant evidence to indicate that diaspora philanthropy has evolved from an ad hoc practice into a more strategic practice.54 Instead, he argues, ad hoc customs by individuals, families and ethnic and religious groups or communities are still much more common practice in diaspora giving.
U.S.SecretaryClintonattheGlobaldiaspora ForuminMay2011whentheofficialU.S.

diasporaalliancewasfounded

Backyard giving and ad-hoc giving

SomediasporagivinginAsiamaybehighlyorganized,especiallythatundertakenbyfamiliesand bycommunitiesinthediaspora.Butithasnot,Sidelargues,forthemostpart,evolvedintoa morestrategicpracticeofphilanthropy.55 Practitioners working in Asia have reported that often it is local religious leaders who traditionallyrecruited theiroverseas townmatestocontributetolocal activitiesforthe poor. Other cases in Asia and more recent developments have seen larger NGOs generating local giving.However,AsiandiasporacommunitiesaredescribedassuspiciousofthelargerNGOsand the preference to remain on a more personal kind of giving. Diaspora giving to homeland communities is a vital financial stream and is reliant on the local connection and intimate knowledge of the local peoples and issues. Reviewing the research done on channels and mechanisms used by diaspora communities to send money home, Sidel concludes that these channels include first and foremost the family channel in virtually every country diaspora givingthroughfamiliesaswellasgivingthroughclanassociationsinChinaandTaiwan.Other channelsincludethroughethnicandprofessionalgroupsinIndiaandothercountries,through neighbourhoodandregionalgroupsinthePhilippines,andthroughforeignbasedethnicNGOs. Preferenceforacertainchannelhastodowiththeindividualsincomelevelorassets.Arecent surveyonHighNetWorthIndividualsinthePhilippineshasrevealedthatthesepersonsprefer togivethroughlargerNGOs.56
54

Sidel,Mark(2008):DiasporaGiving:AnAgentofChangeinAsiaPacificCommunities?,page8 Seeabove,page4 Seeabove,page5

55

56

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Sidel remarks that the aforementioned channels should in many cases considered as elite channels. Inthe caseofIndia,ananalysis ofchannelsand mechanisms hasrevealedthelarge diaspora money flows to religious groups and institutions in that country. Overall, measuring thesediasporagivingflowswithanyprecisionisconsideredtobeverydifficult.57 AcrossdiasporacommunitiesespeciallythoseintheU.S.questionsregardingmorestrategic givingarebeingtakenupbyspecificgroupswithinthecommunityandthecallforstreamlining growsbiggerduetotheawarenessofavailableresourcesandtheirpotentialimpact.Theimpact of diaspora giving is a recent and ever stronger concern among donors also because of their increasing knowledge about development causes and the notion that entrepreneurial wealth cansaveandimprovecommunitiesbackhome.Diasporamoneyingeneralisincreasinglybeing discussedashavingpotentialtosubstituteforgovernmentexpenditures,particularlyonhealth, educationandothersocialservices,aswillbeoutlinedoverthefollowingpages.

57

Sidel,Mark(2008):DiasporaGiving:AnAgentofChangeinAsiaPacificCommunities?,page6

48

July2011 Diaspora bonds

Diaspora bonds are debt instruments offered by the homeland government to raise capital amongstmigrantsofthatcountry.Themigrantpurchasesbondswhicharegovernmentsecured and receives interest on his bond. Having emerged in the 1930s in Japan and the Republic of China, they were implemented and sold successfully in Israel around 1950. Diaspora bonds madetheirglobalcomebackinIndiaduringtheyear1998.Arecentsurgeincountrieslooking intothesefinancialtoolstoraisecapitalisbasedonthreeglobaltrends: 1)Globaldiasporacommunitiesareincreasinglyeconomicallyempowered, 2)Theinternethasboostedaccesstobothgeneralinformationandrelativesfaraway 3) The economical empowerment and stronger ties to the homeland have strengthened the senseofbelongingandoftherighttodefineonesidentity.58

Figure11:Potentialofdiasporasavings

Source:WorldBank(2011),MigrationandDevelopmentBrief14

World Bank Economist Dilip Ratha, a specialist on migration, diaspora savings and remittance analysis,summarisedthatinthepastdiasporabondshavebeenusedbyIsraelandIndiatoraise over $35 billion of development financing. Several countries, such as Ethiopia, Nepal, the Philippines,Rwanda,andSriLanka,areconsidering(orhaveissued)diasporabondsrecentlyto bridgefinancinggaps.Besidespatriotism,diasporamembersareusuallymoreinterestedthan foreigninvestorsininvestinginthehomecountry.In2010,RathaarguedthecaseforHaitian
58

Chander,Anupam(2001):DiasporaBonds,NewYorkUniversityLawReview,Vol.76,pg.1006

49

July2011
diasporabondstobeissuedtohelptheearthquakevictims.NotonlyHaitiansabroad,butalso foreignindividualsinterestedinhelpingHaiti,evencharitableinstitutions,arelikelytargetsfor thesebonds.Offeringareasonableinterestratea5percenttaxfreedollarinterestrate,for example could attract a large number of Haitian investors who are getting close to zero interestrateontheirdeposits.59 DilipRathaalsocommentedearlierthisyearthatoneoftheworldsmoreambitiousattemptsto harvestfromitsdiasporacommunityssavingsfailed.ThefinanceministerofNepalannounced in the annual budget in July 2009 that the government would issue a diaspora bond to raise fundsforinfrastructuredevelopment.Indeed,NepalRastraBankfollowedthroughinJune2010 by floating a Foreign Employment Bond, Dilip Ratha recounts on his World Bank blog. AlthoughtheinitialgoalwastoissueRs.7billion(about$100million),Rs.1billionwasfloatedin the first round. Nepali workers in Qatar, Saudi Arabia, UAE, and Malaysia could buy the bond fromoneofsevenlicensedmoneytransferoperatorsindenominationsofRs.5,000(about$65). Data on this diaspora bond effort remains incomplete, Ratha concludes, but the funds raised havebeenminuscule,nowhereneartarget.60

Conclusion
A trusted industry body is needed that can issue bonds for a particular sector and country. Ukraine,Russia,Pakistan,RomaniaandColombiaarejustfivecountriesoutofthosecountries withthehighestdiasporasavings(seeTable20intheAppendix).Theserandomfivecountries taken together, for instance, make up for estimated diaspora savings of around $47 billion. However,fewpeoplewouldinvestintogovernmentbondsissuedbyanyofthesegovernments of which each single one is known to have comparatively high degrees of government corruption. It was mentioned earlier that releasing the potential of remittances and diaspora savings is chiefly the remit of national governments and their governance and trustbuilding capacities. However, the issuance of these kinds of social impact bond instruments could be done by a trusted intermediary organisation instead of the home government as trust in administrative bodiesisoftenlowerthantrustinlarge,internationalNGOs. To access those diaspora savings, a trusted intermediary such as an NGO between the local government and the donor/purchaser of the bonds could take a lead. The reliability of this intermediarycouldbeassessedbyanindependentorganisation,whichwouldprovidetheNGO with a rating a crucial parameter for issuing bonds which are designed for this particular
ForDilipRathasblogpostondiasporabondsandsavings,seehere: http://blogs.worldbank.org/category/tags/diasporabond,(AccessedJune2011)
60 59

Seeabove

50

July2011
charity and its cause and for providing the donor/purchaser with a scoring system. Either the NGOitselfwouldgetaverygoodratingthatallowsittoissuebonds,oranotherintermediary bodywouldissuebondsonbehalfofanycreditworthyNGO,andpassthemoneyontothem. What additional layer of organisation and hence additional level of costs this would entail is opentodebate.

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FOREIGN DIRECT INVESTMENTS

Foreign direct investments are explicitly not philanthropic but business investments which, nevertheless, might have the adverse effect of discrediting international aid agencies through their immediate shortterm positive impact on communities and cities (for instance through infrastructureinvestments) AscanbeseenfromTable6,privatemoneyflowstodevelopingcountries,suchasremittances and foreigndirect investments, haveincreased dramatically over the past 20 years. While the often described privatization of foreign aid is not the case it is evident that unprecedented sumsofprivatemoneyareindeedflowingtodevelopingcountries.61TheboomofFDIflowsto developing countries since the early 1990s indicates that multinational enterprises have increasinglydiscoveredthesehostcountriesascompetitiveinvestmentlocations. Byitself,foreigndirectinvestmentdoesnotimplymuchelsethanbeingafigureforinvestment fromabroadintoalocallybasedcompanywhichduetotheinvestmentssizeandstructure hasalastingeffectonthemanagementstructureofthecompanyinwhichitisinvested.Inthe context of a particular country and industry, foreign direct investments do have benefits and shortcomingswhicharefrequentlydiscussedwithintheaidcommunity.

Table6:Resourceflowfromallcountriestodevelopingcountries,$billion,19952009 FDI Remittances OverseasDevelopmentAssistance,ODA 1995 95 55 57 2000 149 81 49 2004 208 159 79 2005 276 192 108 2006 346 227 106 2007 514 278 107 2008 593 325 128 2009 359 307 120 2010e 325

Source:WorldBank,MigrationandRemittancesFactbook2011

Sinceprivatecharitablegivingremainssmallanddevelopingcountrygovernmentsareborrowingmore,notless, fromofficialsources,thisclaimismisleadingreadmorehere:Harford,Tim,Hadjimichael,BitaandKlein,Michael (April2005):ArePrivateLoansandCharitableGivingReplacingAid?

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SEGMENTATION OF PLAYERS
Segmentation
While the split of philanthropic contributions by individuals, foundations and corporations differsquitestronglybetweencountries,acloserlookwastakenatavailabledatafromtheU.S. toillustratesomekeytrendsindomesticandoverseasgiving. Thebreakdownofprivategivingin2010fortheU.S.(byGivingU.S.AandtheIndianaUniversity Research team) in below Figure 12 reveals that the contribution to any charitable cause (domesticandinternational)byindividualsdonatingmoneytononprofitorganisationswas73 percent (or $212 billion). This compares to only 14 percent by U.S. foundations, 8 percent throughbequestsfromindividualsand5percentthroughAmericancorporations.

Figure12:U.S.privategiving,bysource,in$billion,2010

Source:GivingU.S.A

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July2011 International involvement of U.S. foundations

Keyfindings:

Internationaldevelopmentrepresentsasmallshareofoverallfoundationgiving,
and foundation giving for international development is small compared with officialaid

PhilanthropyfordevelopmentisdominatedbyU.S.foundations,whichchannel
their giving primarily through global funds rather than directly to developing countries

While only a small number of foundations have offices in the worlds poorest
countries, increased collaboration with local grantmaking institutions can be seen

Foundations

have in contrast to nongovernmental organisations and governmentsquitespecificinterestsandadifferentfocusjusthumanitarian development

New philanthropic actors and young entrepreneurs are changing the face of
giving: surveys show that female philanthropists and social entrepreneurs generally have a different approach to giving, seeking high engagement in philanthropicendeavoursandatangibleimpact

MajorplayerssuchastheBill&MelindaGatesFoundationdonotjustrelyon
the funds that it donates to make an impact, they leverage their funding as a waytomakeanevenwiderimpactintheareaswheretheywork

OuranalysisclearlyshowsthattherecipientsofU.S.foundationgrantsaretop
emergingmarketsratherthanthepoorestcountries

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Global data on foundations is too limited for an exhaustive analysis of both domestic and international grants. The U.S. has the most advanced reporting procedures for foundations in place.InternationalinvolvementofU.S.foundationsis,undoubtedly,themostextensive,both in causes addressed as well as dollars spent in comparison with foundations from other developed countries. European data is somewhat harder to acquire and the data that is available unfortunately often includes different types of foundations (e.g. operational foundations which are not grantmaking). For a detailed analysis, this section has focused on international grants by U.S. foundations while, in a second step, available data on European foundationswasscrutinized.
Figure13:EstimatedinternationalgivingbyU.S.foundations,19982009 Source:U.S.FoundationCentreDatabase

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Figure14:Domesticvs.internationalgrantsofU.S.foundations,$million,20002009 Source:U.S.FoundationCentreDatabase

Figure 13 (previous page) and Figure 14 above illustrate that while a fall occurred during the recessionin2009,internationalgiving(anddomesticgiving)intheU.S.isonasteadyupward trend. Figure 14 displays the large share of philanthropic money that remains within the country.

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Thetablebelowshowsthetop35countrieswhichweretargetedmostbyU.S.foundationsand withwhat$amount.Datawasallocatedoveraneightyearperiodfrom20032010.

Table7:Top35countriesreceivingU.S.grants,bytotal$amountandnumberofgrants,period20032010

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Country Switzerland England Kenya SouthAfrica Canada India China Israel Mexico Germany Australia Brazil Haiti Italy Netherlands Russia Philippines Nigeria France Uganda Ghana Peru Indonesia Colombia Bangladesh Vietnam Belgium Ireland Thailand SouthKorea Tanzania,Zanzibar&Pemba NorthernIreland Chile Ethiopia Zimbabwe $million 2,541 1,301 637 572 551 531 483 398 328 291 281 274 206 204 185 177 148 142 129 107 102 94 93 91 87 82 79 77 65 61 59 57 54 51 51 Grants,count 847 3,366 1,031 2,480 3,198 2,398 2,739 2,476 1,871 651 674 1,470 280 567 422 739 511 569 799 649 303 559 588 304 80 690 338 293 385 71 459 46 432 159 280 Source:U.S.FoundationCentre, InternationalGrantsDatabase

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Table 7 (previous page) reveals that U.S. foundations are sending the highest share of their grant money to two countries within Europe, Switzerland and the United Kingdom. This underlinesthestrongpreferenceofU.S.foundationstochanneltheirgivingprimarilythrough global funds (such as the World Health Organisation or United Nations agencies) rather than directlytodevelopingcountries. As Table 21 in the Appendix shows, few foundations have offices in the worlds poorest countriesthiscrucialpointwillbetakenupagainatalaterstageinthisreport.62 The table on the previous page also displays clearly that the recipients of U.S. foundation grants are top emerging markets rather than the poorest countries. Hence, Russia joins the otherthreeBRICstates(Brazil,IndiaandChina)inthetop20ofrecipients. Afewcountrieswerescrutinizedinmoredetailforthisreport.InPakistan,forinstance,during the year of the start of the U.S. military campaign in Pakistan in 2004,there was a significant hikeindonationstoPakistanbasednonprofitorganisations.Closerinspectionrevealedahike notonlyin2004butalsoin2007and2010.Theseincreaseswereduenottogovernmentalaid but individual donations from foundations, namely Gates (2004, 2007: donations of 6 and 5 millionrespectively)andSoros(5millioninresponsetothePakistanfloods).
Figure15:U.S.foundationsgrantstoPakistan,$million,20032009 Source:U.S.FoundationCentreDatabase

TheWorldBankSulla,Olga(February27,2007):PhilanthropicFoundationsandtheirRoleinInternational DevelopmentAssistance,InternationalFinanceBriefingNote,NewSeriesNumber3,seehere: http://siteresources.worldbank.org/INTRAD/Resources/BackgrounderFoundations).pdf,page4,(AccessedJuly2011)

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MoneyflowstogloballyoperatingNGOsinSwitzerland,suchastheWorldHealthOrganization (WHO, which tops the list of grants recipients within Switzerland with around $770 million alone,i.e.30percent),63are characterized by similar Figure16:U.S.foundationsgrantstoSwitzerland,$million,20032009 peaks.

In almost all cases of noticeable and sudden increases in funding, one can identify Gates in the case of Switzerland (Table 7,page57)itwastheGates foundations single donationof$500millionto the Global Fund to Fight AIDS, Tuberculosis and Malariain2006.

The general problem with volatility in money flows, whether it is government Source:U.S.FoundationCentreDatabase aidorphilanthropicmoney, isthattheseswingsindisbursementarelikelytoresultinswingsofdomesticexpenditureand therefore difficulties to adjustprograms and longterm development. In thepast, foundations havefacedcriticismfornotinvestingwithalongtermcommitment.FoundationssuchastheBill &MelindaGatesFoundationhaverespondedtothatandincreasedthelongterminvolvement andimpactoftheirdevelopmentgrantsthroughmultiactorcooperation.64

InregardstoSwitzerland,theWorldHealthOrganizationasrecipientNo.1isfollowedbytheGlobalFundtoFight AIDS,TuberculosisandMalaria,theGlobalAllianceforVaccinesandImmunization,MedicinesforMalariaVenture andtheGlobalAllianceforImprovedNutritionandtheselatterfourrecipientstakentogetheraccountfornearly50% ofdonations(or$1.2billion) CompareBillGatesaddressingtheUnitedNationsinhisspeechontheMillenniumGoals,seehere: http://www.gatesfoundation.org/speechescommentary/Pages/billgatesunitednations2008.aspx,(AccessedJune 2011)

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U.S.grantmakingappearslessvolatilewhenyoutakethecaseofEngland.Here,inthetop10 ofgrantrecipientsarefourofBritainstopleagueuniversities(UCL,ImperialCollege,Oxfordand Cambridge). While there is no doubt that these four universities are involved in groundbreaking work in developing countries as well as conductingresearch on keyissuesconcerning development, it nevertheless becomes clear that foundation grants (U.S. or otherwise) to overseas NGOs and institutionsarejustpartlyforpuredevelopmentpurposes. This point is further underlined looking at Ireland (in Table 7, page 57) clearly a developed countryembracedbystrongpartnerswithintheEuropeanUnionbutstillaheadofforinstance Ethiopia in terms of U.S. grant dollars received.65 This is mainly due to a single $32 million donationtotheUniversityofLimerickbyTheAtlanticPhilanthropiesinthatperiod.

Figure17:U.S.foundationsgrantstoEngland,$million,20032009 Source:U.S.FoundationCentreDatabase

AcountrysuchasEthiopiaisverylikelytoreceivemoreU.S.foundationgrantdollarsthroughmultinational agencies(suchastheWHO)thanthroughdirectfoundationgrantstodomesticNGOsorevengovernmentbodies,as thosedomesticallybasedinstitutionsareinmanycasesstillnotperceivedtobetrustworthyenough

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Theincreasedimportanceofrichindividualsissuinggrantsatunprecedentedlevels(suchasThe Bill&MelindaGatesFoundation)isaprimaryshiftintheinternationalgrantmakinglandscape in recent times. As a 2008 paper by the European Foundation Centre concluded, the large majority of foundations around the world are set up by an individual using her/his personal wealth,orbyajointinitiativeofseveralindividuals.Formanyfounders,notesthepaper,thekey reasonstosetupafoundationaretheirinterestinaparticularproject,strongattachmenttoa cause,thefoundersbeliefortheconvictionsofthepersonwhoinspiredtheproject.Inthepast anduptillnow,mengenerallyformthemajorityoffoundersandtendtobemiddleagedsenior executives.Anincreasingnumber offemalephilanthropists as wellasnewwealthdonorsand youngbillionairessuchasFacebookfounderMarkZuckerbergtheyoungestbillionairesigning theGivingPledge66havegraduallycontributedtochangingthispatternoverthelastdecade. Surveys show that women generally have a different approach to giving, seeking high engagementinphilanthropicendeavoursandatangibleimpact.67

If you have the money you dont have to collaborate with anyone all you need is a grantee
Philanthropy Expert, Asia

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Seehere:http://givingpledge.org/

EuropeanFoundationCentre(2008):FoundationsintheEuropeanUnion,FactsandFigures,seehere: http://www.efc.be/NewsKnowledge/Documents/EFCRTF_EU%20FoundationsFacts%20and%20Figures_2008.pdf, page11,(AccessedJuly2011)

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The ASA International Holding (ASAI) registered in Mauritius and a globally operating micro finance services provider received a single grant of $20 million from the Bill & Melinda Gates Foundationin2009andthereforetopsTable20(Appendix)ofaverage$pergrant.68 TheWHOinSwitzerlandreceived270grantswithatotalvalueof$770millionovertheperiod under observation (average of $3.7 million per grant). However, the average calculation is somewhat flawed (as for many other countries inTable 20) because the Bill & Melinda Gates Foundation accounts for 93 percent of all grant dollars, sending nearly $7 million with each grant. Anotherexampleforaparticularlypoliticalinvestmentfocusinsteadofamerelyhumanitarian oneisthecaseoftheVaticanCityatposition12receivinggrantsrangingfrom$30,000in2006 to$3.2millionin2007(showinganaverageof$450,000).WhiletheVaticanhasseveralpurely humanitarian societies under its roof, the largest of the aforementioned grants went to the Vaticandirectly,hintingmoretowardsthedonorsconcernforartsortheculturalandreligious heritageoftheCatholicChurchetc.thanforpurelyaid.

