This year, the Hudson Institute Center for Global Prosperity (CGP) presented the first analysis of philanthropic freedom across the world. The 13-country pilot study, Philanthropic Freedom, examines barriers and incentives for individuals and organisations to donate resources to social causes. We asked the Institute’s Deputy Director & Research Fellow, Yulya Spantchak, to introduce the study and explain why this report is of particular value to global philanthropy today.
Yulya Spantchak: The Center for Global Prosperity (CGP) at the Hudson Institute has focused its research over the last seven years on the magnitude and sources of global philanthropy to the developing world. Through its annual Index of Global Philanthropy and Remittances, first published in 2006, CGP has compared philanthropic flows to other financial flows, including private capital investment, government foreign aid, and remittances. CGP’s research shows that American global philanthropy exceeds US Government foreign aid. When remittances are added, total private giving is almost four times greater than government aid. Of all financial flows from the developed to the developing world, some 80% are private and only 20% are government, the reverse from 30 years ago.
WINGS: What exactly is Philanthropic Freedom and how does it relate to cross-border giving?
YS: Philanthropy is defined as an “activity performed with a goal of promoting well being.” More specifically, philanthropy researcher Helmut Anheier points out that philanthropy often involves the “voluntary use of private assets for the benefit of public causes.” It can take on many forms such as donors giving to non-profit organisations and charities; diaspora communities funding development projects in their home countries; corporations undertaking cause-related marketing campaigns as well as multi-million dollar single disease treatment programs; and individuals text messaging money to disaster victims through mobile phones and donating to overseas projects through internet giving websites. Regardless of what form private giving takes, the presence of philanthropic activities in a country is encouraged by fundamental liberties such as the ability of individuals and organisations to assemble, own property, and engage in voluntary transactions.
The basic indicators of whether and how easy it is to give within a country or across borders defines philanthropic freedom. CGP’s pilot study evaluated countries on three core indicators: 1) fairness and ease of non-profit registration, operation, and dissolution; 2) tax incentives; and 3) ease of cross-border financial flows.
Cross border giving is key to philanthropy, especially in countries where the domestic philanthropic sector has yet to develop fully. Furthermore, philanthropy’s integral role in creating NGOs and other sources of wealth and power outside of central government control helps democracies flourish by strengthening freedom of assembly and freedom of speech. This integral role of philanthropy in strengthening civil society can be best demonstrated by the current political events in Egypt and Russia. The current transition in Egypt has resulted in a tightening of civil society. To ensure control of non-profit organisations’ activities, the Egyptian government has proposed restrictive legislation to prohibit philanthropic flows to organisations working in Egypt. Similarly, in Russia, the government has enacted tight regulations on cross-border financial flows to limit the activities of non-profit organisations. Thus, the existence of philanthropic freedom in a nation can strongly impact the health of that nation’s civil society.
WINGS: Can you share the pilot study’s methodology?
YS: CGP used an expert opinion questionnaire to assess the three main categories of indicators mentioned above in 13 countries. This method has been used by other established indexes such as the Freedom House’s Freedom in the World. This method is also cost-effective, requiring far less resources than other techniques such as population surveys. Country experts were given a survey and asked to score each question on a scale of 1 to 5, with 5 being the most conducive philanthropic environment, and 1 being the least. Questions were designed to address the three key indicators: 1) fairness and ease of non-profit registration, operation, and dissolution; 2) tax incentives; and, 3) ease of cross-border financial flows. In addition to scoring, the experts were asked to provide a narrative explaining their score and providing additional information. Each country questionnaire was then also published as an individual report for containing details not included in the overall Philanthropic Freedom report.
Country experts were chosen by the project’s advisory board, which includes members from The Center on Philanthropy at Indiana University, the International Center for Not-for-Profit Law, Changing our World, Inc., the National Endowment for Democracy, the Brookings Institution, the Worldwide Initiatives for Grantmaker Support (WINGS), and the Department of Philanthropic Studies at VU University Amsterdam, the Netherlands.
Upon receiving the questionnaires from each country expert, CGP reconvened its advisory board to review the data. The review of the data was critical to ensuring that each country expert understood the scoring system in the intended way and provided an accurate description of the country’s philanthropic and civil society conditions. CGP plans to use the same methodology when it expands this pilot research from 13 countries to 40 countries to create a full Index of Philanthropic Freedom.
WINGS: What are the key findings of the study?
YS: This study is the first to measure philanthropic freedom across countries. Numerous details were revealed from the data collection. While many of the high income nations, such as the Netherlands, Australia and the US scored high, many emerging economies also scored well. For example, Mexico, South Africa, and India all had scores in the 4 range. These countries have regulations and tax incentives conducive to philanthropy, yet the laws on the books are limited by bureaucratic obstacles. Some countries scored similarly on one indicator, but varied drastically on others. For example, while Brazil and Egypt have similar domestic tax incentives, barriers to CSO operations and cross-border flows are significantly greater in Egypt. Egypt is joined by Russia and China with the most restrictions on philanthropic activity due to each government’s interference in civil society activities and cross-border flows.
WINGS: How does this pilot study speak to the power of networks—calibrating strategies, roles and relationships—within a context of philanthropic freedom and cross-border giving?
YS: This research is critical to improving the networks between civil society organisations and philanthropists. In many nations, there are many incentives to give, however government regulations or lack of transparency prevent a healthy civil society from existing and receiving such funds. The network component of our work spans beyond the philanthropic community, but to policy leaders, non-profits, and philanthropists in an effort to improve the giving environment.