Humanitarian and International Development NGOs

While both the Homi Kharas/Blum Brookings summary and the Index of Global Philanthropy focus solely on quantity, the Center for Global Development’s Commitment to Development Index (CDI) attempts to incorporate aspects of aid quality.  Since ”aid is about more than money,” the CDI rewards donor selectivity and penalizes tied aid, project proliferation, donor fragmentation, and lack of coordination. 

Trying to integrate measures of quality alongside quantity is - it seems to me - critical, however difficult, and puts the conversation where it needs to be.  It would be interesting to systematically apply similar standards to private funds.  How would NGOs fare?  I often encounter the implicit assumption (and am guilty of it myself) that funds are better deployed by NGOs and private philanthropy than government agencies, but it would be good to use benchmarks to compare. 

Like the Index of Global Philanthropy, CDI also recognizes that “development is about more than aid,” and so it incorporates six other components: trade, investment, migration, environment, security, and technology.  Since its mission is to compare national governments in their commitment to development, it measures the impact of a country’s public policies on these factors. 

This means that the U.S. scores fairly low on the migration component, since its policies admit legal immigrants and refugees at low rates relative to other countries.  I think this more accurately gauges U.S. involvement than the absolute dollar amount of remittances used by the Index of Global Philanthropy.  But it also means that the CDI only estimates the impact of tax policies in the U.S. in stimulating private giving, nowhere accounting for the recent phenomenal growth in private aid described so well by Kharas, Brookings, and the Index of Global Philanthropy that might have significant long-term implications for the aid endeavor. 

The Index of Global Philanthropy 2008 (mentioned in my previous post) tries to take a comprehensive approach to tracking funding flows and has developed a measure called “U.S. economic engagement.”  It includes official development assistance (ODA); private giving through foundations, NGO/private voluntary organizations, universities and colleges, and faith-based groups; private capital flows; and remittances from immigrants back to their home country.

While remittances undeniably have developmental impact, and are philanthropic in nature, I think it’s wrong to include them in a philanthropic index focused on development.  Most remittances go from family member to family member, while the other categories track flows between unrelated entities.  I don’t think we’d consider it development assistance (or “economic engagement”) from France to the U.S. if I were living and working in Paris and sending money home to support my parents or siblings.   The fact that the U.S. does not consider many of those sending the money to be “legal” gives the U.S. credit for stimulating development in other countries where little is due.  

Some remittances are for specific community purposes, such as the building of a local church or school.  These seem more analagous to the other types of funding measured by the Index, but would be very difficult to separate out.  The Index could include the funds that flow through hometown associations (organizations of immigrants based in the U.S. that raise funds for their hometown)  but I wonder if this would be significant. 

While it might be argued that remittances are more efficient at improving human development than aid, this demonstrates that development could occur more rapidly and effectively if labor were able to cross borders more freely.  I don’t think it counts as an increase in U.S. economic engagement supporting development. 

CORRECTION:  In my last post, I incorrectly stated that the Index did not provide its methodology for avoiding the double-counting of private foundation grants within NGO budgets.  It’s on page 69.  Basically they looked at grants listed by the Foundation Center that went to the 200 largest NGOs, and subtracted out those grants meant to be used in developing countries. 

The private giving numbers cited in the Brookings report of the last post come from an essay by Homi Kharas, The New Reality of Aid.  Kharas sifts through the published data to estimate just how much money given as “development assistance” is actually reaching the poor.

By his estimation, once debt relief (which is really a transfer between one branch of a donor government to another), emergency and technical assistance, and administrative overhead are discounted, only about 37% of the total aid given by the 22 traditional Western government donors can be considered “net development aid.”  Thus, out of the more than $100 billion that these governments publicized as aid in 2005, only about $38 billion was left over to be put to use in poor communities. 

In similiar fashion, Kharas tries to assess how much in private contributions is reaching the ground.  He groups together private foundations like Gates and Rockefeller with international development NGOs like Oxfam and CARE.  While in doing so, he admits to trying to avoid double-counting grants from the private foundations that go to the NGOs in question, but doesn’t elaborate on the methods used.   It’s also unclear if his analysis subtracts out the government support that NGOs receive (government funds made up 61% of CARE USA’s budget for FY 2005-2006, for example).  And where is embedded giving - i.e., funds collected by (Product) RED and other point-of-sale fund raisers - which is notoriously hard to track?

The Index of Global Philanthropy 2008, published by the Center for Global Prosperity at the Hudson Institute, arrives at similar figures, at least for U.S. private philanthropy (though no hint either how they avoid double-counting among foundations, NGOs, and faith-based groups).   It’s probably safe to say that the trend is unmistakable: private giving is gaining on and maybe even outstripping official government assistance.   How much of either is really reaching the poor is still a guess at best.