The Gates Factor

Oftheworldstenlargestfoundations(basedoninvesteddonations),sevenarebasedinthe UnitedStates.Thewealthiestfoundation,i.e.theonewiththelargestamountofendowmentis theMelindaandBillGatesFoundationbasedinSeattle,Washington,andoperatingsince1994 withastartingcapitalof$94million.Sincethen,thecapitaloftheGatesFoundationhasgrown andhassofarprovidedfundingtodevelopmentsprojectsatavalueof$24billion.Itscurrent endowmentis$37.1billion.

How much overseas development has the No1 philanthropist essentially done?
TheGatesFoundationclassifiesitsgrantsintofourgroupsGlobalHealth,GlobalDevelopment, UnitedStatesand Nonprogram grants.All of thefoundationsactivities whichare partof the programs Global Health and Global Development should be categorized as overseas aid as well as those grants to projects in North America which are concerned with international development (e.g. a grant to Oxfam America to provide emergency response to flooding in Guatemala). Over the whole period from 1994 2011, 44 percent of the foundations total numberofgrantsandnearly$18billionofthefoundationsgrantsmoney(71percent)wentto overseascauses(seeTable8,nextpage).

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SeeASAIswebsitehere:www.asainternational.com

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Table8:Shareofgrantdollars,byarea,GatesFoundation,1994March2011 Area GlobalHealth GlobalDevelopment (Globalcombined UnitedStates Nonprogramgrants Total $million 14,492 3,277 17,769 6,005 1,038 24,812 Percent 58% 13% 71%) 24% 4% 100%

Source:Bill&MelindaGatesFoundation,GrantsDatabase

Since the Bill & Melinda Gates Foundation started operating in 1994, combined international grantsequateto around 44 percent of all of the Foundationsgrants, in $ value anestimated amount of $17.8 billion.69 Figure 18 displays how the Global Health initiative of the Gates foundationhasgrowntoitslargestareaoffunding.
Figure18:GrantswithGlobalHealthFocus,GatesFoundation,19942010 Source:Bill&MelindaGatesFoundation,GrantsDatabase

ThisisGlobalDevelopmentandGlobalHealthcombined;AcertainshareoftheUnitedStatesprogramgrants shouldbeincluded,too,thereforethetotalfigureofallinternationalgrantsisslightlyhigher

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The advocacy role of the Gates Foundation

MajorplayerssuchastheBill&MelindaGatesFoundationdonotjustrelyonthefundsthatit donatestomakeanimpact,theyleveragetheirfundingasawaytomakeanevenwiderimpact in the areas where they work. The Gates Foundation for example spends only a small percentageofitsfundsondomesticeducationintheU.S.Whileitamountstoalargesum,itis small compared to the public funds spent on education. Yet, the Gates Foundation plays an importantpoliticalroleineducationpolicyintheU.S.,becauseinadditiontofundingtheyplay an important advocacy role. That is, they dont just funds education programs but also fund policy centres that influence education policy. The Gates role then is leveraged further than theirabsolutevalue.MoreontheadvocacyroleoffoundationsaswellastheGatesdomestic involvementineducationinlaterchapters(Seepage79forU.S.domesticgrantsbytheGates Foundation,andpage126fornotesontheAdvocacyrole).

Special Analysis U.S. Foundation grants to China

AspecialanalysiswasconductedonU.S.foundationsgrantstoChinesefoundationsandNGOs toseewhatareasareofmostinteresttoU.S.foundations.70KeyfindingisthatU.S.foundations focusstronglyonacademicinstitutions,researchanddevelopmentaswellaslaboratoriesand sciencecentres.
Figure19:U.S.FoundationgrantstoChina Theanalysiswasconductedbymanuallyclassifyinggranteesaccordingtoitsname.Whereagranteesnamedid notimmediatelyrevealtheactualpurposeoftheorganisationanindepthanalysisofthatparticularrecipientwas undertaken Source:U.S.FoundationCentreDatabase;ownanalysis
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Thelargestshare(33percent,seeFigure19)isgrantstoeducationalinstitutionswhichinclude academicinstitutionsandresearchinstitutes.Morethanseveninteninthecategoryeducation arehighereducationfacilitiessuchastheShaanxiAcademyofSocialSciences,ShanghaiScience andEducationDevelopmentFoundation,ShanxiAcademyofSocialSciences,GuizhouAcademy ofAgriculturalSciencesortheChineseAcademyforEnvironmentalPlanning.Othereducational institutions grouped under this category included Central Communist Party School, Anhui ProvincialDepartmentofEducation,ShanghaiEducationDevelopmentFoundation,Ministryof EducationofChinaortheBeijingModernEducationResearchInstitute. Thesecondlargestshare(20percent)aregrantstocivilsocietyandculturalinstitutionssuchas the Family Planning Association Wuchang District, Evangelical Lutheran Church of Hong Kong, Lishu County Womens Federation, Chinese Working Women Network, National Peoples Congress, National Prosecutors College or Panzhihua Youth Volunteers Association. Cultural institutionsthatreceivedU.S.moneyareHongKongBallet,MuseumoftheTerraCottaWarriors andHorsesofQinShihuang,NationalArtMuseumofChinaortheChineseCulturePromotion Society. Thethird largest category Political and Economical Infrastructure (19 percent) includesthree subcategories:Social&EconomicalResearch(50percent),Administration/Politics(38percent) andEconomics(13percent).SocialandEconomicResearchgrantsfromU.S.foundationswent toforinstancetheHorizonResearchConsultancyGroup(oneoftheleadingopinionpollstersin China),ChinaDevelopmentResearchFoundation,ResearchCentreforRuralEconomy,theChina National Institute for Educational Research or the Yunnan Participatory Development Association. Administration/ Politics (see Figure 19) include institutions such as the Financial Stability Bureau of the Peoples Bank of China; China Standard Certification Centre; Ministry of Civil Affairs;NationalDevelopmentandReformCommission;AssociationofMayorsofGuangxiorthe ChinaRuralLabourDevelopmentInstitute.

Conclusion
Ascanbeseenfromtherandomlyselectedgranteesinaboveparagraphs,therearequiteafew bodies that are clearly associated with the Communist Party while it is likely that far more bodiesarecontrolledbytheChineseregimethanvisiblefromthenameorofficialaffiliation.To better understand the landscape of Chinese philanthropy, it is important to note that many NGOs are actually government operated, and therefore are more accurately described as Government Operated NonGovernmental Organization, or GONGOs. In general, GONGOs exist to forward a government sponsored cause. Experts have highlighted that the Chinese philanthropic landscape and the role of foundations and NGOs in a nonfree market environment such as this is problematic. Transparency is hard to establish. Nevertheless, the

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newlyestablishedChinesefoundationdatabasewasusedtohaveacloserlookatexistinggrants fromChinesefoundationstogetanunderstandingofthedomesticphilanthropylandscape.This analysiscanbefoundonpage90and91respectively.

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July2011 European foundations: involvement

Expenditure

and

international

Keyfindings:

PhilanthropicexpenditureofEuropeanfoundationsislowercomparedtotheir
U.S.counterpartsdespiteholdingmoreassetsonaverage

ItalyhadthelargestaggregatedfoundationassetsinEurope Britainleadsthewaybyahugemarginintermsofaveragesizeofagrant International involvement by European foundationsis generally at a low level.

Dutchfoundationsfocusstrongestoninternationalrelationsanddevelopment (45percentcomparedtoaround12percentonaverage)

A World Bank paper from 2007 estimated the total international giving by
European foundations to be around half a billion dollars (which is little compared to the U.S. international giving of an estimated $5.9 billion in that particularyear,seefigure13,page55)
Table9:Totalassetvalueoffoundationsin15EUcountries Country Italy(2005) Germany(2005) UnitedKingdom(2005)* Sweden2001 France(2005) Spain(2005) Finland(2004) Netherlands(2002)** Hungary(2005) Belgium(2006) Estonia(2004) Luxembourg(2005) CzechRepublic(2006) Slovakia(2006) Slovenia(2005) Totalassets (million) 85,441 60,000 48,553 16,305 9,445 8,993 3,856 1,445 1,419 1,028 340 203 195 67

34 Source:EuropeanFoundationCentre,2008Analysis,*Top500trusts,**400 Fundraisingfoundations

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Data on European Foundations is limited, especially on their international involvement.71 However, publications by the European Foundation Centre (EFC) and other sources have highlighted that their economic weight is significant with combined assets of 237 billion.72 However, their expenditure is lower compared to their U.S. counterparts despite European foundations holding more assets on average.73 Italy had the largest aggregated foundation assets in Europe (see Tables 9 an 10). A World Bank paper from 2007 estimated the total internationalgivingbyEuropeanfoundationstobearoundhalfabilliondollars.74

Table10:Breakdownoftop50foundationsassetspercountry Source:EuropeanFoundationCentre

Country
Italy UnitedKingdom Germany Spain Sweden France Finland

Percent
39% 34% 16% 4% 4% 2% 1%

Areasonforthatistherelativelyyoungageof(asizable)philanthropyinmanyEuropeancountrieswhile,secondly, thestrikinglywidediversityoffoundationsacrossEuropemakesithardtoaccumulatedata,too.Lawsonfoundations varyacrossEurope,andthedefinitionoffoundationsdiffersbetweenonecountryandthenext.TheEFCResearch usedinthissectionisfocusingonpublicbenefitfoundations(definedasbeingassetbasedandpurposedriven, withoutmembersorshareholdersandbeingseparatelyconstitutednonprofitbodies)anddrawsondata accumulatedmainlyin2005,claimingtobethemostuptodatesurveyasofDecember2009

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Fromasampleof55,552foundationsin15countries;Table9previouspageisshowninmillionsforreasonsof simplicity

Forafewkeystatisticsonthistopic,seethestatisticalportaloftheUnitedNationshere: http://www.un.org/partnerships/YStatisticsEurope.htm,(AccessedJune2011) TheWorldBankSulla,Olga(February27,2007):PhilanthropicFoundationsandtheirRoleinInternational DevelopmentAssistance,InternationalFinanceBriefingNote,NewSeriesNumber3,seehere: http://siteresources.worldbank.org/INTRAD/Resources/BackgrounderFoundations).pdf,page4,(AccessedJuly2011)

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Table11highlightsthatfoundationsin14majorEuropeaneconomiescombinedwithatotalof morethan380millioncitizensarespendingmore(inEuro:46billion)thantheU.S.foundations surveyedbytheFoundationCentre(seeFigure12page53;U.S.$41billionor30billionEuro) however relative to the population and the held assets, Europe spends significantly less. Germany has the highest expenditure in total figures (both domestically and abroad). Britain leadsthewaybyahugemarginintermsofaveragesizeofagrant.75

Table11:Totalexpenditureoffoundationsin14EU countries Country Total Germany(year:2005) Italy2005 Spain2005 France2005 UnitedKingdom2005* Netherlands2005 Hungary2005 Sweden2001** Belgium2005 Estonia2004 Finland2004 Luxembourg2005 Slovakia2006* CzechRepublic2006*** Expenditure (million) 46,120 15,000 11,530 5,700 4,175 3,972 2,714 1,100 627 570 272 249 154 42 15

Several foundations from selected countries have indicated their expenditure to the European Foundation Centre, which allows drawing some conclusions on areas and spending priorities across various foundations in Europe. Data on areas of interestwereprovidedintwowaysandreflecteither theamountof spendingoneachareaof interestor the number of foundations interested in each area. Both types of data are represented in Figure 20 on thefollowingpage. Theoverviewofexpenditureperareaofinterestfor a sample of 36,717 foundations in seven EU countries shows that foundations spend most on health and social services. The latter is strongly supported by foundations from France (36 percent of all their support) and the Netherlands (31 percent). French foundations direct the majority of their support to health (49 percent of all their support). In the Netherlands foundations focus strongly on international relations and development (45percent)whichreflectsthestrongDutchtradition of humanitarian involvement.76 The strongest support for employment comes from Belgian foundations. Swedish foundations mainly support science(48percent).

Source:EuropeanFoundationCentre,2008Analysis *Top500trusts **Grantstothirdparties ***Grantsexpenditureof70FoundationsInvestment Funds(FIF),whichrepresent62.6%oftheassetsofall Czechfoundations

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EuropeanFoundationCentre(2008):FoundationsintheEuropeanUnion,FactsandFigures,page11

StrongDutchtraditionofhumanitarianinvolvementisalsovisibleintheextraordinarilyhighshareofofficial developmentassistance(82%ofGNI),seethisreport,Table3,page29

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Figure20:Distributionoffoundationssupportbyfieldsofinterestin13EUcountries
Health Social Services International Development Arts & Culture Education & Training Science Environment Religion Community Development Social Science Recreation & Sports Employment Animal Welfare Philanthropy/ Volunteering/ NPI Civil Society, Law & Civil Rights Not elsewhere classified

Expenditure per area of interest (Belgium, Finland, France, Hungary, Netherlands, Sweden and UK) Number of foundations interested in each area (Estonia, Germany, Italy, Luxembourg, Slovakia, Spain)

Source:EuropeanFoundationCentre,2008Analysis

Figure 20 highlights that international involvement by European foundations is generally at a low level. For future analysis it would be useful to look at both Netherlands and the United Kingdom in terms of foundations and their activities, as the EFC analysis has identified the Netherlands as the country with the strongest focus on international affairs while the United Kingdom, following the AngloSaxon pattern of philanthropy, has the by far highest grants on averagewhichisworthexaminingfromtheinternationalperspective,too. Further data available from the EFC and also the German Foundation Association (Bund Deutscher Stiftungen, BDS) confirms the low level of engagement with international affairs of European foundations and German foundations respectively, as can be seen in the following figures21and22.

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Figure21:Geographicareasofinterest,Europeanfoundations(6EUcountries)

Source:EuropeanFoundationCentre,2008Analysis

TheEFCsurveyexplainsthatthedatafortheabovegraphongeographicareasofinterestwere providedintwowaysandreflecteithertheamountofspending,orthenumberoffoundations interested,ineachgeographicareaofinterest.BothtypesofdataarerepresentedinFigure20 above. The EFC analysis (among six countries only due to data not being available) further underlinesthatfundersmostlysupportactivitiesatlocalandnationallevel,whilecrossborder support is most often given to other EU countries but not beyond. A snapshot on German foundations(Figure22nextpage)underlinesthepreviouslyidentifiedtrendfurther,withnearly 90 percent of German foundations having no international focus at all. However a share of 5 percentisfundingprojectswithinternationalfocusonly, while6 percentofallfoundations in Germanyhadafocusonbothdomesticandabroadengagementsin2011.

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Figure22:Germangrantmakingfoundations,geographicalfocus,2011 Source:GermanFoundationAssociation,2011

Conclusion
Overall expenditure at European foundations is lower than their U.S. counterparts despite holding higher assets on average. International involvement of European foundations is generally at low levels. Dutch foundations focus most strongly on international development causes. A fragmented foundation landscape with a variety of different types of foundations highlights the different path that most of the European countries have taken compared to AngloSaxonphilanthropy.

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July2011 Asian foundations play an increasingly important role in their region

A World Bank paper has observed that international philanthropy by Asian foundations is relatively limited owing to cultural and religious traditions that favour local philanthropy. In many countries, nonprofit organizations are struggling to gain government recognition as a separate sector. Most Asian philanthropy is directed at local community needs and social welfare.Aidtononreligiouscausesisrelativelylow,accordingtotheAsiaPacificPhilanthropy Consortium.TherehasbeenverylittleresearchonAsianphilanthropyingeneralandevenless on the activities of Asian foundations in developing countries. The paper concluded that the countrieswiththemostfoundationsareAustralia,Japan,China,andHongKong(China),andthe Republic of Korea, but foundations could also be found in Malaysia, the Philippines, Thailand, andVietnam.77

TheWorldBank,Sulla,Olga(February27,2007):PhilanthropicFoundationsandtheirRoleinInternational DevelopmentAssistance,page5

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July2011 The role corporations play for overseas philanthropy

Keyfindings:

In the U.S., corporations have given $15 billion to charity in 2010 which
manifeststhesmallestshareoutofallprivategiving

Recorded corporate giving usually includes not only cash but also inkind
donationsofproductsandmanagementtime,too

In 2009, giving to any international causes has increased 15% while giving to
developingcountrieshasincreasedby8%

The more global the companys operations, the more international is their
philanthropicfocus

Most often cited goal of a companys philanthropy is enhancing corporate

reputation

The role and importance of corporate philanthropy strongly differs between

countriesdependingontheoverallcultureofgivingofasocietythemajority ofgivingforinstanceinBrazilhappensthroughcorporations

Corporatephilanthropyasphilanthropybyfoundationsdoesimplyaspecific
focusandagenda(bythecompanyfounder,chairman,boardorshareholders) which, in the worst but likely case, excludes funding for controversial issues likehumanrights,certaindiseaseprevention,raceorgenderrelations

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Corporate giving: Not just lipstick on a pig?
Asformanyotheractorsinthephilanthropicecosystem,corporategivinghasbeenresearched most accurately in the United States. The Committee Encouraging Corporate Philanthropy (CECP)hasconductedasurveyamongstleadingU.S.companiesforthefourthyearinarowand, basedonasampleof171companiesand2009data,concludedthat Morecompaniesgaveless,afewgavemore Aggregatetotalcorporategivingroseby7percentin2009 Morecompanieshavereportedanincreasedfocusonaparticularprogramarearather thanspreadingtheirfundingacrossdisciplines Givingtoanyinternationalcauseshasincreased15percentwhilegivingtodeveloping countries has increased by 8 percent, reflecting the overall trend towards a rising awarenessofglobalcausesamongstgloballyoperatingcompanies Manufacturing companies lead international giving due to their stronger relationship withdevelopingcountriesasmanufacturingbasesandmaterialssuppliers

Thesurveyoutlinesthatwhilemorethanhalf ofallcompaniesdecreasedtheirinternational contributions from 2008 to 2009, aggregate total giving rose above 2008 levels by 15 percent. This increase, the survey explains, can be attributed to a handful of companies that significantly increased their international giving, mainly pharmaceutical companies and those with signatureprograms and longterm dedicationtospecificcauses.78

