Philanthropy

While 9/11 sits nearly seven years behind us, the consequences of new laws and unintended effects are still coming to light.  The public continues to debate the intricacies and politics of U.S. counterterrorism laws under the Patriot Act - from the ambiguity over what constitutes reasonable suspicion to whether electronic surveillance without a warrant is an acceptable policy of a democratic government. 

Last month, OMB Watch (a non-profit watchdog organization in Washington D.C.) and Grantmakers without Borders (a philanthropic network focused on social justice and international philanthropy) published a jointly-researched white paper, Collateral Damage: How the War on Terror Hurts Charities, Foundations, and the People They Serve .  The paper highlights the unintended consequences of counterterrorism laws on the U.S. non-profit sector and international philanthropy.  

1) In the wake of 9/11, counterterrorism laws have morphed to require only reasonable suspicion as the rationale for designating an organization as a supporter of terrorism.  Meaning organizations can have their property seized, they can have their finances frozen, and they can be put under electronic survelliance, if the Department of Treasury or Justice Departments find a reasonable suspicion of terrorist activity.  (For the legal minded:  Reasonable suspicion is more than a hunch, but considerably below preponderance of the evidence.  Ornelas v. United States, 517 U.S. at 695; Illinois v. Gates, 462 U.S. at 235.) 

Not knowing an organization that has come under reasonable suspicion, I’m curious as how the determination is made.  Too many wire transfers?  A vague mission statement?  Dealings with particular countries, in particular areas? 

2) International philanthropy suffers because the U.S. sector must operate under this suspicion. When a natural disaster hits, international relief organizations, such as the Red Cross and Red Crescent, are some of the first to respond in local crisis area - with money, goods, and expertise.  Collateral Damage discusses that after the 2004 tsunami, there were U.S. organizations operating in areas of Sri Lanka which were controlled by the Tamil Tigers, whom the U.S. had designated terrorist organization.  Under the counterterrorism laws, these relief organizations were at risk of violating prohibitions against providing “material support” to terrorists - when they were creating displaced persons’ camps and hospitals or providing food and water. 

Extensive infrastructure, strong financial backing, and large talent pools make the U.S. non-profit sector one of the best in the world - yet Collateral Damage made me (once again) ask the question of whether U.S. law allows the sector to exemplify the standard for international philanthropy.  The ability of counterterrorism laws to detract from a non-profit organization’s mission is completely at odds with what the sector seeks to achieve - and with how international philanthropy operates.  

In my pursuit to better understand international philanthropy, someone posed the question to me, “Should western style philanthropy really be a world-wide model (the standard)?”  I don’t know how to fully answer and it is a question that keeps me thinking.

The U.S. has a robust philanthropic sector - partially because the U.S. government doesn’t provide certain services as government does in other countries (health insurance, education, etc) and private philanthropy has been an alternative ways of getting funding into these areas.  (Side note: The Chronicle of Philanthropy discussed this week what impact the next president will have on the non-profit sector - different outcomes depending upon the candidate selected. (”The Next President Will Have Strong Nonprofit Ties”).)

It’s interesting to ponder how private philanthropy has grown in the U.S. as contrasted with other countries - what it looks like in Canada, why it has existed for hundreds of years in Japan, and the certain requirements it takes to qualify as Islamic.

As I think about philanthropy and growth of the sector, I ask myself whether there is a model that ’should’ be the standard or whether it is more useful to think expansively when considering the philanthropic sector.

Last week’s release of the 2008 Index of Global Philanthropy by the Hudson Institute, Center for Global Propsperity showed the power that private money is having on the world of philanthropy.  Citing that in 2006 government aid equaled less that 25% of the all economic dealings with developing countries - with private flows making up the majority of the money contributed. 

Numbers cited from ODA reflect an on-going discussion that developed countries should do more, to give more - with the U.S. giving the most in real terms in 2006 with $23.5 billion, but as a percentage of their GNI, Sweden, Luxembourg, and Norway lead the list.  The Index tributes the growth of public-private partnerships, rise of social entrepreneurship, increasing prominance of religous organizations, and effect of remittance flows to be the current driving forces in today’s global philanthropy. 

Focusing on U.S. economic engagement in developing countries, ODA equalled only 12% of the $192b in total economic engagement in 2006.  Potentially more interesting is that the traditional definition of philanthropy - foundations, corporations, universities, voluntary & religous organizations - only equated to 18% of this total.  Most of the economic engagement was found in U.S. remittances and U.S. private capital flows.

Two striking points emerge from this data:

1) Private flows are important - as many economists have highlighted in discussions over development.  Investing in developing countries is important for sustainable growth.  However, with its $23.5b the U.S. government (and governments around the world) have important roles to play.  Positive emphasis on this type of private investment does not mean that it can accomplish everything - government funding must continue (and must be encouraged to continue).

2) The Index’s correct citing of the rise of social entrepreneurship, venture philanthropy (and a myriad of other terms) is what makes this sector so interesting, right now.  Increasingly, new and innovative ways are being used to to reach beneficiaries in developing countries.  There is power behind private money - and yet, the rigors of accountability are still not firmly in place.  When you consider the very large spectrum of methods for giving, donating, and intervening - coupled with the infinite number of interest areas, it should be alarming that there are no clearly defined rules on what private money must disclose and no clear basis for how to behave.

Carol Adelman (Director, Center for Global Properity) talks about the significance of the 2008 Index in the Financial Times  -the need for this type of data and the challenge to improve the trends we are seeing.  From my vantage point, while we can’t yet claim to have the answers to solving all economic and development problems - more data in the area of global philanthropy is certainly welcome. 

And to restore any faith you’ve recently lost, the Index provides over seventy pages of the progress being made by dedicated people and organizations to solve the many areas of inequity in our world.