Humanitarian and International Development NGOs

While I have some qualms about the methodology behind the data, it seems clear that private resources for international development are growing rapidly, and are beginning to rival official development aid (ODA).

This could portend a shift in the relationships between NGOs and the governments and key multi-lateral institutions that traditionally set the framework for how development aid works. As I mentioned in the previous post, increased scale means power to influence an agenda.

These private resources are dispersed among different sets of groups. There are private grantmaking foundations, NGOs, church missions, and faith-based organizations. The Gates Foundation alone is responsible for a significant portion of the growth, and the interests of other mega-philanthropists in reducing extreme poverty could quickly add up.

Whether there exists enough of a common perspective and agenda among these groups to put them in the driver’s seat of development remains to be seen. Is there a day coming when governments will see themselves as trying to leverage the money being made available through private sources, rather than the other way around?

Complicating matters is the entry of new players.  While historically ODA has been the domain of the 22 OECD countries, middle-income countries are increasing the amount of development assistance they are making available.

China, for instance, is investing significant sums in Africa.  What does this mean for the western philanthropic dollars and NGOs at work there?  Especially when China’s money has fewer strings attached (theirs is not an anti-corruption or strengthening local governance agenda) and they’re happy to invest in basic public infrastructure that is sorely needed.

Development aid is becoming an increasingly fragmented, competitive marketplace while more money enters the system.  The interests of a wide array of donors and influential actors are jockeying for position.  Harnessing this and using it to improve the impact on people’s lives in developing countries will be a challenge indeed.  NGOs should seek to play a leadership role as these shifts occur, but to be a positive force will require collaboration as well as taking risks that give voice to the aspirations of the people they are serving in the poorest communities around the world.

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.