It is important that corporates figure out what is it that the community needs and then they can begin to work together
Philanthropy Expert, South America

Thesurveyfurtherunderlinesthenotionthat themoreacompanyisinvolvedontheground inaparticularcountry,themorelikelyitistodonatetolocalcharitablecauses.Manufacturing companies are usually much more involved on the ground in countries outside of their homelandthanservicecompanies,duetotheirneedofrawmaterials,morelocalworkersand

CommitteeEncouragingCorporatePhilanthropy(2010):GivinginNumbers,CorporateGivingStandard,seehere: http://www.corporatephilanthropy.org/download/pdfs/giving_in_numbers/GivinginNumbers2010.pdf,pg28 (AccessedJuly2011)

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their reliance on local infrastructure.79 Thus the typical manufacturing company dedicated almostonequarterofitstotalgivingbudgettograntsforinternationalrecipients. WhiletheanalysisoftheCECPisworthwhileandinsightful,ithasseveralshortcomingsofwhich one is particularly striking. Corporate philanthropy has, ideally, always a social benefit to the recipient but at the same time it also improves the reputation of the company. Thus, it is probably fair to say that there is usually another underlying goal. The CECP research fails to analysetheelementofreputationandhowimportantitisintheeyesofthesurveyedCEOs. Although the CECP survey has a designated questionexaminingthemotivationlabelthat suitsagrantandofferstherespondentthree categories (Charitable; Community There are not many cases Investment/Strategic; Commercial) it is not where collaboration between entirely clear which one of the two latter corporates has been very labels is the one that covers Enhance corporatereputation. intense and interactive. A The label that gets closest to capturing the purely business motivation of enhancing corporate reputation is Commercial. This label is defined by CECP as philanthropy in which benefit to the corporation is the primaryreasonforgiving;thegooditdoesto the cause or community is secondary. The goalmaybetoentertainaclientordonateto a cause that is important to a key vendor or customer. This category suggests a low response by respondents as only a few respondents would presumably admit to the primary and secondary reason of their giving in such an explicit way. As it turns out, 5 percent on average are labelling their donationascommercialintheCECPsurvey.

community foundation can act as an intermediary or broker, asking both IBM and Xerox for support. Corporations would not do it unless there was a broker; otherwise there is not a real motivation for them to work together
Philanthropy Expert, Asia

Incontrasttothat,asimilarstudybyMcKinseyfoundthat7outoftencorporatephilanthropic donationsareconsideredtobemotivatedbyenhancingthecompanysreputation(Inaddition to the social benefits which are, with such a donation, a given) according to 721 company executives surveyed in 2008. The surveys result, although a different sample and different question,seemstocollidewiththe5percentcommerciallymotivateddonationsfoundbythe
Manufacturingcompaniesreportedthatanaverageof38%oftheirtotalrevenueisgeneratedabroad,while Servicecompaniesreportedanaverageof16%(N=27,N=36,respectively),seeCommitteeEncouragingCorporate Philanthropy(2010):GivinginNumbers,page28
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CEPC survey. Instead, the CECP team published their 60pages report without mentioning(corporate)reputationonce.80 As the McKinsey study further highlighted, eightoutoftenexecutivesstressedthepoint that finding new business opportunities shouldhaveatleastsomeroleindetermining which philanthropic programs to fund, compared with only 14 percent who say finding new business opportunities should havenoweight.81

Every aspect of underdevelopment requires a business

Herman Chinery-Hesse, African entrepreneur (also known as The Bill Gates of Ghana)

Across respondents, social and political issues relevant to their business are most likely to be funded.Thebusinessgoalsmostoftencitedareenhancingthecompanysreputationorbrand, buildingemployeecapabilitiesandimprovingemployeerecruitmentandretention. Whatever the business goals of their philanthropy programs, more than 80 percent of respondentssaytheyareatbestonlysomewhatsuccessfulatmeetingthem.Roughlyonefifth of respondents say their companies are very or extremely effective at meeting social goals, addressingstakeholderinterests,orboth. LeavingasidecorporatephilanthropyinWesternsocietiesforamoment,thepicturebecomesa verydifferentonewhenlookingatsomedevelopingcountriesandemergingeconomies.While inWesterndevelopedcountries,corporategivingwasandtoalargeextentstillismotivatedby corporatereputationandcorporatephilanthropyconstitutesthesmallestshareofallprivate giving(intheU.S.),inthecaseofforinstanceBrazilthemajorityofallphilanthropyiscorporate instead.ThespecificcaseofBrazilisthathistoricallycorporationstakecareofcommunitiesand communityissuesrelatedtothelocationoftheirmanufacturingplantsandemployees. GIFE Group of Institutes, Foundations and Enterprises is reportedly the first South Americanassociationofgrantmakers,unitingprivatelyheldorganizationsthatfundoroperate social, cultural and environmental projects of public interest. However, 95 percent of its membersarecorporations.

Reasonforthatmightbethatoneoftheirthreeguidingprinciples,accordingtoWikipedia,isRepresentingthe CEOvoiceincorporatephilanthropywhichisprobablynotthebeststartforindependentresearchonCEO motivations.SeeheretheentryonWikipedia:http://en.wikipedia.org/wiki/Committee_ Encouraging_Corporate_Philanthropy(AccessedJuly2011) McKinseyandCompany(2008):GlobalSurveyThestateofcorporatephilanthropy,seehere: https://www.mckinseyquarterly.com/The_state_of_corporate_philanthropy_A_McKinsey_Global_Survey_2106,page 3(AccessedJune2011)

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GIFE significantly focuses on developing solutions to overcome Brazils social inequalities, wherebyitsstrategicobjectiveresidesininfluencingpublicpolicybymeansofpartnershipsand the sharing of ideas, actions and experiences with the State and other civil society organizations.82 TofurtherstrengthenandleveragefromthisstrongcorporatephilanthropyinBrazil,according to Marcos Kisil President of the IDIS (Instituto para o Desenvolvimento do Investimento Sustentvel,orInstitutefortheDevelopmentofSocialInvestment)thesectorstronglyfocuses onanewlyevolvedconceptofCreatingSharedValuesbetweencommunitiesandcorporations. Thisconceptwillbescrutinizedindetailfrompage106onwards.

There still is too prevalent an idea that the donor is the one who decides where to put the money. What were seeing, and I hope that this is the trend of the future, is that donors are working more in partnerships in order to find out the most appropriate distribution of money. This concept is taking over more and more and is called Creating Shared Value
Philanthropy Expert, South America

82

Seeherehttp://www.gife.org.br/

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COUNTRY SNAPSHOTS

The following snapshots of a few countries should illustrate how these various international development money streams that the report has investigated so far relate to domestic philanthropy.

Philanthropy in the U.S.

Due to the widely available and well established data and reporting on U.S. philanthropy this chapter is kept very brief and offers analysis of the Bill and Melinda Gates Foundations domesticexpenditureonly. Looking at the Gates Foundation in terms of its domestic engagement, U.S. grants make up a significant share with 58 percent of all projects. However the share of expenditure for U.S. causes is approximately 24 percent only, as the Global Health initiatives are far more cost intense.TheUnitedStatesProgramformsoneoffourmajoractivityareaswithGlobalHealth, Global Development and a minor sum supporting other foundations (e.g. such as the U.S. CouncilofFoundations,orCOF).
Table12:Bill&MelindaGatesFoundation,GrantsgivenaspartoftheUnited StatesProgram,byarea,19942010 Grantarea CommunityGrants Education,all4areas Education,PostSecondary Education,CollegeReady Education,EarlyLearning Education,Scholarships Libraries Advocacy&PublicPolicy FamilyHomelessness Research&Development EmergencyResponse Percent* 36% 27% 17% 68% 9% 7% 26% 6% 4% 3% 2%

*Totaldoesnotaddupduetorounding Source:Bill&MelindaGatesFoundation

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Number of community foundations grants falling
ThethreelargestareasofinvestmentwithintheUnitedStatesProgramareCommunityGrants, Education and Libraries over the whole 19942011 operating period of the Foundation. However,thefocushasslowlybeenchangingfromsupportingcommunityfoundationstogiving grantstoeducationalinitiatives,ascanbeseeninfigure23. Community foundations fulfil core social services to communities in their neighbourhood. Examplesarea$1milliongranttoaSeattlebasedhousingdevelopmentassociationtosupport acapitalcampaignforcommunityfacilitiesinWestSeattleora$4milliongranttotheSeattle Foundationtosupportlocalnonprofitorganisations.Thesearetwoexamplesoflargergrantsin 2004,whichtogetherwithahighnumberofsmallergrantsresultedinariseinthatyearaftera rather weak 2003 (see below figure 23). However, the overall trend is falling with the lowest numberofjustabove30grantsin2007.
Figure 23: Bill & Melinda Gates Foundation, Number of Grants given to Community and Educational Projects, 20002010 Source:Bill&MelindaGatesFoundation

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Education is increasingly on the agenda for Gates
ThemajorityofeducationalgrantswenttoCollegeReadyinitiativeswhichareusuallygrantsin theareaof$1milliontoCollegeFoundationsinsupportofstrategicplanningandresearchorto recruitlowincomestudentsandinfluencethosestudents'coursetakingpatternsinpreparation forcollege.Asinglegrantofmorethan$12millionwenttotheNationalEquityProjectwhichis a Californian initiative acting U.S.wide to increase and improve penetration of coloured studentsincolleges.83

ItisworthnotingthatthetermcolouredisperceivedasderogatoryinBritainandelsewhere,howeverthewebsite oftheBill&MelindaGatesFoundationusesthistermfrequently,seehere:http://www.gatesfoundation.org/Grants 2011/Pages/NationalAssociationfortheAdvancementofColoredPeopleOPP1033306.aspx,(AccessedJuly2011)

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July2011 Philanthropy in Africa

Specifics of African philanthropy have remained largely unrecognized. Ghanaian entrepreneur Kingsley AwuahDarko said When you come to Africa, take everything you know aboutEuropeorAmericaandturnitupsidedown84which,inregardstophilanthropy,means theAfricanwayofgivingisquitedifferenttoNorthernphilanthropy.Ingeneral,givingisspread verywidelybasedonthetraditionalAfricansayingIambecauseyouare(ubuntu,originatedin theBantulanguagesofSouthAfrica)andstronglyestablisheddutiesofmutualsupport. WhileintheNorthgivingismoreofagivingawayextrawealth,inAfricaitisverymuchmore basedonsharingwhatyouhaveandyourfeelingofresponsibilityforthecommunityandyour family,andalsothenotionIambecauseyouare(theethicalconceptofubuntuanddutiesof mutualsupport).MoneycomesfrommanyandquitedifferentsourcescomparedtotheNorth, andalsoasaresultoflesswealthoverallontheAfricancontinentthesumsgivenawayare smaller. In terms of individual giving trends, it can generally be said that the percentage of income given by African high net worth individuals as a share of their total assets is much greaterthanindevelopedcountries.ThesamecouldprobablybegeneralisedtomostAfricans, irrespectiveofnetworth. However,Africahas,similar to any other continentoverthelastdecades,seenanincrease in wealth and especially a growth in high net worth individuals and, as a result, more and new playershaveenteredthelandscape:New foundations andgrantmakinginstitutionssimilarto Western models, such as the social justice orientated Trust Africa or the African Women DevelopmentFund(AWDF).Strong,independentandwellequippedfoundationshaveemerged as a result of the Black Economic Empowerment initiatives, for instance the Ty Danjuma Foundation.85Theincreaseinwealthispartofthereasonfortheentranceofnewplayers,but nottheonlyone.Someofthesenewfunds,whilestronglyAfricaninidentity,agendaandfocus, were setupby/incubatedviaforeigndonororganizationsorthroughbilateral basketfunding mechanisms;somecommunityfoundationswereestablishedviaforeigndonorinitiatives;while other community foundations or community philanthropy organizations have emerged very organically,inverylowincomeareas. As indicated in the mapping document, the paper would benefit from a more substantive outline or reflection of philanthropy in Africa. Although there is a paucity of data on giving in Africa, as a continent, there is some academic research and additional conversations with expertsinthefieldmayhelptoaddtothissection.

84

Seehere:http://www.inc.com/magazine/20081001/meetthebillgatesofghana.html Seehere:http://www.tydanjumafoundation.org/

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July2011 Further research

Thefollowingsourcesmaybeofvalueinprovidingmoresubstantiveinformation: There is an upcoming journal on The State of Philanthropy in Africa by TrustAfrica; the East Africa Association of Grantmakers will soon launch a study on The State and Nature of Philanthropy in East Africa; the Centre for Civil Society at the University of KwaZulu Natal is producingajournalonPhilanthropyinSouthAfrica. Otherbooksandreportsinclude:PhilanthropyinEgyptbyMarwaElDaly;GivingandSolidarity ResourceflowsforpovertyalleviationanddevelopmentinSouthAfricabyAdamHabiband BrijMaharaj(editors);ThePoorPhilanthropist,aseriesofpapersbySusanWilkinsonMaposa etal.;FollowtheMoney!PoliciesandPracticesinDonorSupporttoCivilSocietyFormationsin Southern Africa by the Southern Africa Trust; Kenyan Diaspora Philanthropy Key Practices, TrendsandIssuesbyJacquelineCopelandCarson.

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July2011 Philanthropy in Australia

TheAustralianFoundationmemberorganisationestimatesthatthereareapproximately5,000 foundations in Australia giving between half a billion and onebillion dollars (Australian $) per annum. This includes 950 private ancillary funds (or PAF; as of July 2011) and approximately 2,000 charitabletrustsand foundationsadministeredbytrusteecompanies. Thehighshareof privateancillaryfundswhichareessentiallyU.S.stylefoundationsispartlyresponsibleforthe difficultyofobtainingaccuratedata.86ThisnewtypeofPAFfoundationshasbeenintroducedin 2001. PAFs are very private and are often family foundations. They are obligated to donate 5 percentoftheirassetstocharitablecauseseachyear.
Figure24:Fundingareasbytop10reportingAustralianfoundations,$(AU.S.)million,3yearaverage(20052008)

Source:PhilanthropyAustralia,2010

Despite this new foundation structure and the overall new wealth of individuals in Australia, philanthropyadvisorsarereportingthattherearenotenoughtaxincentivestoencouragegiving
Forthemostuptodateanalysisofthesector,seeMadden,KymDr.,Scaife,WendyDr.(2008):Goodtimesand Philanthropy:GivingbyAustraliasAffluent,here: http://www.bus.qut.edu.au/research/cpns/whatweresear/documents/GoodTimesandPhilanthropyGivingByAustralias Affluent_March2008.pdf,(AccessedJune2011)
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while amongst individuals still exists a lack of trust in institutions and support for charitable givingingeneral.PhilanthropyAustralia,thenationaladvisorybody,reportsthatinternational giving is increasing as more and more Australians are making their fortunes abroad, thereby developing strong ties with the AsiaPacific region. The majority of overseas giving is to those countries. In regards to collaboration amongst philanthropic players in Australia, foundations are increasingly working together with the government while the newly established PAFs havent shownagreatdealofcooperationyet.

Stories about giving, about generosity, are becoming main stream. Were seeing them in the media, in social media, in TV and newspapers, in a way that we havent seen them before. We believe thats encouraging more giving
Philanthropy Expert, Australasia

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Abreakdownbyareaoffundingisavailableforthetop10foundationsthatarereportingtheir grantsandfigure24onpage84illustratesthefocusontraditionallymoreurgentareassuchas social welfare and health. Figure 25 exemplifies that Australian foundations have given more each year. In 2009, donations have declined for the first time. Philanthropy Australia reports that in the 200809 income year individual taxpayers claimed $2,093 (AU.S.) million worth of gifts,adecreaseof10.8percentfromthepreviousyear.Thisisthefirstdecreaserecorded in overadecade.

Figure25:Top10reportingAustralianfoundations,Allfundingareas,$(AU.S.)million,20052008 Source:PhilanthropyAustralia

How Australia compares to the rest of the world

Philanthropy Australia concludes that comparisons are difficult as charitable donations are measured in different ways across countries (amounts given per taxpayer, per head or per household,forexample;alsousingdifferentincomeyears).However,researchindicatesthatit isreasonabletosaythatAustraliansgiveslightlylessthantheUKandCanada,andsignificantly lessthantheU.S.

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The 2008 report by the Australian Centre for Philanthropy and Nonprofit Studies at Brisbane Universityfound: Approximately 6 in 10 of the wealthiest Australians (approximately 5 percent of Australiastotalpopulation)claimdeductionsfortheircharitablegiving AffluentAustraliansgivemorethantheaverageAustralianbutgenerallynotmuchmore The level of personal wealth held by wealthier Australians has accelerated at a much fasterratethantheircharitablegiving Despitesomesuperlativeyetisolatedexamples,thereislittleevidencethatAustralias ultrarichandultraultraricharegivingatthesamerateastheiroverseascounterparts87

87

Madden,KymDr.,Scaife,WendyDr.(2008):GoodtimesandPhilanthropy:GivingbyAustraliasAffluent,page51

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July2011 Philanthropy in BRICS states a (very) short overview

To take into account SouthSouth giving, i.e. philanthropy between emerging economies or developing countries, the following pages look at selected BRICS countries Brazil, India, China andSouthAfrica. NatashaDesterrofromthePacificFoundationServicesreportedonthestateofphilanthropyin theBRICcountriesBrazil,Russia,IndiaandChinainanarticlewrittenforTacticalPhilanthropy Advisorsin2009.88

Brazil
ShesummarisesphilanthropyinBrazilasasectorthatisyoungandalsogrewtremendouslyin the 90s, when Brazils dictatorship was phased out and a democratic government was put in place. The country opened itself up to foreign investments (and foreign aid), yet Brazilians individualcharitablegivingdidntchangemuchastheresaculturalexpectationofatopdown problem solving model in society. As outlined earlier in this report, the majority of giving in Brazil happens through corporate philanthropy. Corporate philanthropy usually implies a specific focus and agenda (by the company founder, chairman, board or shareholders) which might lead to avoid funding for controversial issues like human rights, certain disease prevention,raceorgenderrelations. ThemostrelevantconceptinBrazilisCommunityPhilanthropicOrganisations,orCPOs,which are partnerships between all players based on the strong tradition of corporate philanthropy andtheircommunityinvolvement. MarcosKisil,DirectoroftheIDISInstituteinSaoPauloBrazil,describesthisconceptasfollows: TheCPOisarevisedversionofthetraditionalcommunityfoundation.Akeydifferenceisthatit is not itself a grantmaker. CPOs do not gather or distribute funds but act as a broker and catalystforallpartiesinthecommunitythathavefundsorinfluenceorotherresources.[...]The CPO itself is funded through an annual fee from the participant companies, which pays for salaries,basicofficeneeds,publications,etc.Whenprojectsandresourcestoimplementthem areidentified,theCPOactsasabroker,directingfundsdirectlytotheorganizationthatwillbe responsibleforimplementingeachproject.TheCPOalsofollowseachproject,lookingforresults and evidence of impact that can be used to assure donors that their money is making a difference to the community and to help attract new donors for new projects. The model is flexible enough to accommodate local needs and circumstances. Each donor retains the responsibilityforthequalityoftheirgiving,butontheunderstandingthatitisthecommunity
88

ForNatashaDesterrosarticleonPhilanthropyintheBRICstates,seehere: http://www.tacticalphilanthropy.com/2009/05/cofbuildingphilanthropybricbybric,(AccessedJune2011);See hereforthePacificFoundationServices,http://www.pfsllc.net/(AccessedJuly2011)

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thatidentifiesneeds,andthatmonitorstheresultsandimpact.Thislastpointiscrucial.TheCPO model establishes a new paradigm for companies. Rather than a company branding a social investmentscheme,developingatemplate,andapplyingitwhereveritcan,ithastobewilling tohavetheprioritiesdeterminedbythecommunitiesinwhichitworks.89 Thisconceptofcollaborationbetweenthecommunityanddonorsisfurtherscrutinizedinthe CreatingSharedValuesfrompage106onwards.

