Let philanthropy help find a way at home and abroad

Could encouraging more philanthropic behaviour help this country, not just with social problems at home, but also in reducing the need for government spending abroad?

Help is needed, but can private individuals do more?
Rory Broomfield
On 31 August 2011 12:19

Over this past weekend we have seen the Government urging private investors to help poor families affected by crime and poverty.

The announcement of the Social Impact Bond programme should be welcomed in its attempts to encourage philanthropic behaviour in the UK and tap into its longstanding traditions in this regard. However, could encouraging more philanthropic behaviour help this country, not just with social problems at home, but also in reducing the need for government spending abroad? 

Two weeks ago Andrew Mitchell had a much publicised trip to Mogadishu, the first trip of its kind by a UK Secretary of State to the city in 18 years. His trip was, however, more than the PR coup that the BBC said that it might have been. Instead it represented the UK Government’s commitment to the region and international development in general.

Nevertheless, this commitment comes with a £7.8bn per year government budget, which has been ring-fenced since the 2010 General Election. At a time when we are seeing fears over the extent of the deficit, whether the Chancellor will meet his deficit target and over the UK’s AAA+ credit rating, should we not try and further incentivise private giving abroad? 

Governments currently play an influential role in international development. Bill Gates, one of the world’s most famous philanthropists, said in an interview with Justin Webb on the Today programme that because of its scale, the United States Government is dramatically larger than all philanthropy and can fulfill a need that society has identified.

However, even though the US Government is the largest in the world, US citizens gave $36.9 billion in 2009 to developing countries, outspending its Government by more than $10bn. This signals that even when the Government is large, philanthropist giving on particular causes can be larger. 

The UK Government still gives a lot more per capita than the US Government does (although the US’ Overseas Development Aid (ODA) budget is larger in absolute amounts) but UK private donations for overseas causes amounted to £2.5bn in 2010, approximately a third of the UK's overseas budget.

Andrew Mitchell has tried to encourage private investment by releasing plans on how he wants aid money to directly fund businesses in poor countries. But why stop there? The UK does have a gift aid arrangement to help giving to NGOs but why not allow individuals more opportunities to give to social programmes or even create them for themselves?

When the Government is facing questions over its deficit reduction programme and private individuals are seeing pictures of misery and dismay in places like East Africa, and the apparent shortage of resources in Libya, shouldn’t private finance be helped to find a way abroad through schemes like the Social Impact Bonds as well as at home?

After all, this might reduce direct government spending and help people extend the traditions of Rowntree and Barbados abroad. 

Rory Broomfield is a communications consultant. He tweets at @rorybroomfield.

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