August 21, 2002
by Carol Adelman
At the upcoming World Summit on Sustainable Development in Johannesburg later this month, the U.S. will again be pilloried for being stingy on foreign aid. U.S. government aid as a percentage of GNP does indeed rank last. Denmark, Norway, the Netherlands, Luxembourg and Sweden are lauded for being on top.
But the figures, counting only public sector contributions, are deceptive. Americans help others abroad -- just as they do domestically -- primarily through private donations, foundations, corporate and university giving, religious offerings, and direct help to needy family members. Scandinavians and other Europeans give abroad primarily as they do at home -- through government.
So, at the guilt-fest in Jo'burg, the U.S. delegation should tell the real story of American generosity abroad. While there are no complete figures for international private giving, conservative estimates from surveys and voluntary reporting are impressive: Americans privately give at least $34 billion overseas -- more than three times U.S. official foreign aid of $10 billion.
International giving by U.S. foundations totals $1.5 billion per year, according to the latest figures. Even this shortchanges the "mega-donors" such as the Bill and Melinda Gates Foundation, because its biggest outlays came after the latest figures were tabulated.
Corporate philanthropy has also become a significant part of the total. Once disallowed by U.S. courts, charitable giving by U.S. businesses now comes to at least $2.8 billion annually. And cooperation between corporations and foundations has become common: When Merck gave $50 million for an HIV/AIDS program in Botswana, it was matched by the Bill and Melinda Gates Foundation.
This doesn't begin to touch the work of America's NGOs, whose missions help the needy around the world. Groups like Catholic Relief Services and Save the Children give a whopping $6.6 billion in grants, goods and volunteers. Religious overseas ministries contribute $3.4 billion, including health care, literacy training, relief and development.
Even the $1.3 billion U.S. colleges give in scholarships to foreign students is more than Australia, Belgium, Norway, or Switzerland gave in total foreign assistance in 2000.
There's another way that the U.S. contributes as well, one that speaks volumes about this country's real gift to the world. As Mexican President Vicente Fox says, the "real heroes" are immigrants who send money to families back home. Personal remittances from the U.S. to developing countries came to $18 billion in 2000 and provide, in Mexico for example, the third largest source of foreign exchange. U.S. Treasurer Rosario Marin, who sends money to her aunt in Mexico, calls remittances "one of the most important transactions between our two countries."
Some international economists have seen that such remittances should be considered a central part of any development strategy. But overturning the status quo won't be easy: Former president Jimmy Carter has said he hopes these remittances and other private donations won't be used to excuse what he considers American stinginess on foreign aid.
Yet such private giving is a much faster and more direct way of helping. Remittances don't require the expensive overhead of government consultants, or the interference of corrupt foreign officials. Studies have shown that roads, clinics, schools and water pumps are being funded by these private dollars. For most developing countries, private philanthropy and investment flows are much larger than official aid.
This is good news to them, and to most Americans, who are skeptical of official foreign aid. While the public supports U.N. and government aid for humanitarian crises, only 9% want our foreign aid to increase while 47% want it cut.
The skepticism is sound: The three historical purposes of foreign aid -- humanitarian relief, security assistance, and economic development -- have been uneven in their degrees of success. Government humanitarian relief efforts have generally gone well, delivering food, medicines and shelter during crises. But other forms of assistance are not so reliable.
Consider security assistance: Foreign aid has helped solidify bases agreements, gained allies during the Cold War, and rallied support for the Gulf War and the war against terrorism. Yet, we are learning that the roots of terrorism have been nurtured by governments of some of our largest aid recipients, particularly Egypt, which receives $2 billion annually.
Likewise the impact of U.S. foreign aid on economic development. Our aid has trained thousands of foreign students and built thousands of kilometers of roads, bridges and sewage systems. Yet, without economic and political systems to sustain these investments, the investment has no long-term effect.
While foreign aid should continue to help countries in humanitarian relief, it must turn to partnerships with the private sector. Our best efforts on an official level will come through building lasting institutions in the countries we wish to help -- not lasting government contracts with Beltway consulting firms.
Official aid, at its best, should aim to work itself out of a job by encouraging local philanthropy and self-sufficiency. Our aid can foster open markets and societies abroad by supporting institutions which seek to liberalize politically and economically -- training in the rule of law, government transparency, free press, intellectual property. We must abandon the "donor" mentality and begin to consider ourselves a partner and a matchmaker for the developing world.
In Johannesburg, the U.S. delegation can answer the criticisms they will face with four additional key points. First, that our government gave more foreign aid, in absolute terms, than any other country in 2001, topping second-ranked Japan. Second, the U.S. has long provided the most foreign direct investment in developing countries, which creates real sustainability in economic development. Third, the U.S. provides the bulk of the world's R&D, which saves millions of lives with improvements in food and medicines. And, finally, we give far and away the most militarily, which helps make the world safe for economic growth and democracy.
Americans are a most generous people, clearly the most generous on earth in public -- but especially in private -- giving. For too long already, the percentage of U.S. official development assistance has hidden the real extent of giving which exemplifies the American spirit. We have much to explain, but nothing to apologize for, in Johannesburg.
Carol Adelman is a Senior Fellow at Hudson Institute and director of Hudson's Center for Global Prosperity. She served as a career foreign service officer for ten years and as an assistant administrator from 1988-1993 at the Agency for International Development (USAID).
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