India
Natasha Desterro summarises philanthropy in India with the words A new middle class has begunexploringnewhorizonsofeducation,culture,andleisureandwithnewwealthandthe (secondstrongest) growth in the number of billionaires (after China) there is a considerable amountofnewformsofgiving,too.90Historically,Indiahashadaverystrongcommunitarian tradition but in recent years there was a slight shift away from only thinking about the local community, very likely driven by the growing number of Indian entrepreneurs who act nationallyandinternationallyanddonotnecessarilywanttoseetheirgrantsallgobacktoone particularvillage.Onepractitionerofanintermediaryorganisationandfundraisingconsultancy operatinginIndiadescribedhowtoomuchlocalnessissometimesevenanobstacleratherthan thebestpracticecase.ThepractitionerreportedthatIstillstrugglealotwithfunderssayingI onlywanttofundawomensorganisationinthatparticularvillageasitissometimesveryhard to find that Figure26:SharesofGlobalMiddleClassConsumption,20002050 organisation.

The overall trend in India is that peoples interest in helping others goes beyond the local community more often than in the past and people are slowly starting to for instance give to national anti povertyschemesaswell.

Source:OECDDevelopmentCentre,Theemergingmiddleclassindevelopingcountries,by HomiKharas

Kisil,Marcos(2006):CommunityphilanthropyorganizationsinBrazilAnewparadigmforcorporatecitizenship, Alliancemagazine,seehere:http://www.alliancemagazine.org/node/988,(AccessedJuly2011) In1998therewereabout50individualswithanetworthof$50million,in2007,therewere2,000individualswith anetworthofmorethan$200million,seeDesterrosarticleonPhilanthropyintheBRICstates

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Thesenewformsofgivingareaslowbutsteadydeparturefromthetraditionallygrownprivate and discreet giving in India towards more open philanthropy. Driving this shift is the rising middleclassinIndiaseeFigure26previouspage.ThisisatrendnotonlyinIndiabutglobally. AnandJoshua,HeadofmarketingchannelsatChennaibasedWorldVisionIndiaputitthisway: There used to be the days when the West always led, but now its being taken on by Asian countries.91

China
Similarly, China has seen an increase in philanthropic activity. Desterro describes the long tradition of philanthropy and over the last 20 years, individuals in China see themselves as having an increased role in civil society. In 1998, there were about 50 individuals with a net worthof$50million,in2007,therewere2,000individualswithanetworthofmorethan$200 million.92 ForChina,itsmiddleclassisstillverysmall(lessthan12percent)asapercentageofthetotal population.ThatisonereasonwhyChinahasbeenreliantoninvestmentandexportsasdrivers foritsgrowth.Ifexportsareslow,themiddleclassisprobablynotyetbigenoughtotakeup theslackandpropelgrowthforwardattherapidpaceofthepastremarksaWorldBankpaper from2010.93 To understand the landscape of Chinese philanthropy, it is important to consider that many NGOs are actually government operated, therefore are more appropriately termed Government Operated NonGovernmental Organization or GONGOs. In general, GONGOs exist to forward a government sponsored cause. According to a report on environmental GONGOsbytheWilsonCentre,94GONGOsacrossdifferentcountrieswereoriginallyformedto receiveassistancefrommultilateral,bilateralorinternationalNGOsandstrengthentechnology and information support. In China, GONGOs evolved in the mid1990s as a hybrid between governmentagenciesandNGOsandaddressabroadspectrumofsocialneeds. A short list of selected GONGOs reveals that many of them are actually recipients of the U.S. grantswhichwereanalysedearlier(seepage58):
Lamont,James(May2010):AsAsiaemerges,sodoPhilanthropists,TheFinancialTimes,here: http://blogs.ft.com/beyondbrics/2010/05/19/asasiaemergessodophilanthropists/#ixzz1RPvsk4DA,(AccessedJuly 2011) SeeDesterrosarticleonPhilanthropyintheBRICstatesandNickYoungsarticleonChinesePhilanthropy,here: http://china.blogs.nytimes.com/2007/10/15/answersfromnickyoung/,(AccessedJuly2011) OECDDevelopmentCentre,Kharas,Homi(2010):TheEmergingMiddleClassinDevelopingCountries,Working PaperNo.285,seehere:http://www.oecd.org/dataoecd/12/52/44457738.pdf,page30(AccessedJuly2011) SeetheWilsonCentersreportonChineseNGOs,here: http://www.wilsoncenter.org/sites/default/files/chineseinventory1.pdf,(AccessedJuly2011)
94 93 92 91

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ChinaRedCrossSociety ChinaCharityFederation BeijingCharityAssociation SoongChingLingFoundation ChinaWelfareInstitute ChinaFoundationforDisabledPersons ChinaFoundationforPovertyAlleviation ChinaWomenDevelopmentFoundation ChinaYouthCareFoundation ChinaChildrenandTeenagersFund ChinaFoundationforGuangcaiProgram ChinaEducationDevelopmentFoundation Forthisreport,ananalysisofthefoundationlandscapeinChinahasbeenconductedbasedon theChinafoundationcentredatabase(CFC)whichhasbeennewlyestablished. ThecreationoftheCFChasbeenhailedasaturningpointbymany,includingtheHauserCentre for Nonprofit Organisations at Harvard University.95 After all, the China Foundation Centre or CFCisabrainchildofsomeofthevisionariesinthephilanthropicfieldinChina,suchasChinas bestknownphilanthropicfigure,XuYongguang,whocreatedtheHopeProjecttwodecadesago whichhasbecomethebestknownphilanthropicbrandinChina,andShangYusheng,whohas beenreferredtoastheFatherofAccountabilityfornonprofitsinChina. The Centres opening ceremony in July 2010 has attracted the attention and support of best knownfiguresinthefieldofphilanthropyofChinaaswellasthemostprominentinternational players, including the Ford Foundations first China Representative, Peter Geithner, China Representative of Gates Foundation Ray Ipp, China Representative of Ford Foundation John Fitzgerald,PresidentoftheFoundationCenterintheU.S.BradSmith,andDirectoroftheHauser CentreatHarvardUniversity,ChristopherStone. AnewsreleaseontheHarvardwebsitehassummarizedtheChinaFoundationCentrescreation as a response to the increasing number of wealthy individuals in China for whom setting up foundationstogivetocharitablepurposeshasnotyetbeenacommonlyconsideredthingtodo. The creation of the CFC represents a milestone in the evolution of the private foundation communityinChina,andmakesitalmostadefaultnormfortherichtoconsidergiving.

95

Seethepressreleasehere:http://hausercenter.org/chinanpo/2010/08/chinafoundationcenterestablished/ (AccessedJuly2011)

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Thesecondthemeistransparency.Aspiringtobecomeaportaltodisclosedetailedfinancialand programinformationofallfoundations(andnonprofits)inChina,theoperationoftheCFCaims totriggerachainreactionthatchangesthefundamentalbehaviourofphilanthropyinChina. First, Chinese foundations, especially the public fundraising foundations most of which are GONGOs, are under the pressure to comply and disclose their information too. This includes boththeirfinancialsandtheirprograms.SomemajorGONGOsliketheChinaCharityFederation, ChinaRedCrossFoundation,arethegovernmentdesignatedlegalrecipientsofpublicdonations from home and abroad in times of disaster. During the Wenchuan Earthquake period for instance,therewereupto$8billiondonationsandover90percentwenttotheGONGOs.For the Qinghua earthquake, the government issued an order to have these foundations transfer funds raised to local Qinghua government. When information disclosure becomes a norm for foundations,GONGOswillbeunderthepressuretoaccountforthefundsraised. Fortwo selectedyears,2005and2010, thetop 100foundationsandtheirexpenditure infive keyareashasbeenanalysed.

Table13:Top100Chinesefoundations*,fundingbyarea,$million,2005vs.2010

Areas CivilSociety+Culture PovertyRelief Education Environment Health Other Total

2005 Count 13 12 52 4 17 2 100

$million 15.5 37.6 183.4 5.4 39.3 5.1 286

2010 Count 6 14 65 1 11 2 99

$million 66.8 161.4 655.1 14.5 120.7 15.1 1,034

Source:ChinaFoundationCentreDatabase;ownanalysis *Note:Top100forthistableandalsothebelowchartreferstotheTop100foundationsinthatgivenyear

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ExpenditurebythetopChinese foundations grew by astonishing +260 percent over five years, from a total expenditureof100foundations of $286 million (or 1.8 billion Chinese Yuan) in 2005 to $1,033 (or 6.6 billion Chinese Yuan)in2010.
Figure27:Top100foundations,fundingbyarea,$million,2005vs.2010

Looking in detail at specific areas, it becomes clear that Education has seen by far the strongest growth in total expenditures in five years, while the number of grants in Educationhasnotgrowninline Source:ChinaFoundationCentreDatabase;ownanalysis with the $ dollars per grant (see Table 13/ Figure 27). The category Education includes university foundations, research centres but also youth education and youth empowerment schemessuchasthe China Youth DevelopmentFoundationwhichruns programstobuild and improveschools,libraries,computerlabs,playgroundsandalsosupportsteachersintheirdaily work.96 Aselectednumberofeducationalfacilities(seetablebelow)exemplifiesthestaggeringgrowth that some of these institutions have seen over five years according to the China Foundation Centresdatabase.
Table14:SelectedChinesefoundationsandtheirgrantamountsin$dollarintheareaofEducation,2005and2010 (incl.%growth)

BeijingYouthDevelopmentFoundation ChinaSportsFoundation JiaxingEducationFoundation ChinaWomen'sDevelopmentFoundation ChinaPostdoctoralScienceFoundation

Source:ChinaFoundationCentreDatabase;ownanalysis

2005 $million 9.2 8.5 17.9 24.4 117.2

2010 $million 60.7 26.2 29.8 174.8 424.0

%growth +558% +207% +66% +615% +262%

96

FortheCentreswebsite,seehere:http://www.cydf.org.cn/en/(AccessedJuly2011)

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South Africa
AsarecentstudyonAfricanPhilanthropyremarked,Africanphilanthropyisntsomethingthat needs to be introduced by anybody because Africans have strong traditions of selfhelp, self support,voluntaryinstitutions,rotationcreditandassociationslikeSouthAfricanstokvels.97In South Africa institutionalised philanthropy which supports educational facilities, health and social services beyond the mere neighbourly support that is so strong on the continent and especiallyinSouthAfrica,isgrowing,butstillsmallscalecomparedtootheremergingmarkets. Oneofthereasonsforthisisdescribedtobethelackofacultureofgiving. LocalorganisationinSouthAfricaishuge,withexampleswherecommunitiesorganisevoluntary neighbourhood security groups to reduce crime and delinquency in their local area, or form semiformal associations to allow people to gather in a whole range of clubs savings clubs, groceryclubs,burialsocietiesandsoonandpoolmoney.Accesstothesecollectiveassetsis generally rotated or shared by the group members.98 However, new money that is prevalent throughouttheAfricancontinentdoesnotgiveitawayeasily. Ashiftintraditionalvalueswhichisbeingdetecteddoesnotmakethingseasier.Asthepaperby WilkinsonMaposa remarks, With economic change, the content of help has become more monetary,affectingthemotivationbehindassistance.InSouthAfrica,someinformantstalked abouthowthetraditionandnotionofUbuntutherecognitionofoneselfthroughothersis dyingoutandthereisnothingtofillthegaporreplaceit.[...]Ubuntuisvanishing.[...]Because our homes differ in terms of income, [...] those with income give material help more than emotionalhelp,andthosehomeswithnothingprovideemotionalhelpandtheirpresence.99

Conclusion
BRICcountries,ascanbeseenfromthisverybriefinvestigation,areseeinggrowthindomestic philanthropy which appears to be crucial to any emerging markets philanthropic ecosystem. Thenotionofrelianceonlocalorganisationsandplayersinsteadofwaitingforforeignmoneyto comeinhascreatedthrivingphilanthropiclandscapeswithuniquecharacteristicsandparticular opportunities.

WilkinsonMaposa,Susan,et.al.(2005):ThepoorphilanthropistHowandwhythepoorhelpeachother,UCT GraduateSchoolofBusiness,(foreword),seehere: http://www.impactalliance.org/ev_en.php?ID=14913_201&ID2=DO_TOPIC,(AccessedJuly2011);Foranother detailedstudyonSouthAfricanPhilanthropy,seethefollowuppaperbyWilkinsonMaposa,Susan,et.al.(2009):The poorphilanthropistII.Newapproachestosustainabledevelopment,UCTGraduateSchoolofBusiness,seehere: http://www.gsb.uct.ac.za/clpv/files/Poor%20Philanthropist%20II_webres.pdf,(AccessedJuly2011)

98

97

SeeWilkinsonMaposa,Susan,et.al.(2005):Thepoorphilanthropist,page54 Seeabove,page58

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NEW PHILANTHROPY

KEYFINDINGS:

The new landscape of development finance is result of a new breed of

philanthropicactors,newfinancialtechniquesandanewmicrolevelapproach

Microfinance has successfully gone through the different stages that the now
emergingimpactinvestingindustryislikelytogothroughmuchfaster

Impactinvestmentinstrumentshavepotentialforhugereturnsandassetscould
beworth$400billionandmore

Theseimpactinvestingfundsarenotthesilverbulletbutjustacomplementto
traditionalphilanthropy

Impactassessmentswhichformthebasisofanyimpactinvestmenthavecertain
shortcomings which are difficult to eliminate: While a philanthropists horizon and funding milestone is usually 2 3 years, a nonprofit organisation often can give only piecemeal impact demonstrations within those first years, therefore fails an impact assessment and falls short of funding at a crucial stage

Innovations

such as microfinance but also a new way of approaching philanthropy in general has been triggered by three key changes: 1) new philanthropic actors searching synergies with business, and a new type of institution: the Social enterprise 2) the implementation of new financial techniques and 3) a new microlevel approach that focuses on small communitiesaslevelofaction

ApaperbySeverinoandRayfrom2009examinedthenewlandscapeofoverseasdevelopment aidwhichhasevolvedfromofficialdevelopmentassistancebyOECDmemberstates(only)toa multiactorandmultipolicyenvironmentofbothprivateandgovernmentactors.Lookingatthe challengesahead,theauthorsconcludethatreachingthenecessaryscaleofresultsinthefight against poverty, climate change or the rampant food crisis will require using the considerable firepoweroftheprivatesector.100

100

SeeSeverinoandRay,page12

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The authors describe several new actors and tools that have emerged over the years and exemplifytheirpointofanewlandscapeandanewtypeofcollaborationusingtheexampleof Microfinance(seegraphbelow). Traditional government aid in the form of bank transfers to recipient governments had proven to be largely unsuccessful and governmentscametobeknownas both innovationpoor and low funded. Microfinance was, so the 2009 report suggests, the result of the coming together of new actors invigorating new developments on three levels (see graph): At the actor level (new actors with a new focus on systemic impact, see top box), the financial technique level (middle box) and the society level (seebottombox). Thesethreelevels, 1.Newphilanthropicactors, 2.Newfinancialtechniquesand 3.Themicrolevelapproach arebeingexaminedcloseroverthe followingpages.
Figure28:ThreelayersofinnovationinMicrofinance

New philanthropic actors introducing modern business practices and aiming to provide more systemic responses

Introduction of new financial tools and techniques

A growing awareness of microsocial and micro-economic concerns

Microfinance

The segmentation analysis highlightedtheIndianGivingCircles Source:owngraph;basedonSeverinoandRay by DASRA, the Brazilian CPOs and community foundations. These types of collaborations all form a new or evolved type of institution based on cooperation between business and communities and government. Even the Brazilian CPOs which historically grew in opposition to the (as corrupt perceived) government have evolved and becamestrategichubsofcooperationbetweencitizensandthegovernment.

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Social Enterprises a promising hybrid model
Asocialenterpriseisabusinesswithprimarilysocialobjectiveswhosesurplusesareprincipally reinvestedforthatpurposeinthebusinessorinthecommunity,ratherthanbeingdrivenbythe needtomaximiseprofitforshareholdersandowners. Government funded social enterprise incubators have, especially in the UK, taken off from a good start. Institutions such as the Young Foundation have both under the past Labour government as well as the current Cameron administration proven to win grants for their incubatorprogramsandsocialenterprisepilotswhichtosomeextenthavebecomepartofthe currentgovernmentsbigsocietyconceptandactionplan.101Crossnationalincubatorssuchas the Social Innovation Exchange SIX are bringing together ideas from various countries, too.102 Foranexhaustiveandthoroughanalysisofthesocialinvestmentmarketandlandscape,seethe reportbyClearlySofromJuly2011.103
Figure29:Spectrumofsocialorganisations Source:GraphadaptedfromClearlySoreport,2011

101

http://www.youngfoundation.org/ http://www.socialinnovationexchange.org/

102

ClearlySo(2011):InvestorPerspectivesonSocialEnterpriseFinancing,ReportpreparedfortheCityofLondon Corporation,CityBridgeTrust,andtheBigLotteryFund,seehere:http://217.154.230.218/NR/rdonlyres/1FC8B9A1 6DE2495F9284C3CC1CFB706D/0/BC_RS_InvestorPerspectivesonSocialInvestment_forweb.pdf,(AccessedJuly2011)

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A Social Enterprise: BRAC
A social enterprise worth examining is the Bangladeshfounded institution BRAC, originally a microfinanceprovider. TheEconomistreportedonBRACin2010writingthatBRAChasprobablydonemorethanany otherinstitutiontoupendthetraditionsofmiseryandpovertyinBangladesh.BRACisbymost measuresthelargest,fastestgrowingnongovernmentalorganisation(NGO)intheworldand oneofthemostbusinesslike.104 TheEconomistcontinues:AlthoughMohammedYunuswontheNobelpeaceprizein2006for helpingthepoor,hisGrameenBankwasneitherthefirstnorthelargestmicrofinancelenderin hisnativeBangladesh;BRACwas.Itsmicrofinanceoperationdisbursesabout$1billionayear. Butthisisonlypartofwhatitdoes:itisalsoaninternetserviceprovider;ithasauniversity;its primaryschoolseducate11percentofBangladeshschildren.Itrunsfeedmills,chickenfarms, teaplantationsandpackagingfactories.BRAChasshownthatNGOsdonotneedtobesmalland thatalittleknowninstitutionfromapoorcountrycanoutgunfamousWesterncharities. Ian Smillie calls BRAC undoubtedly the largest and most variegated social experiment in the developing world in his book Freedom from Want. The Economist continues: BRAC earns fromitsoperationsabout80percentofthemoneyitdisbursestothepoor(theremainderisaid, mostlyfromWesterndonors).Itcallsahalttoactivitiesthatrequireendlesssubsidies.Atone point,iteventriedfinancingitselffromthetinysavingsofthepoor(i.e.,noaidatall),though this drastic form of selfhelp proved a step too far: hardly any lenders or borrowers put themselvesforward. WhatmakesBRACunique,thearticledescribes,isitscombinationofbusinessmethodswitha particularviewofpoverty.TheEconomist:Womenbecametheinstitutionsfocusbecausethey arebottomoftheheapandmostinneedofhelp:70percentofthechildreninBRACschoolsare girls.Microfinanceencouragesthepoortosavebut,unliketheGrameenBank,BRACalsolends a lot to small companies. Tiny loans may improve the lot of an individual or family but are usually invested in traditional village enterprises, like owning a cow. BRACs aim of social changerequiresnotgrowth(inthesenseofmoreofthesame)butdevelopment(meaningnew anddifferentactivities).Onlybusinessescreatejobsandnewformsofproductiveenterprise. After30yearsinBangladesh,BRAChas(moreorless)perfecteditswayofdoingthingsandis spreading its wings round the developing world. It is already the biggest NGO in Afghanistan, Tanzania and Uganda, overtaking British charities which have been in the latter countries for decades.105
TheEconomist(February18,2010):BRACinbusiness,seehere:http://www.economist.com/node/15546464, (AccessedJune2011) TheEconomist(February18,2010):BRACinbusiness,seehere:http://www.economist.com/node/15546464, (AccessedJune2011)
105 104

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BRACsfastgrowthandexpansionhasalsomadethesocialenterprisesufferfromillpractices suchassellingtoomanyloanstooverindebtedclientsasprocesswhichhasbeendescribedas thatthemotivesonbothsidesoftheloantransactionsweremixesofgoodintentions,over optimism,andinertia.Forlackofcreditinformationsharing,suchasthroughacreditbureau,no one could see the big picture. The research community generally agrees that BRAC in Bangladeshhasgrowntoolargetoofastinrecentyears.BRACandASAhavehaltedorreversed theirgrowthinrecentyears,itisreported.106

BRAC is already the biggest NGO in Afghanistan, Tanzania and Uganda. Coming from a poor country and a Muslim one, to boot means it is less likely to be resented. Its costs are lower, too: it does not buy large white SUVs or employ large white men
Article in The Economist BRAC in business, February 18, 2010

ForarecentresearchnoteonBRACbyDavidRoodmanattheCenterforGlobalDevelopment,seehere: http://blogs.cgdev.org/open_book/2011/04/notexactlypushing.php,(AccessedJuly2011);Foradditionalanalysis andaperspectiveonBRACanditsgrowthaswellasoverallsuccess,alsoreadthearticleinForbesMagazineIs BiggerBetter?byDavidArmstrong,findhere:http://www.forbes.com/forbes/2008/0602/066.html(AccessedJuly 2011)

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July2011 2. New Financial Techniques

Microfinance is evolving from credit to inclusive financial services

MaximilianMartinreviewedhowthemicrofinancefieldhassuccessfullygonethroughdifferent stagesleadingtotheemergenceofanewassetclassanda$2530billionmarketwithroughly 100millionborrowers,withapotentialdemandof500millionborrowersandamarketsizeof $250billion. Microfinance and related emerging markets financial services are at the frontiers of philanthropy in the decades ahead, and present an enormous capital allocation and social impact opportunity. Microfinance is currently transitioning from a focus on credit to inclusive financialservices,i.e.ithasevolvedfromprovidingmicrocreditonlytoincludingmicrosavings, microinsurance,remittancesandotherfinancialinnovations. Martinconcludesthatoverthepastthreedecades,themicrofinancefieldhassuccessfullygone through the different stages that the now emerging impact investing industry is likely to go throughoverashorterperiodoftime.107

Impact Investing
Impact investing refers to investment vehicles built to solve the worlds most pressing social challenges, while offering investors social and financial returns. Impact Investing has emergedasaviableandgrowingdisciplinehoweveritisstilla nascent market until investors put their money into these fundsatalargescale.Industryinitiativeshavebeendrawnup to increase structure, transparency and accessibility of these financialtools.108

Impact investing is not trying to replace philanthropy; it's a complement to philanthropy

Antony Bugg-Levine, Rockefeller Foundation

Martin,Maximilian(2011):FourRevolutionsinGlobalphilanthropy.ImpactEconomyWorkingPaper,Vol.1,see here: http://www.sanitationfinance.org/sites/www.sanitationfinance.org/files/11_Martin_Four%20Revolutions%20in%20G lobal%20Philanthropy_IE%20WP_1.pdf,page16,(AccessedJune2011);SeealsotheMicrofinanceHandbookbythe CharitiesAidFoundation,here:https://www.cafonline.org/publications/2011publications/investorshandbook.aspx, (AccessedJuly2011)

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107

SeeanexampleKeystonereporthere:https://www.cafonline.org/publications/2011publications/keystone performancesurvey.aspx;SeealsoTimmins,Nicholas(November28,2010):Impactinvestmentaburgeoningasset class,seehere:http://www.ft.com/cms/s/0/e875dda6fae611dfb576 00144feab49a.html?ftcamp=rss#axzz16gPePUu9,(AccessedJune2011)

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New financial intermediaries GIIN, IRIS and GIIRS
New financial actors, philanthropic and corporate institutions, have joined forces in 2010 to form a Global Impact Investing Network, or GIIN, and propel the effort of more transparency and guidance in a rather young industry. Supporters of GIIN are including the Rockefeller Foundation,Deloitte,PwC,Hitachi,Citigroup,DeutscheBank,JPMorganandtheBill&Melinda GatesFoundation. AstheFinancialTimesputit,proponentssaytheframeworkGIINmaynotonlybringcapitalto worthyorganisationsinfarflunglocales,butshouldalsoestablishbenchmarksthatcouldrate thesocialgoodanycompany,bond,orfundgenerates.109 The GIIN network has since established a set of standards (Impact Reporting and Investment Standardsinitiative or IRIS) which addresses investors who would be willing to choose investments based on their social benefit if only they had a credible way to measure it. IRIS allowsassessing theactualimpactthat theseinvestmentshaveand casestudies arecurrently beingproducedwhichhighlighttheusageandadvantageoftheseindicatorsforthosekindsof funds.110 The Global Impact Investing Rating System or GIIRS was then designed to develop ratings for socialandenvironmentalimpactfunds,providingajudgmentakintoaMorningstarinvestment ratingorS&Pcreditriskrating.111

Impact Investment Funds

Assets in impact investment funds could grow to be worth between $400 billion and $1,000 billionoverthenextdecadeinsectorssuchascleanwater,maternalhealth,primaryeducation, microfinanceandaffordablehousingaccordingtothemostrecentstudybyJPMorganandthe RockefellerFoundation.112 The report analysed over 1,000 impact investments in five sectors (housing, water, health, education, and financial services) that target global populations earning less than $3,000 annually.Inthefieldofimpactinvestmentsinthesesectorsalone,thereportestimatesa$400

109

Stabile,Tom(April11,2010):Architectsofasocialinvestmentdataengine,TheFinancialTimes,seehere: http://www.ft.com/cms/s/0/e297b7de440b11df923500144feab49a.html#axzz1R97OVcEY,(AccessedJuly2011)

ForacasestudybyIRISandKleissnersfoundationKLFelicitasseehere: http://iris.thegiin.org/files/iris/KLF_IRIS_Case_Study.pdf,(AccessedJune2011)
111

110

SeeStabile,Tom(April11,2010):Architectsofasocialinvestmentdataengine,TheFinancialTimes

J.PMorganandTheRockefellerFoundation(November29,2010):ImpactInvestments:AnEmergingAssetClass, seehere:http://www.rockefellerfoundation.org/news/publications/impactinvestmentsemergingasset,(Accessed June2011)

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billionto$1trillioninvestmentopportunity,withpotentialprofitsrangingfrom$180billionto $600billion. Impactinvestmentisaimedatthoseatthebottomofthepyramidwhoearnlessthan$3,000 a year, and where the aim is to have a positive social impact, not just produce returns althoughthestudydemonstratesthatneverthelessrealreturnsarebeingmade. Themarketisstillyoungandacompleteoverviewofitssizeiscurrentlyhardtoestablish.While the current total size of the market is estimated to be around $50 billion,113 the Top 50 Americanimpactinvestmentfundsareholdinganestimatedtotalofaround$6billionassets. An analysis of thetop 50impact investment funds currently onthe market made clear that a largenumberofthemareactuallyjustservingNorthAmerica.Acloserlookrevealsthatmanyof theseNorthAmericansocialimpactfundsarefocusingoncleantech,healthandhousingwhile less arefocusingonfinancial inclusion, i.e. microfinanceandlowincomefinancialservicesa keygoalformanyofthedevelopingworldfunds.114
Table15:ImpactInvestmentFunds,Top50,byregionalfocus,2011

RegionalFocus All Developingworldonly Developed&developingworld

NorthAmericaonly

Count 50 13 16 19 2

% 100% 26% 32% 38% 4%

$million (appr.)* 5,733 1,243 2,290 1,700 500

%count 100% 26% 32% 38% 4%

% assets ($) 100% 22% 40% 30% 9%

Europeonly

Source:ImpactAssets.org,ownanalysis Moredetaileddescriptionofsomeofthefunds:http://www.giirs.org/forfunds/pioneer *Note:ThesefiguresareownestimatesbasedonfiguresprovidedbyImpactAssets.org.Thesefiguresare Assetsundermanagement(AUM)whichdoesnotgiveanindicationhowmuchisactuallybeinginvested

TheImpactAssets50projectisintendedtohelpinvestorsmakesenseoftheexpandinguniverseofimpact investing,andisprovidingfinancialandimpactinformationtofundmanagers.AnalysisisbasedontheImpactAssets database,foravailableanalysisbyImpactAssetsandthedatabaseitself,seehere: http://www.impactassets.org/impactassets50/2011impactassets50,(AccessedJuly2011)

114

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Seeabove

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Outofthislistof50funds,25haveregisteredwiththefirstwidelyacceptedindustrybody,the GIIRS, which provides accreditation. These 25 Pioneer GIIRS funds represent $1.2 billion and haveinvestmentsinmorethan200highimpactprojectsin30countries. Severino and Ray concluded in 2009 that these kinds of funds combine the expertise of development actors, the resources of private investors and the public guarantee of philanthropicorpublicdonorsenabletochannelpreciousresourcestounderfundedareasor activities. Forinstance,theAgenceFranaisedeDveloppement(AFD),thebankCrditAgricole(CA)bank andDanonehaveteameduptoestablishaninvestmentfund(DanoneCommunities)thattaps intomainstreamfinancialmarketstoinvestinprogramswithhighsocialimpact. ThisfirstcommonexperiencehasledAFDandCAtolaunchalargefundforthegeneralpublic thatwillguaranteetheinvestorsrevenue,liquidityandsecuritystandardsequaltothoseofany highly secure financial vehicles but which will partly be invested in development projects. In the aftermath of the 2007/2008globalfoodcrisis,specialisedinvestmentfundsare The Big Society Bank also being devised to incite sovereign investors to finance will provide 600m of agriculturalproductioninAfrica. Severino and Ray further pointed out that the longterm yields of international financial institutions based on such business models confirm that the conceptual distinction between forprofit and solely for solidarity activities is largelyartificial.115

new capital for the social sector

City of London Social Investment Report 2011

115

SeeSeverinoandRay,page12

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Diaspora Bonds
Seepage49.

Social Impact Bonds and the Payment by result approach

In2010,thethenUKJusticeSecretaryJackStrawannouncedtheworldsfirstsocialimpactbond pilot. Based on a contingent return model, it aimed to mobilise up to 5 million for several specialised charities that work with the Peterborough prison in Cambridgeshire, England. The charitieswillprovidearangeofmentoring,educationandsocialsupportservicesfor3,000male prisonerswhohavebeensentencedtolessthanayearinjail.TheUKJusticeSecretaryargued: Itistheshorttermprisonerswhohavethehighestpropensitytoreoffend.Thisbondwillhelp to moderate increases in the prison population and produce a benefit for society. The chief executive of the St. Giles Trust, one of the specialised charities selected to deliver services at Peterborough,describedthebondasafundingrevolution.Themodelisstraightforward:the investorswillreceiveadividendfromthegovernmentonlyiftheprogramachievesareduction greater than 7.5%in reoffending among the prisoners covered by the program, who are measuredagainstanequivalentcontrolgroupontheUKpolicenationalcomputer.Thereturns arecontingent on success:the moremoneyUKstateagenciessave through theprogram, the higher the return paid to bond investors, rising to a maximum of 13 percent, with payments madeduringyearssixandeight.Ifsuccessful,thepilothashighreplicationpotential.116 AsTheEconomisthasdescribedinAugust2010,policymakersonbothsidesoftheAtlanticare keen on a new approach to alleviating societys troubles. On July 22, Barack Obamas administration listed the first 11 investments by its new Social Innovation Fund (SIF). About $50m of public money, more than matched by $74m from philanthropic foundations, will be given to some of Americas most successful nonprofit organisations, in order to expand their workinhealthcare,increatingjobsandinsupportingyoungpeople.117

Martin,Maximilian(2011):FourRevolutionsinGlobalphilanthropy,page3;ThePeterboroughSocialImpactBond PilotisalsoextensivelyscrutinizedinClearlySo(2011):InvestorPerspectivesonSocialEnterpriseFinancing,page93 TheEconomist(Aug12,2010):Let'shearthoseideas,seehere:http://www.economist.com/node/16789766, (AccessedJune2011)

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Other bond instruments
TheInternationalFinanceFacilityforImmunization(IFFIm)initiative,launchedin2005,consists in issuing bonds backed by legallybinding 10 to 20 year donor government commitments. By frontloading longterm aid flows, this resourcemobilization instrument aims to both lock in preciousresourcesoveragivenperiodoftimeandachieveacriticalmassoffundingtoallowfor quickprogresstowardstheMillenniumDevelopmentGoals(MDG).The2006bondlaunchraised $1billion.IFFImaimstoraisefourtimesasmuchoncapitalmarketsoverthenext10years enough to support the immunisation of half a billion children through campaigns against measles,tetanus,andyellowfever.118

118

SeverinoandRay,page10

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Corporate Social Investing: Creating Shared Values
As highlighted in previous chapters on Brazil and corporate philanthropy, a new concept has been introduced that brings together communities, community organisations and foundations with corporations. Especially for developing countries where involvement of corporations is strongerthanindevelopedmarkets,thisconceptmanifestsaclearopportunitytoleveragethe fundsfromcompanies.
Figure30:TheevolutionofCorporateSocialResponsibility

Source:FSGSocialImpactConsultants

Academics and consultants are seeing a change in mindset in the business world. For larger corporations which have so far engaged in the usual corporate social responsibility activities, leadingthinkersMarkKramer(oftheconsultancyfirmFSG)andMichaelPorter(fromHarvard University) in the nonprofitmeetsbusiness sphere have developed a new set of terms the concept of Shared values (see figure 30). The concept ofshared value, which focuses on the connectionsbetweensocietalandeconomicprogresshasthepowertounleashthenextwave ofglobalgrowth,sotheauthorsclaim.119 Anincreasingnumberofcompaniesknownfortheirhardnosedapproachtobusiness such as Google, IBM, Intel, Johnson & Johnson, Nestle, Unilever and WalMart have begun to embark on important shared value initiatives. But our understanding of the potential;ofsharedvalueisjustbeginning.

Porter,MichaelE.andKramer,MarkR.(January01,2011):CreatingSharedValues,HarvardBusinessReview;See alsoTable22intheappendixforfurtheranalysisofthesharedvaluesconcept;ForKramerscompany,FSGSocial ImpactConsultants,seehere:http://www.fsg.org/

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Everyfirmshouldlookatdecisionsandopportunitiesthroughthelensofsharedvalue.Thiswill lead to new approaches that generate greater innovation and growth for companies also greaterbenefitsforsociety. AsanexampleservestheBillandMelindaGatesFoundationandoneoftheirprojects: The Gates foundation has formed partnerships with leading global corporations to fosteragriculturalclustersindevelopingcountries.Thefoundationcarefullyfocuseson commodities where climate and soil conditions give a particular region a true competitive advantage. The partnership brings in NGOs like Root Capital and TechnoServe as well as government officials to work on precompetitive issues that improve the cluster and upgrade the value chain for all participants. This approach recognizes that helping small farmers increase their yields will not create any lasting benefitsunlesstherearereadybuyersfortheircrops,otherenterprisesthatcanprocess the crops once they are harvested, and a local cluster that includes efficient logistical infrastructure,inputavailability,andthelike.Theactiveengagementofcorporationsis essentialtomobilizingtheseelements. AnotherexampleisthepharmaceuticalcompanyNovartisanditssharedvalueactivityinIndia. Novartis has chosen a bottomofthepyramid approach by reaching out to low income households in India.120 Instead of offering drugs for free or at discount prices (like many pharmaceuticalplayershavesooftendonethroughsingledrugdonationprogramsinthepast) NovartissetuptheirArogyaParivarHealthyFamiliesprogramwhichaimsatteachinghealth seekingbehaviours.300healtheducatorsareemployedtoconductcommunityhealtheducation withfocusonprevention,child&maternalhealthandsymptomawareness. The other services which this Novartis campaign offers are healthcare provider education to addresstheproblematiclowlevelofmedicaltrainingaswellassupplychainmanagementto ensurecontinuityofsupplyinvillagepharmacies.121

ThisexampleisnotfromthearticleinHarvardBusinessReviewbutfromTeawiththeEconomistinterviewwith theauthorinJuly2011,seeherethevideo: http://www.economist.com/blogs/multimedia/2011/04/mark_kramer_shared_value,(AccessedJuly2011) TheNovartiscasewasillustratedintheEconomistvideointerview(abovelink)andalsohighlightedina2011 documentationfileonthewebsiteofMarkKramersconsultingcompany,FSGSocialImpactConsultants,seehere: http://www.fsg.org/Portals/0/Uploads/Documents/PDF/CSV_Webinar.pdf?cpgn=Webinar%20DL%20 %20Creating%20Shared%20Value%20in%20Action%20ppt,(AccessedJuly2011)

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Theauthorsclaimthatcorporationsareimprovingtheircompetitiveness(speakreputation)by creatingsharedvaluesatthreelevels: Byreevaluatingproductsandmarkets Byredefiningproductivityinthevaluechain Byenablinglocalclusterdevelopment

(1)ThefirstreferstowhattheaboveAfricanfarmerexampleoutlinedbyhelpingdevelopnot onlytheyieldandharvestbutalsothebuyer,logisticsandcompetitiveinfrastructure,notonly moreyieldisgeneratedbutalsomoredemandwhichisgoodforbusiness. (2)Theredefinitionofproductivityreferstoconservingenergyandnaturalresourcesandtaking careof youremployees,thereby reducingcost(energy,resources)andincreasing productivity (happyworkers),i.e.goodforbusiness,too. (3)Thethirdreferstoenhancingrelatedandsupportingindustriesandinfrastructure,i.e.similar to(1)

Do good, (place your product) and speak about it

Their prime example for moving on from Corporate Social Responsibility (CSR) to Creating Shared Value (CSV) is that CSR was fair trade purchasing whileCSV is providing crop inputs, technology, training, and financing to increase small hold farmers quality and yield. Sounds expensive,doesntit?However,lookingattheabovedescribedexampleofNovartisinIndia,the authors claim that while Novartis has managed to reach low income groups, improve health seekingbehaviour,openupnewdistributionmechanismsfortheirproducts(whileMarkKramer stressesthefactButnotjustforNovartisproductsonly),theprogramhasreached40million peopleandhasbrokenevenwithinthefirst13months. Threeotherexamplesofthisapproachthathavebeenrecentlyhighlightedare: Adidas Group: Adidas has partnered with Nobel Laureate Muhammad Yunus microfinance organization,GrameenBankto manufacture a lowcost shoe forthepoor inBangladesh. The shoeswillbecheapandaffordableforthepoor,besidesitwillprotectpeoplefromdiseases, saidYunus.ThisprogramisaperfectexampleofthesharevalueprinciplebothforAdidasand fortheGrameenBank. BMW: TheBMW Guggenheim Labis a mobile laboratory that will travel to nine major cities worldwideoversixyears.Ledbyinternational,interdisciplinaryteamsofemergingtalentsinthe

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areas of urbanism, architecture, art, design, science, technology,education,andsustainability,theLabwill address issues of contemporary urban life through programs andpublic discourse. Its goal is toexplore new ideas, experiment, and ultimately create forwardthinking solutions for urban life. This program establishes a social purpose for BMW that could help address the exclusiveness/elitism of the UltimateDrivingMachine.

There is no doubt that corporate donors prefer to put their money locally partly because it increases their capacity to monitor the impact of it

H.J. Heinz: Heinz has launched a micronutrient campaign to combat the threat of irondeficiency Philanthropy Expert, South anaemia and vitamin and mineral malnutrition America amonginfantsandchildreninthedevelopingworld. More than five million children in 15 developing countries have received sachets of vitamin and mineral powders that have been approved by UNICEFand theWorld Health Organizationas a costeffectivetreatmentforirondeficiency.Remarkably,atacostofalittlemorethantwocents persachet,achildsmicronutrientneedsforayearcanbemetforanannualtotalof$1.50.This HeinzprogramcombinessharedvaluewithextraordinarysocialROI.122

Klein,Paul(June14,2011):ThreeGreatExamplesofSharedValuesinAction,ForbesOnline,seehere: http://blogs.forbes.com/csr/2011/06/14/threegreatexamplesofsharedvalueinaction/,(AccessedJuly2011)

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Impact Assessment
The influx of business practices has fostered accountability, stakeholder management and overall professionalism. Across the industry and players, there is no doubt that philanthropy needs to understand more of impact assessment and that these processes are of vital importance for the industry. Until recently, as one expert remarked, philanthropists were happywithstoriesofchangewhiletherewasoftennotmuchproveofhowmuchchangehas actuallyoccurred. However, many especially smaller institutions struggle withshowingtheirlongtermimpact.Thekeyproblemis that while a philanthropists horizon and funding milestone is usually 2 3 years, a nonprofit organisation often can give only piecemeal impact demonstrationswithinthosefirstyears. To demonstrate impact, figures and measures are required. It is a crucial difference for nonprofits in developing countries because of the lack of social reporting and government statistics that nonprofits in the Western World can access. In developed countries, nonprofitscanuseadhocproxiestoquantifysomething easily and quickly while in developing countries that is impossible.

If we fund only what we can measure there is a lot that we are going to miss
Philanthropy Expert, Asia

Thenonprofitsectorisatthecrossroadsatthemoment,althoughindustryinsidersstressthe factthattherewontbeasinglemeasuringtemplate.Insteadeachactorandprojectneedsto finditsuniquewayofconvincingshareholdersandstakeholdersbydemonstratingthepotential impact. Large organisations are much more capable of developing, using and/ or implementing new waysofmeasuringtheimpactoftheirprograms,andindustryexpertsstressthefactthatlarger playersshouldleadthewayindoingsointheirfieldofactivity.Smallerorganisationswhichare inasimilarfieldofactivitycouldthenfollowthemandadopttheimpactmeasuringprocedure that has been tested and accepted as valuable.123 However, industry experts have highlighted that a valuable procedure in this context may be defined very differently by an impact assessment body and by a community at the receiving end of the program, and that the organizations of different sizes (trying to implement the same monitoring procedure) might ratheraddtotheproblemthanthesolution.
Amongstthestakeholdersofbigcompanieswhowereaskedwhattheythoughtoftheircharitablepartners, internationalcharitiesandNGOstendedtoperformbetterthanlocalones,thereforethegeneralcredibilityoflarger playersseemtounderlinethispoint,too.Seehereforarelatedarticle,TheEconomist(November11,2010):Faith, hopeandcharities,seehere:http://www.economist.com/node/17461445,(AccessedJune2011)
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Nevertheless, monitoring schemes have been set up and bestpractice cases established by relevantindustrybodiesforinstanceintheUK.124 ThefocusonlargeorganisationstoleadthewayinSROIhasbeenrecommendedbyDASRAbut hasalsobeenapolicyofNPC,whichinthepastfocusedonanalysingsmallercharitiesbutnow turneditsattentiontobiggerones. In general, any organisation of any size should be much stricter about the input and output descriptionandmuchmoreefficientwiththeirresourcesaswell. One of the recent and most meaningful players in the field of assessing charities and impact assessmentistheU.S.basedserviceproviderCharityNavigatorprovidingratingsforcharities as rating agencies do for commercial businesses. Their scores originally looked simply at overheadsasapercentageofmoneyraisedwhichprovedapoorguide,aslowoverheadsmay meannotthriftbutillpaid(andincompetent)staff.InJuly2011itrevampeditsratingstogive moreweighttotransparentandwellruncharitieswhileitisalsotestinganewimpactrating thatisexpectedtoberolledoutin2012.Atfirstthiswillassessonlywhetheracharitypublishes any information about the impact of its work (but not whether this information is useful or credible).TheEconomistmagazineconcludesthatalthoughsuchdataarestillfarfromperfectit isbetterthannoneatall.125 Thereisnodoubtthataglobaloratleastmultinational framework will be established based on current efforts and pilots such as the Charity Foundations information portal,alreadyoperativeinmanycountriesoutsideofits origincountry,theUK.126

If you are a charity on the ground, your accountability is first with the community and only second to the donor
Philanthropy Expert, Africa

Foraguideonsocialreturnoninvestment,seehere:http://www.thesroinetwork.org/publications/cat_view/29 thesroiguide2009/35chapters?orderby=dmdate_published&ascdesc=DESC,(AccessedJuly2011)
125

124

TheEconomist(November11,2010):Faith,hopeandcharities Seehere:http://www.charitytrends.org/

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Ingeneral,aSROIanalysisissupposedtofollowthesesixsteps: 1.Establishingscopeandidentifyingkeystakeholders.Itisimportanttohaveclearboundaries aboutwhatyourSROI analysiswillcover,whowill beinvolvedintheprocess andhow.Often serviceusers,fundersandotheragenciesworkingwiththeclientgroupareincludedinanSROI 2. Mapping outcomes. Through engaging with your stakeholders you will develop an impact map (also called a theory of change or logic model) which shows the relationship between inputs,outputsandoutcomes 3. Evidencing outcomes and giving them a value. This stage involves finding data to show whetheroutcomeshavehappenedandthengivingthemamonetaryvalue 4. Establishing impact. Those aspects of change that would have happened anyway or are a resultofotherfactorsaretakenoutoftheanalysis 5.CalculatingtheSROI.Thisstageinvolvesaddingupallthebenefits,subtractinganynegatives andcomparingtheresultwiththe investment. This isalsowherethesensitivity oftheresults canbetested 6.Reporting,usingandembedding.Thisvitallaststepinvolvesverificationofthereport,sharing findingswithstakeholdersandrespondingtothem,andembeddinggoodoutcomesprocesses127

Critique of impact assessment

Numerous experts have endorsed accountability measures and more transparency and better reporting tools. However, it is a tradeoff and the smaller a NGO is the more it is likely to struggletofulfiltheserequests. SashaDichter,executiveatthesocialinvestmentcompanyAcumenFund,describedthesolution totheimpactassessmentdilemmaasfollows: Philanthropyisaboutgenerosity.Betoughandasmuchbusinessaspossiblebutatthe sametimebeasgenerousasyoucanbe.128

127

Takenfromtheguideonsocialreturnoninvestment,SROINetwork

AsreportedinawebcastontheAcumenFundwebsite,seehere:http://www.acumenfund.org/aboutus/whatis patientcapital.html,(AccessedJuly2011)

128

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A fundraising executive with extensive knowledge in developing countries although clearly endorsingallmonitoringandevaluationmeasuresthatarecurrentlybeingimplementedacross countriesintheNGOsectorhasstressedthepointthatIfyouareacharityontheground, youraccountabilityisfirstwiththecommunitythatyoureworkingwith,itisonlysecondtothe donor.Shefurtherremarked: Everybodylikestoknowwhathappenstotheirmoney,andwhethertheremoneyhas any impact. However I do worry that with things that drive the impact we distort the wayinwhichgivinghappens.Ihavebeenontheothersideoftheequationworkingwith NGOsinAfricaandwithrecipientsofdonorfunds,andseenthepressureputonthemto conform to what donors want. Imagine you report to someone who sits 10,000 miles awayfromtheissuethatisbeingaddressed,andthatinstitutionthinksithastheanswer and the organisation on the ground is responsible for achieving a particular donor defined goal... this can change impact. And the ontheground operations are then so busywithrunningafterimpactandmeasurementtheyendupnotbeingaseffectiveas theycouldbe.

Conclusion
Large organisations are much more capable of developing, using and/ or implementing new waysofmeasuringtheimpactoftheirprograms,andindustryexpertsstressthefactthatlarger playersshouldleadthewayindoingsointheirfieldofactivity.Thereislittledoubtthataglobal oratleastmultinationalframeworkwillbeestablishedbasedoncurrenteffortsandpilotssuch as the UK Charity Foundations information portal. Caution should always accompany these evaluationefforts,andqualitativeassessments(incontrasttoquantitative)ofprogramsshould probablyoutweighthoseattempts.129

129

SeetheCAFonlineportalhere:http://www.charitytrends.org/SearchTool_Step1.aspx?reset=true(AccessedJuly 2011)

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July2011 3. The micro-level approach

The previous chapters examined the impact of business ideas on the nonprofit sector, the emergence of new philanthropic actors, examined new financial techniques as well as innovative approaches to corporate social investments.

All these issues have in common the microlevel approach, whether social enterprises work with small communities,microfinanceinstitutesgivesmallloansto individuals, social investment funds support micro farminginIndiaorwhetherthecorporateSharedvalues Philanthropy Expert, Asia conceptbringstogethercompaniesandtheirsurrounding community. The term mentioned in this context is community buyin130 which essentially means to have supportfromthosepeoplethatarebeingaddressedbyor affected by a particular program. Therefore, a crucial aspect of the microlevel approach is collaboration. Over the following pages, collaboration between philanthropic players will be examinedcloser. While many practitioners have reported that collaboration between players in development causeswhetherdomestic,foreignormultilateralactorsisstillverypoor,thereareexamples forcooperationthathavemanagedtoconvinceevenscepticsoftheirpotential. Philanthropy is often informed and shaped by strong family connections and individuals backgroundrespectively.Therefore,thefundingoftengoestocausesinthatparticularfamilys interest. In India, collaboration is all about getting families work together and DASRA, a development and NGO support agent, has developed and implemented Giving Circles which are based on philanthropic families and a strongly local approach towards donations and funding.IncontrasttothoseGivingCircleswherecorporateplayerscanjoinatalaterjoinand topupfundsbutdonottaketheleadfromthestart,131U.S.communityfoundationsareusually
130

If you have the money you dont have to collaborate with anyone all you need is a grantee

Expertshavehighlightedthatbuyinremainsacontentiousissuepartoftheproblematlocal/communitylevel hasbeenthattoooftenbuyinhasreferredtoconsultationbutnottranslatedintodecisionmakingpowerinstead

ArepresentativeofDASRAexplained:Corporatestendtohavecommitteesandtakemonthstomakefunding decisionsaseithertherehastobecommitteeconsensusorsometimesstaffvotingandconsensus.Wehavenever experienceditwhereacorporatecandelegateafundingdecisiontooneperson,thuscorporatesareexcludedfrom theinitialfundingdecisionbutinsteadcantopupexistingfundsatalaterstage.DASRAthereforeofferscorporates theopportunitytobenefitfromtheirduediligence/researchandshortlistedfundorganizations(independentofthe givingcircledecisionmaking).Theybenefitfromthesamemanagement;reportingandhandsonassistancethatthe circlereceivebutcantakedecisionsindependently

131

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kickstartedbylargecorporatefundsanddonations. The general model of a community foundation has its origin in the U.S. but these kinds of foundations132 and also types distinctly different from the U.S. model (which do not necessarily
involve collaboration between these three aforementioned sectors) are increasingly being

implemented in developing countries.133 For a specific type of cooperation in Brazil, the Community Philanthropic Organisation, or CPO, corporatefundingisalsoessential.

Those institutions most sensitive to their stakeholders are the ones that will live
Philanthropy Expert, Australasia

While these three types of institutions Indias GivingCircles,U.S.communityfoundationsorBrazilsCommunityPhilanthropicOrganisations arealluniqueandhistoricallygrown,allofthemhaveincommonthecommunitybuyinand microlevelapproach.134 The microlevel approach is important in two ways: for international donors and funds, it becomes more and more vital to cooperate with indigenous players to secure if not at least allow the possibility of community buyin, and therefore impact. For domestic players, cooperation with other domestic players from different sectors and backgrounds increases resources,leverageandimpact,too.Whentryingtoachievegoodcommunitybuyin,italways helps to remember that a community is a group ofindividualsnotasingle Give me the money and Ill do what I was going entity. A nonprofit to do with it anyway I hear that a lot from organization cannot attract a community any NGOs and thats really not the way to do it! more than a new kid on the block can make Philanthropy Expert, Asia friends with a school. True buyin comes from
Hodgson,JennyandKnight,Barry(2010):Morethanthepoorcousin?Theemergenceofcommunityfoundations asanewdevelopmentparadigm,seehere: http://www.alliancemagazine.org/members/pdfs/morethanthepoorcousin.pdf,(AccessedJuly2011) HelenaMonteiro,Helena(2006):BusinessintheCommunity:TheRoleofCorporationsinsupportingcommunity philanthropyinBrazil,CenteronPhilanthropyandCivilSociety,CUNY,seehere: http://www.idis.org.br/biblioteca/pesquisas/microsoftwordisfp_hmonteiro_paper.pdf/download,(AccessedJune 2011) Expertshavehighlightedthatsimplybeingalocalentitydoesnotautomaticallyguaranteecommunitybuyin andthatbothgoodandbadpracticeexamplescanbeobserved
134 133 132

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developingpositiverelationshipswiththepeopleinit. Practitioners consulted for this report highlighted that the microlevel approach or localness seemstobethekeytosuccess.Workingtogetherwithothers,whetherNGOs,corporationsor local government units, is deemed to be more successful as each player brings its own set of resources to the table. However, keeping such a partnership going takes a lot of work and goodwill, so much goodwill as one fundraising executive remarked. Working together with other actors for development requires openness in perspective in looking at others, and establishing partnerships and trust. If that actor is the governmentitneedstakingoffthesuspicionsthatnot forprofits have of government, and vice versa. The Collaboration is not well problemisthatnoteveryactorisamenabletothetask. The following example for successful collaboration between various players is from the Philippines and highlights the immense success possible with bi or eventrisectoralcooperation.

The Philippines League of Corporate Foundations was setupbycorporationstosharebestpractice.Overtime its members examined what each of them were fundingandtheyrealisedthat70percentofthemhad an interest in education. As it is often in the area of education, the members realised that there were plenty initiatives and areas where government knew what needed doing and had some programmes in place.Thecorporationsrealisedtheycouldntcoverthe whole country. Instead the corporations chose the localness approach and, for example, one bank that had branches in one particular province decided to Philanthropy Expert, India concentrate on that particular province, getting all members to buy into some three or four basic areas that could be addressed, like school lunches for example. The federal government then went to the local administration departments and asked them if they were interested in collaborating. It manifestsamultisectorundertakingbetweenbusinessandgovernmentandlocalgovernment aswellasNGOswhoarelocaltothearea.Onepractitionerdescribedtheprojectasitworks, and it works with more impact because youre all on the same page. Youre not just doing whateveritisyouwanttodo,buttryingtogetsystemicchange.135

tried in India and there is still resistance to it. India has a legacy of people who are very quiet about their giving. Out of millions of non-profits only a small proportion are open and transparent. A lot of individuals are giving ad-hoc to support families or old people very directly

135

SeeherefortheLeagueofCorporationswebsite:http://www.lcf.org.ph/

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Cooperating with and empowering local players often means bypassing governments and/or regional administrative bodies which can prove the single biggest obstacle for more collaboration between philanthropic players. The Economist magazine spoke to Stephen Goldsmithaboutinnovationindeliveringsocialservices.Goldsmith,aHarvardprofessorbutalso chairmanoftheCorporationforNationalandCommunityServiceandadvisortothemayorof NewYork,said:Icanthinkof1,000innovationsbutIhavenotyethadaninnovativeideainany meeting that was legal. Governments, so The Economist article, seem particularly bad at shiftingmoneyfromoldbudgetstonewones,whichisonereasonwhySocialInnovationFunds such as the American Social Investment Fund (SIF) has started with only $50m. Every government agency should be required to put 1 percent of its budget into innovation funds, argues the Centre for American Progress, a thinktank withstrongtiestotheObamaadministration.TheYoung Foundation has proposed thesame policy in Britain, The If you are interested Economistconcludes.136 Thisissueofshiftingmoneyfromonepottoanotheris an increasing problem and an immense opportunity at thesametime.Newpartnershipsbetweengovernments, business and civil society mean that it is no longer just fundraising (NGO seeks funder) or philanthropy (funder seeks grantee or NGO) but also resource mobilisation. Resource mobilisation describes the process where existingfundsusuallyatgovernmentlevelbutnotinall instances are utilised and reallocated, i.e. accessing moneythatisalreadyavailable.

in making your fund go a longer way it is important to look for partners

Philanthropy Expert, Africa

Collaboration in overseas giving a special analysis

Problemsofcollaborationcanoccurwhennoteveryplayerisequaltothetask.Inmanycases existingpartnershipsaredriventothewallnotbecauseoftheunwillingnesstocooperatebut because of the relationship being unequal. This is especially the case when international foundationscomeintoplayandtheproblemofadonordrivenagendaoccurs. Thefollowingexampleofaratherunfortunatecollaborationwasgivenbyaphilanthropyexpert workinginAfrica: Itshappeningallthetime,butletmegiveyoujustoneexample.Iwenttoaprogramin Central Ghana, a couple of years back. Ive been to the organisation before, a really goodandstrongorganisation.ItwasworkingwithyoungpeopleonHIVAidsissuesand they were really good at what they did. They had community buyin. They had an
136

TheEconomist(Aug12,2010):Let'shearthoseideas

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agenda and they were doing it well. And they were being funded by an American foundation. Over the years their dependency on that American foundation grew because it went from one program to several programs. And then the foundation changeditsfocusandsaidtothatorganisationthattheyhavebeenworkingverywell with,theyhadaverygoodpartnership,ActuallywerenotgoingtobefundingHIVAids anymore now and were seeking a transition to Microfinance and Economic Empowerment instead. And the organisation looked at its team and concept and realizedthey did nothavethat expertise but theydid have a community buyin. They felt pressurized because they knew if their workers would not have jobs it would be terribleastheyhadbeenworkingwiththemforalongtime,sowhattheydidisthey rationalizedandsaidIfwemoveintothatnewareawestillwillbeabletoworkwith thoseyoungpeople,westillwillbeabletodealwiththeHIVAidspreventionissuebut we might have to do just a bit less of what were doing now. Within two years the organisationwasamessbecausetheydidnotknowaboutmicrofinance,theycouldnot dealwithalloftheimplications.ThenthefunderssaidWearenotseeingtheresults thatweintendedtoseeandwerenotseeingtheimpactweareafter,sowewillstop givingyouthemoney. Regarding this case, it seems not only incomprehensible that the American foundation has agreed to the NGOs attempt to change focus, but moreover the fact that the funders have pushedthroughtheagendachangeinthefirstplace.Eveniftheychangetheirfocus,afunder shouldknowwhattheirpartnerisgoodat.Essentiallytherewasalotofnaivetyonthepartof thefunderwhothoughtthatmicrofinanceistheanswertoeverythingandthatanybodycando it.IntheirheaditmighthavesoundedlikeHeythisistheperfectmatchsoletsgetinwhereit is already happening. However, to succeed you need special views and knowledge and if you donthavethatyoumessup. A positive example for collaboration and local expertise again from the developing world was the involvement of the Kellogg Foundation in Latin America in the early 1990s. A Brazilian FundraisingExecutivedescribeditasfollows: Normally the international donor had no interest in the local donors. The Kellogg Foundationcreatedaspecificprogrammethataimedatcreatingbetterconditionsand helpthedevelopmentoflocalphilanthropyinBrazil,andeverywhereinLatinAmerica andtheCaribbean.Itwasthefirsttimethataninternationalfoundationinourregion puttheirhelptowardslocaldonors.Thisrepresentedanopportunitytohelpdonorsof the region to perceive their own role and participation in society as more important. ThisprojectbytheKelloggFoundationwasinthefirsthalfofthe90sandcreatedthe currentgenerationofphilanthropicleadersthatareleadingthecountrytoday.

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In the case of Brazil, current cooperation between local foundations and foreign foundations and the opportunity to set examples and benchmarks has been highlighted, too. It is about creating confidence amongst players and, as the Brazilian fundraising executive explained, havinggoodexamplesthatcanserveasbenchmarksforotherorganisations. Theoverarchinggoalseemstobetoestablishlocalplayers,supportandstrengthenexisting ones, create best practice cases and distribute these with the overall goal to avoid that donorsareoperatingtoofarapartfromtheirgrantees. AfundraisingexecutivewithastrongfocusonthedevelopedworldandAustralia/NewZealand has a quite different perspective, describing her daytoday work as convincing NGOs and potentialgranteestobetotallydonorfocusedinresponsetothecrowdedmarketplaceand theirincreaseddemandfortransparencyandimpact. I think we have to be totally donorfocussed. We have to be thinking always about whatthedonorwant,needs,expects.Itiscrucialtotreatthemwithgreatrespectand greatappreciation.Someorganisationsarebetteratthatthanothers.Andtheoneswho arenotdoingitwellareleftbehind,becausenowadaysdonorsknowwhattheyshould expect whether they are corporations, trusts or even individuals. We do have to be enormouslyrespectfulandconsiderateofdonorsevenmorethanwehavebeeninthe past.Otherwisetheywillgosomewhereelse. Whether in the developing or developed world, any approach towards implementation of evaluationtools shouldalwaysaim to takeintoaccountlocalplayersontheground. After all, the advice from fundraising and grantmaking experts in developing countries is the exact oppositetotheaboveNewZealandapproach,i.e.Becomelessdonordriven.Thatdoesnot mean to avoid accountability, but the priority in developing countries is on being held accountablebyalocalagentinsteadofaforeignplayer. Aphilanthropyexpertfromadevelopingcountryexplained: Ithinkitisreallyimportantforinternationalfunderstohaveanideawhatshappening ontheground.Butitisalsoveryartificialtothinkthatiftwoboardmemberscometoa particular country that they have never been to before and they had no or little knowledgeofandthatavisitgivesyouaflavourofwhatsgoingon.Yourpartnersetup the meeting and while nobody would say that the meeting is set up deliberately to favour anybody or anything it is still very likely to see a very limited slice of whats happening.

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Inconclusion,itiscrucialtomaketheeffortandgettoknowonesstakeholders;underpinning this is a more fundamental action to determine your key stakeholders. Not all American foundations that are working internationally have offices or people on the ground. Are their stakeholdersthepartnerorganisations in thatparticular country or are their stakeholders the ultimaterecipients/beneficiariesofthefunds?Ideallytheprimarystakeholdersshouldbethe ultimate beneficiaries. Problem is that it is very difficult for any donor to approach and/ or understand the ultimate beneficiaries (communities, individuals) and their concerns, mechanismsandprocedures;thereforeitcallsforanintermediaryorganisationwhichisbased inthatparticularcountryorregion. Partofthesolutionislookingforpartnershipsinsteadoflookingforinvestmentsonly.Whether in Africa or Brazil, national and continental grant making organisations exist that can be approachedbyinternationaldonors.ForthecaseofAfrica,theFordFoundationhasdonejust thatwiththeirpartnershipwiththeKenyangrantmakingorganisation,theKCDF.137

The importance of local grant-making institutions

The expert on Africa who was consulted for this report stressed the fact that Africa lacks philanthropicintermediaryservicesandadvisorsand the continent could do with more of these bodies, however usually these institutions are much more We see more and more useful for the philanthropist than they are for the community.Theyusuallycanadviseonhowtospend interest of the civil society your money, but they are sometimes less useful to to enter into partnership. I the organisation that they refer donors to. Id be think the idea of a muchhappierforphilanthropicorganisationshaving partnership between civil real partnership with African grantmaking organisationswhoworkinthesamefieldstheywork society, business and in. And the reason I support that notion is about government is something balancingthepowerrelationship.

worth considering

Philanthropy Expert, South America

137

Seehere:http://kcdf.or.ke/

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Balancing the power relationship
Thepowerrelationshipisacrucialpoint.Animportantdistinctionthattakesitevenfurtheris thatsuchpartnershipswiththeirofteninherentinequalityshouldlookatgrantingtoandnot grantingthrough.Thefirstimpliesthatprimarydecisionandpowermakinglieswiththelocal institutions,thesecondthatthelocalinstitutionismerelyaconduitforfundsandprograms.An expertonAfricangrantmakingdescribedthedilemmaasfollows: IfIamsittinginaroomwithanyoftheNorthernAmericangrantmakingfoundations, frankly,Iamperfectlyqualifiedtoagreeordisagreewiththem,andincaseIdisagreeI amhappytowalkaway.WhetheritistheAWDF,theTrustAfrica,SouthernAfrican Trust or the KCDF, anyone of these can do that because they are strong and big enough, and they are grantmakers themselves. They can ultimately hold the same conversation.138 The expert further explained that instead of searching equal partners, a partnership is often beingdiscussedwithpeoplewhodonothavethesamebaseandwiththepowerrelationship beingunequal,theoutcomeisverydifferent. ExpertshavehighlightedthatalargeandgrantmakingorganisationsuchastheAWDFdespite beingdependentondonorsandcomingunderpressuretodothingsinacertainwaybecause it is a larger organisation it is capable of responding to particular funders requests with somethingalongthelinesofAspartofyourdonationtousandouroutlinedpartnership,you aredemandingtoomuchinacertainarea,anditsnotgoingtohappen. Considering the fact that even a larger organisation such as the AWDF might come under external pressure, it becomes obvious what smaller players might be facing. The power imbalance between for instance the Bill and Melinda Gates Foundation working with a local communityorganisationinNorthernNigeriaishardtocomprehend. Experts have highlighted that what needs to be done to approach this unequal power relationshipoverthenextyearsistochangetheconversationatboardlevel,tostartwith.

Change the conversation at board level

Local fundraisers and grantmakers are increasingly calling to involve a wider range and more diverse range of people on the boards of some of the largest international philanthropic organisations. While the two or three Africans on a foundations board do not represent the wholeofAfrica,whattheirpresencedoesischangetheconversationatboardlevel.Keyisto have a greater depth of information through more diverse backgrounds regarding both issue areasandgeographicalarea.
SeehereforAfricangrantmakingorganisations:http://kcdf.or.ke;www.trustafrica.org/; www.southernafricatrust.org/;www.awdf.org
138

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DRIVERS AND INHIBITORS

Thefollowingtablepresentsananalysisandcategorisationofdriversandinhibitorswithinthe nonprofitandfundraisingsector.Currentissuesandchallengeswerecategorisedalongsixkey areas:Political,Economical,Social,Technological,EnvironmentalandLegal.

Table16

Impact on facilitators Impactondonors (NGOs+fundraisers)

New wealth especially in developing countries opens new opportunities for local fundraising Knowledge transfer, new levels of wealth but especially a focus on organic growth from within developing countries resulted in domestic grantmaking institutions (Africa; India) which bring a level of expertise to the table that is unrivalled by externalplayers Needtoraiseawarenessfortheir cause Need to fundraise more and moreefficiently Larger pool of resources (volunteers+financially) Increased competition between commercial and noncommercial players Increased knowledge transfer (socialenterprisemodels)

Political
Increased levels of wealth in all developing countries resulted in a growing confidence to use, support and foster indigenous ways of giving and local institutions Donors more often address domestic organisations and grantmaking foundations instead of international institutions

Increasedlevelsofwealth

Decliningpublicfunding

Increased awareness ofneed for donationandengagement

Increasedcivicengagement

More knowledge, more awarenessofcauses Higher demand for transparency andaccountability

Increasedprivatizationof services

Increased demand for quality servicedelivery Higher demand for transparency andaccountability

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Impact on facilitators Impactondonors (NGOs+fundraisers)

Sustained giving and especially overseas giving negatively affected thus need to Cutbackongiving fundraise more and more Focus on domestic efficiently insteadofoverseas In general, rising number of affluent single households and DINKs (doubleincomeno kids) creates positive environmentforfundraisers Married and widowed citizens are proven to donate more for overseascauses,thusincreasein affluent single households might have negative impact on overseasgiving Olderpeopleas wellaswidowed citizens are proven to donate more for overseas causes, thus increase in older population segments might have positive impactonoverseasgiving 65+ are identified as giving to overseas causes most frequently (while the highest amount is given my 4064 year olds who areprobablyonhigherincomes) High levels of corruption and mistrust in government and/ or politicshavebeenthereasonfor the evolution of completely distinct ecosystems of philanthropy, e.g. the case for Russiaisthatphilanthropyisnot a concept as common as in the rest of Europe because non profit organisations are usually placed in the same category as the government, thus not

Economical Recessionanditsaftermath Lowconsumerconfidence

causes

Fallinglevelofdisposable income Social

For many affluent nonmarried households giving is considered tobepartoftheirlife

Erodingfamilystructure (Westernsocieties)

Increased need for activity, involvement and a cause for a growingnumberofoldercitizens

Agingpopulation (Westernsocieties)

Distrust and institutionalized (e.g.Russia)

(very) low philanthropy

Corruptionandmistrustin politics

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Impact on facilitators Impactondonors (NGOs+fundraisers)

trusted Growingnumberofmigrantsand growing affluence levels of migrants bear huge potential for fundraisingforoverseascauses Growingnumberofmigrantsand growing affluence levels of migrantsmostlikelytoputstrain ondomestictolerancelevels Bears potential to cause ambivalent/ negative reaction amongst donors for overseas causes Huge potential for political implications (immigration caps andrevisionofpolicies,etc.)

Increasedmigrationand immigration

Technological Many new ways of approaching donors, fundraising and marketing the cause as well as nurturingsupporters Challenge to manage itself in a crowdedmarketplace Many new ways of approaching donors, fundraising and marketing the cause as well as nurturingsupporters Challenge to not step over the boundary between social and private (thereby aggravate donors) Many new ways of approaching donors, fundraising and marketing the cause as well as nurturingsupporters Mobile phone usage and new services to transfer money using mobile phones are increasingly important for developing countries,especiallyAfrica Increased awareness and knowledge levels thus rising demand for impact assessments andaccountability butalso informationoverflow

Increaseininternetpenetration andusage

Increaseinusageofsocial networkingsites

Possibility to become engaged much easier moving from past home town community engagement onto the virtual communitysengagement

Increaseinusageofmobile phonesandnewwaysofgiving (Textgiving)

Handlingofinformationflowhas become much easier compared to the PC, and with new applications giving has become mucheasier,too Especially in Africa where a whole continent is yet to go online but is connected through mobiles at the same time, the potential for new (mobile) applications (that send and receivemoney,etc)areimmense

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Impact on facilitators Impactondonors (NGOs+fundraisers)

The Charity Commissions Chair Dame Leather noted that Charities should be at the forefront of environmental sustainability and that it was important to green light charities moves towards becoming more environmentally aware Legal frameworks can provide securitybutalsohindergrowth Incountrieswherealargepartof the funding comes from the public sector, the recent mushrooming of regulations (Equality; Diversity; Accountability) has led to increasing difficulties for fundraisers the call for more reliance on private money is not just a Big society phenomenon butatrendacrossEurope In countries where the largest part comes from the private sector, those countries usually havealesswellestablishednon profitsector,thereforeinitiatives need to be taken to foster even more private giving (tax incentives) Climate change is a concern for many people and a reason to donate,too

Environmental

However, in whatever context and economic environment, regulations on how to conduct proper fundraising or how they should spend their funds are increasing transparency and public trust, thus crucial for funding

Legal

Source:Ownanalysis;FrameworkadaptedfromNFPsreport:LooknfpSynergyhavedonemyPESTanalysis

139

139

Guild,MhairiandSaxton,Joe(February2011):LooknfpSynergyhavedonemyPESTanalysis:Thesocioeconomic trendsaffectingcharitiestoday,seehere: http://www.nfpsynergy.net/includes/documents/cm_docs/2011/l/look_nfpsynergy_have_done_my_pest_analysis_f ebruary_2011.pdf,(AccessedJune2011)

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THE FUTURE OF PHILANTHROPY

Recommendations
Many speculate on the development potential of philanthropic actors and especially private foundations,comparingitwiththeofficialdevelopmentaidprovidedbygovernmentsthrough bilateral or multilateral development institutions. Based on the previous chapters of mapping the landscape, insights from philanthropic and fundraising experts and their best practice examples,thefollowingrecommendationsonhowtoleverageexistingfundscanbemade.

1) Engage in political advocacy

WhatBillandMelindaGatesdoisoftendescribedascatalyticphilanthropyinthesensethat they use their influence on the world stage and amongst politicians and entrepreneurs to become a catalyst for issues and causes of global concern. Engaging in political advocacy to changegovernmentpolicyisnotonlyfortheBill&MelindaGatesFoundationawaytousetheir influence effectively; however they are doing it a lot more than most other philanthropists. Philanthropistsusingtheirvoiceworksatalocallevel,too.Manyexpertswhowereconsulted forthisreporthavehighlightedthe necessityforphilanthropiststoadvocate forchangemore prominently. Political campaigning, lobbying and advocacy is crucial for NGOs, too. For NGOs simplydeliveringagoodserviceisnotenough;theyneedtocampaignforpoliticalactionifthey reallywanttodrivemassivesocialchange.

2) Collaborate more often

Foundations are not actively collaborating with their peers in many cases. Social change is a multisector undertaking between business and central government, local government and NGOsandeveryoneinbetween.Onlythroughamultiactorapproachitispossibletoallowthe possibility of systemic change. Engaging in advocacy and lobbying as described above also extends to the business world. NGOs and philanthropists with a social change agenda are advised to make markets work (for them). Successful nonprofits do not rely on traditional givingbutinsteadworkwithbusinessesandcollaboratetogenerateincomeandsupportlinks wherepossible.

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To maximise the impact of funding, it is often necessary and crucial for intermediary organisations to work closely with both donors and grantees. DASRA, the Indiabased philanthropyintermediaryservice,hasdescribedtheirroleastogivethedonorpeaceofmind regarding the impact of their funding while a close relationship with the grantee (often small NGOs) builds up the grantees inhouse capacities and Community philanthropy management skills a winwin for everyone involved. ultimately the answer, Not only the White House or Downing Street are collaborating with nonprofits (see pages 95 and 104)butgovernmentsacrosstheglobeareforming new partnerships of government, private capital, social entrepreneurs and the public (see page 116 forthePhilippines).

is

encouraging communities to be their own philanthropists

Philanthropy Expert, Asia

The biggest obstacles for more collaboration between business, government, NGOs and philanthropists are preconceptions of the other players involved, as well as the bureaucratic hurdles and budgetary (time) constraints of the public sector. When looking at developing countriesinparticularandcollaborationbetweenplayerswithintheecosystemofdevelopment philanthropy, the frequent power imbalance between donor and grantees needs to be addressed.Inparticular,toavoidadonordrivenagenda,whichintheworstcaseignoresthe NGOsuniquestrengthsandalsoweaknesses,localplayersneedtobeconsulted(outlinedearlier onpage117).Existingpowerimbalancesbetween(often)foreignplayersandlocalplayerscan beaddressedbyconsultinglocaladvisoryboards,settingupcompletelyindependentboardsina particular country or having local players sitting on the foundation board. The overarching theme isseeking a partnership andnot aninvestment.Keyistochange theconversationat boardlevel.

3) Develop and strengthen your (own) facilitators

Collaboration not only faces limitation through personal (and agendalinked) motivations and systemic hurdles (bureaucracy) but also the (multiactor related) problem of speed and scale. Successfulsocialinnovationshavespreadonlyslowly,ifatall.Inbusiness,entrepreneurialfirms thatdowellgrowfast;butsocialentrepreneurshipdoesnotyethaveaMicrosoftoraGoogle. Withencouragementfromthestate,socialentrepreneursbestideascanbespreadfasterand wider and numerous examples have proven that is the case see the Social Innovation Exchange Network (SIX) and many of the Young Foundations incubator ideas and projects. Grantmaking institutions in developing countries, ideally the first point of contact for foreign actors, need to massively scale up their efforts to develop local philanthropy, NGOs and non profitnetworks.
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4) Move towards inclusive decision-making with your stakeholders
Examiningthebestpracticecasesforcollaborationaswellasthosewhereobstaclescouldnot be overcome and the initiative failed subsequently, one aspect emerges as the key for long lastingimpact:Communityinvolvement.Numerouspractitioners,recentresearchaswellasbest practice examples underline the necessity for collaborating either with local NGOs, the communityorcommunityfoundationstomakesurethewholeinitiativegetsascloseaspossible toitsactualstakeholdersandrecipientsrespectively. Furthermore, development experts have highlighted that the whole process of community involvement has to clearly move beyond mere consultation and involvement and towards inclusivedecisionmakinginstead. Community input is what all initiatives in the area of social change philanthropy have in common.Communityinputintothegrantmakingprocessisaconsistentthreadacrossallsocial change programs, and while most of those funds are quite small, their impact is extended throughcollaborativeprocessesthatprovidebenefitsbeyondthegrantdollars. When one searches for the most impactful philanthropic development activity, one has to examine therelationshipbetween philanthropy and communitydevelopment, which could be describedasthelevelofaction.Veryimportantly,thelevelofactionisnotdependentfromthe actual scope of the project, as corporate philanthropy by Novartis has shown. The Novartis projectreachesoutto40millionpeopleinruralIndiathroughcommunitybasedhealthcentres and training classes to change health seeking behaviour (described on page 107). Truly ambitioushealthinitiativeswithtargetssuchaseradicatingpoliointhenexttwotofouryears or increasing the vaccination rate in every country to at least 90 percent (up from about 80 percent currently) are not possible without action at the global (UN, World Bank and other global institutions) as well as national level (governments), however it will be at local level wherepeopledecidetotakethevaccineordecidetoattendaclassonbasichouseholdhygiene. Thepointofinclusivedecisionmakingrequirestakingintoaccountthediversityanddifference between countries, communities and interest groups. Philanthropy is exercised differently in variouspartsoftheworld,andthewelldevelopedphilanthropyoftheNorthequippedwithand drivenbypowerfuladvocatesnowadayshasprobablyalottolearnfromthecommunityand faithbasedphilanthropyoftheSouth,indigenousphilanthropyingeneralandparticularcultures ofgiving,too.

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LITERATURE
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Harmer,AdeleandCotterrell,Lin(September2005):Diversityindonorship:Thechanginglandscapeofofficial humanitarianaid,HPGReport20,seehere:http://www.odi.org.uk/resources/download/234.pdf,(AccessedJuly 2011) HelenaMonteiro,Helena(2006):BusinessintheCommunity:TheRoleofCorporationsinsupportingcommunity philanthropyinBrazil,CenteronPhilanthropyandCivilSociety,CUNY,seehere: http://www.idis.org.br/biblioteca/pesquisas/microsoftwordisfp_hmonteiro_paper.pdf/download,(AccessedJune 2011) Hodgson,JennyandKnight,Barry(2010):Morethanthepoorcousin?Theemergenceofcommunityfoundationsasa newdevelopmentparadigm,seehere: http://www.alliancemagazine.org/members/pdfs/morethanthepoorcousin.pdf,(AccessedJuly2011) HudsonInstitute,CenterforGlobalProsperity(2011):TheIndexofGlobalphilanthropyandRemittances2011,see here:http://www.hudson.org/files/documents/2011%20Index%20of%20Global%20Philanthropy%20and% 20Remittances%20downloadable%20version.pdf,(AccessedJune2011) J.PMorganandTheRockefellerFoundation(November29,2010):ImpactInvestments:AnEmergingAssetClass,see here:http://www.rockefellerfoundation.org/news/publications/impactinvestmentsemergingasset,(AccessedJune 2011) Kisil,Marcos(2006):CommunityphilanthropyorganizationsinBrazilAnewparadigmforcorporatecitizenship, Alliancemagazine,seehere:http://www.alliancemagazine.org/node/988,(AccessedJuly2011) Klein,Paul(June14,2011):ThreeGreatExamplesofSharedValuesinAction,ForbesOnline,seehere: http://blogs.forbes.com/csr/2011/06/14/threegreatexamplesofsharedvalueinaction/,(AccessedJuly2011) Lamont,James(May2010):AsAsiaemerges,sodoPhilanthropists,TheFinancialTimes,here: http://blogs.ft.com/beyondbrics/2010/05/19/asasiaemergessodophilanthropists/#ixzz1RPvsk4DA,(AccessedJuly 2011) Madden,KymDr.,Scaife,WendyDr.(2008):GoodtimesandPhilanthropy:GivingbyAustraliasAffluent,here: http://www.bus.qut.edu.au/research/cpns/whatweresear/documents/GoodTimesandPhilanthropyGivingByAustralias Affluent_March2008.pdf,(AccessedJune2011) Martin,Maximilian(2011):FourRevolutionsinGlobalphilanthropy.ImpactEconomyWorkingPaper,Vol.1,here: http://www.sanitationfinance.org/sites/www.sanitationfinance.org/files/11_Martin_Four%20Revolutions%20in%20G lobal%20Philanthropy_IE%20WP_1.pdf,(AccessedJune2011) McKinseyandCompany(2008):GesellschaftlichenWandelgestalten,GlobalPhilanthropyInitiative,(inGerman) McKinseyandCompany(2008):GlobalSurveyThestateofcorporatephilanthropy,seehere: https://www.mckinseyquarterly.com/The_state_of_corporate_philanthropy_A_McKinsey_Global_Survey_2106, (AccessedJune2011) OECDDevelopmentCentre,Kharas,Homi(2010):TheEmergingMiddleClassinDevelopingCountries,WorkingPaper No.285,seehere:http://www.oecd.org/dataoecd/12/52/44457738.pdf,(AccessedJuly2011) Porter,MichaelE.andKramer,MarkR.(January01,2011):CreatingSharedValues,HarvardBusinessReview Salamon,Lester(2003):GlobalCivilSocietyAnOverview,CenterforCivilSocietyStudies,here: http://www.wingsweb.org/download/global_civil_society.pdf,(AccessedJuly2011) Salamon,Lester(2004ed.):GlobalCivilSociety,DimensionsoftheNonprofitSector,Volume2,KumarianPress

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Salamon,Lester(June2010):PuttingtheCivilSocietysectorontheeconomicmapoftheworld,AnnalsofPublicand CooperativeEconomics,Volume81,Issue2,(pages167210) Severino,JeanMichelandRay,Olivier(2009):TheEndofODA:DeathandRebirthofaGlobalPublicPolicy,CGD WorkingPaper167.Washington,D.C.:CenterforGlobalDevelopment Sidel,Mark(2008):DiasporaGiving:AnAgentofChangeinAsiaPacificCommunities?,seehere: http://www.asiapacificphilanthropy.org/files/APPC%20Diaspora%20Giving%202008_Overview.pdf,(AccessedJune 2011) Stabile,Tom(April11,2010):Architectsofasocialinvestmentdataengine,TheFinancialTimes,seehere: http://www.ft.com/cms/s/0/e297b7de440b11df923500144feab49a.html#axzz1R97OVcEY,(AccessedJuly2011) TheEconomist(Aug12,2010):Let'shearthoseideas,seehere:http://www.economist.com/node/16789766, (AccessedJune2011) TheEconomist(February18,2010):BRACinbusiness,seehere:http://www.economist.com/node/15546464, (AccessedJune2011) TheEconomist(February18,2010):BRACinbusiness,seehere:http://www.economist.com/node/15546464, (AccessedJune2011) TheEconomist(May122011):Thelessonsofphilanthropy:Givingforresults,seehere: http://www.economist.com/node/18679019,(AccessedJune2011) TheEconomist(November11,2010):Faith,hopeandcharities,seehere: http://www.economist.com/node/17461445,(AccessedJune2011) TheEconomist(September4,2008):Thefutureofaid:AscrambleinAfrica,seehere: http://www.economist.com/node/12060397/,(AccessedJune2011) TheWorldBankRatha,DilipandMohapatra,Sanket(February2011):PreliminaryEstimatesofDiasporaGiving, WorldBankPaper,MigrationandDevelopmentBrief14 TheWorldBankRatha,DilipandMohapatra,Sanket(February2011):PreliminaryEstimatesofDiasporaGiving, WorldBankPaper,MigrationandDevelopmentBrief14,seehere: http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934 1288990760745/MigrationAndDevelopmentBrief14_DiasporaSavings.pdf,(AccessedJune2011) TheWorldBankSulla,Olga(February27,2007):PhilanthropicFoundationsandtheirRoleinInternational DevelopmentAssistance,InternationalFinanceBriefingNote,NewSeriesNumber3,seehere: http://siteresources.worldbank.org/INTRAD/Resources/BackgrounderFoundations).pdf,(AccessedJuly2011) TheWorldBank(2011):MigrationandRemittancesFactbook2011,secondedition,here: http://data.worldbank.org/datacatalog/migrationandremittances,(AccessedJune2011) TheWorldBank(November2010):IssueBriefMigrationandRemittances,seehere: http://siteresources.worldbank.org/TOPICS/Resources/214970 1288877981391/Annual_Meetings_Report_DEC_IB_MigrationAndRemittances_Update24Sep10.pdf,(AccessedJune 2011) Timmins,Nicholas(November28,2010):Impactinvestmentaburgeoningassetclass,seehere: http://www.ft.com/cms/s/0/e875dda6fae611dfb57600144feab49a.html?ftcamp=rss#axzz16gPePUu9,(Accessed June2011)

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WilkinsonMaposa,Susan,et.al.(2005):ThepoorphilanthropistHowandwhythepoorhelpeachother,UCT GraduateSchoolofBusiness,here:http://www.impactalliance.org/ev_en.php?ID=14913_201&ID2=DO_TOPIC, (AccessedJuly2011) WilkinsonMaposa,Susan,et.al.(2009):ThepoorphilanthropistII.Newapproachestosustainabledevelopment, UCTGraduateSchoolofBusiness,here:http://www.gsb.uct.ac.za/clpv/files/Poor%20Philanthropist%20II_webres.pdf, (AccessedJuly2011)

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APPENDIX

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Table17:Sourcesofnonprofitsector,global,ca.19952000,excludingvolunteers;tablesortedby PhilanthropyPercent

Country
(34countries) Total Pakistan Uganda Romania SouthAfrica Slovakia Tanzania Spain Hungary Poland Colombia CzechRepublic Kenya UnitedStates India Peru Brazil Israel UnitedKingdom Sweden France Argentina Norway Ireland Australia Austria Finland Mexico Belgium SouthKorea Japan Germany Italy Philippines Netherlands

Philanthropy*
$billion 113.4 0.13 0.04 0.03 0.58 0.07 0.05 4.85 0.26 0.41 0.26 0.12 0.06 73.14 0.39 0.16 1.22 1.12 6.88 0.96 4.3 1 0.39 0.35 1.25 0.38 0.36 0.1 1.2 0.87 6.73 3.21 1.1 0.04 1.45 Percent 13%** 43% 38% 27% 24% 23% 20% 19% 18% 16% 15% 14% 14% 13% 13% 12% 11% 10% 9% 9% 8% 8% 7% 7% 6% 6% 6% 6% 5% 4% 3% 3% 3% 3% 2%

Government
$billion 539.3 0.02 0.01 0.06 1.05 0.06 0.07 8.27 0.39 0.63 0.26 0.34 0.02 172.92 1.09 0.23 1.77 7 36.53 3.04 33.12 2.6 1.97 3.87 6.18 3.16 2.2 0.13 19.64 4.8 117.05 60.73 14.4 0.06 35.64 Percent 34% 6% 7% 45% 44% 22% 27% 32% 27% 24% 15% 39% 5% 31% 36% 18% 16% 64% 47% 29% 58% 20% 35% 77% 31% 50% 36% 9% 77% 24% 45% 64% 37% 5% 59%

Fees
$billion 680.3 0.16 0.06 0.04 0.76 0.16 0.14 12.63 0.78 1.58 1.21 0.4 0.33 320.9 1.54 0.89 8.41 2.82 34.89 6.6 19.83 9.74 3.28 0.79 12.38 2.72 3.51 1.32 4.76 14.1 134.92 30.51 23.85 1.01 23.31 Percent 53% 51% 55% 29% 32% 55% 53% 49% 55% 60% 70% 47% 81% 57% 51% 70% 74% 26% 45% 62% 35% 73% 58% 16% 63% 44% 58% 85% 19% 71% 52% 32% 61% 92% 39%

Total
$billion 1333.3 0.3 0.1 0.1 2.4 0.3 0.3 25.8 1.4 2.6 1.7 0.9 0.4 567 3 1.3 11.4 10.9 78.2 10.6 57.3 13.3 5.6 5 19.8 6.3 6.1 1.6 25.6 19.8 259 94.5 39.4 1.1 60.4 Percent 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Source:JohnsHopkinsUniversity(CCSS),ComparativeNonProfitSectorProject(2010) *Note:Thisincludesdomesticandinternationalphilanthropy **Rowtotalandvalues13percent,34percentand53percentrespectivelycorrespondtothepiechartonpage18;howeverthe countrybreakdowninthistableisbasedonadifferentandlessuptodatedatasetthantheaggregateforthepiechart(therefore slightdifference) 134

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PhilanthropyPercent Country
(34countries) Total Romania Tanzania Sweden Pakistan Uganda Norway France SouthAfrica Philippines India Spain Germany Finland CzechRep. UnitedKingdom UnitedStates Slovakia Colombia Netherlands Kenya Australia Austria Argentina Hungary Poland Italy Ireland Belgium Mexico Israel Brazil SouthKorea Peru Japan

Table18:Sourcesofnonprofitsector,global,ca.19952000,includingvolunteers;tablesortedby

Philanthropy*
$billion 429.7 0.2 0.3 11.2 0.2 0.1 4.6 46.2 1.5 0.8 1.7 11.9 51.7 3.0 0.3 28.9 181.8 0.1 0.5 18.5 0.1 5.7 1.8 3.7 0.3 0.6 9.4 1.1 5.4 0.3 2.0 2.0 3.3 0.2 30.2 Percent 31% 67% 62% 54% 53% 52% 47% 47% 46% 43% 40% 36% 36% 35% 30% 29% 27% 25% 25% 24% 24% 24% 23% 23% 21% 20% 20% 19% 18% 18% 17% 16% 15% 15% 11%

Government
$billion 539.5 0.1 0.1 3.0 0.0 0.0 2.0 33.1 1.1 0.1 1.1 8.3 60.7 2.2 0.3 36.5 173.0 0.1 0.3 35.7 0.0 6.2 3.2 2.6 0.4 0.6 14.4 3.9 19.6 0.1 7.0 1.8 4.8 0.2 117.2 Percent 26% 21% 13% 15% 5% 6% 20% 33% 32% 3% 25% 25% 43% 25% 32% 36% 26% 21% 13% 46% 4% 25% 41% 16% 26% 23% 30% 68% 66% 8% 59% 15% 22% 18% 42%

Fees
$billion 679.8 0.0 0.1 6.6 0.2 0.1 3.3 19.8 0.8 1.0 1.5 12.6 30.4 3.5 0.4 34.9 320.4 0.2 1.2 23.3 0.3 12.4 2.7 9.7 0.8 1.6 23.9 0.8 4.8 1.3 2.8 8.4 14.1 0.9 134.9 Percent 42% 13% 25% 32% 42% 43% 33% 20% 23% 54% 35% 39% 21% 40% 38% 35% 47% 54% 62% 30% 72% 51% 36% 61% 53% 57% 50% 14% 16% 75% 24% 69% 64% 68% 48%

Total
$billion 1649.6 0.3 0.6 20.8 0.4 0.1 9.9 99.2 3.3 1.9 4.4 32.8 142.9 8.7 1.1 100.2 676.0 0.3 1.9 77.4 0.5 24.3 7.6 16.0 1.5 2.8 47.6 5.7 29.8 1.8 11.8 12.1 22.2 1.3 282.3 Percent 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Source:JohnsHopkinsUniversity(CCSS),ComparativeNonProfitSectorProject(2004) *Note:Thisincludesdomesticandinternationalphilanthropy

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Table19:Estimateddiasporasavings,2011 Source:WorldBank,MigrationandDevelopmentBrief14,February2011

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Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

Country Mauritius Switzerland Latvia NorthernIreland Bangladesh SouthKorea Haiti Kenya Lithuania Bhutan Mongolia VaticanCity Germany Netherlands Australia Denmark England Italy Mozambique Swaziland Ghana Greenland Ethiopia Tunisia Colombia Panama Qatar Bulgaria Scotland Philippines Finland Taiwan Gabon Senegal Pakistan

Average$grantmillion 4.14 3.00 2.67 1.24 1.09 0.86 0.74 0.62 0.56 0.55 0.49 0.45 0.45 0.44 0.42 0.41 0.39 0.36 0.35 0.35 0.34 0.33 0.32 0.31 0.30 0.30 0.30 0.29 0.29 0.29 0.28 0.28 0.28 0.27 0.27

Table20:Top35countriesreceivingU.S.grants, byaverage$amountpergrant,period2003 2010

Source:U.S.FoundationCentre, InternationalGrantsDatabase

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Table21:OfficesofU.S.foundationsinthepoorestdevelopingcountries Source:WorldBank,GlobalProgramsandPartnershipswebsite,andstaffanalysis INTERNATIONALFINANCEBRIEFINGNOTE,NewSeriesNumber3,February27,2007:PhilanthropicFoundations andtheirRoleinInternationalDevelopmentAssistance

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Table22:Interviewquotesandcategorisation,MarkKramerandMichaelPorter(sourceseenotesatbottomoftableand footnotes)

Mark Kramer highlighted in The Economist interview how he sees Corporate Social Responsibility(CSR)comparedtoCreatingSharedValue(CSV):

Type

Corporate Social Creating Shared values, CSV Responsibility,CSR

About not getting caught Creatingvaluenotonlyforthe doingsomethingwrong business (profit) but also for thecommunity Rethinkthevaluechain,open up new products and new markets ...aim to differentiate in a crowdedmarketplace ...not adding cost but finding new ways to promote new marketsandnewproducts Differentiating your company based on the social value proposition of your immediate surrounding/ community Identify the social issues that are at the core of the companys business and improvesociety The shared values concept is very much of selfinterest, in theinterestofthecompany.If you think about purchasing coffeedoitinadifferentway Productivity increases are probably in many cases

Coremotivation

E.g.worryingaboutthelabour conditions in your supply Measure chain; Reducing the companys environmental footprint;etc. ...external pressures This type is driven mainly (governments, activist by... organisations,etc.) ...aconstraintorlimitationon business,preventingyoufrom Perceivedas... doing what you might otherwiseliketodo,addingto thecostofyourbusiness Differentiating your company bydoinggood

Gain

Message and reputational Be overall more sustainable marketing andresponsible

Problem

Despite great and successful CSR initiatives, they often

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Type Corporate Social Creating Shared values, CSV Responsibility,CSR
appear random (in topic, reach and impact) and, literally,aslipstickonapig(as TheEconomistfamouslyputit once) Randomness of CSR: Why should you be spending the shareholders money deciding that you want to support breast cancer versus habitat for humanity? (Quote MichaelEPorter) CSRisadeadendandweare ready to move on. The real impact is not by the CSR department or the corporate giving, but by looking at the company itself and what they doandhowtheycanimprove the social impact of their productsandservices(Quote MichaelEPorter) CSR became standard for larger corporations and therefore has weak competitiveadvantage Competitiveedge minimal (while the Novartis example might be one of the betterexamples) CSV might just be a new way of giving companies a clean face after the most severe reputational crisis that the corporate world could have possibly imagined (the recession as triggered by corporategreed)

These shared values dimensions of a companys strategyaregoingtobesome of the greatest differentiators that companies are going to be able to mobilise in the coming years (Quote by MichaelEPorter)140

(All insets in column 2 and 3 are quotes from Mark Kramers The Economist interview unless otherwisestated;howeverthecategorisationincolumn1isourowninterpretation)141

140

SeethevideointerviewwithMichaelE.PorteronHarvardBusinessReviewWebsite,here: http://hbr.org/2011/01/thebigideacreatingsharedvalue/ar/1,(AccessedJuly2011) TeawiththeEconomistinterviewwithMarkKramerinJuly2011,seeherethevideo: http://www.economist.com/blogs/multimedia/2011/04/mark_kramer_shared_value,(AccessedJuly2011)

141

140