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Karol C. Boudreaux: Charitably inclined Americans contribute generously abroad

Karol C. Boudreaux

Published: Friday, Dec. 3 2010 12:00 a.m. MST

Editor's note: Karol C. Boudreaux is a senior research fellow at the Mercatus Center at George Mason University and lead researcher for Enterprise Africa!, an international initiative to promote successful business development in Africa. She is an internationally recognized expert on the role played by private institutions to alleviate poverty and promote prosperity. Boudreaux will be contributing her analysis monthly to the Deseret News on effective care for the poor.

Charitable giving is a characteristic that describes most Americans. A recent study by Indiana University shows that Americans gave just over $300 billion to charitable organizations in 2009. Seventy-five percent of this money came from individuals like you and me, making Americans the most charitably inclined people in the world.

And America's poor are themselves exceptionally charitable. In fact, a 2007 study 2007 study found that people making less than $20,000 per year gave over 4 percent of their income to charitable purposes, in comparison to those making over $90,000, who gave just over 2 percent of their income.

Interesting, then, that Americans should be accused of being stingy. Specifically, critics have charged that the U.S. is miserly when it comes to helping people in the developing world. Currently, the U.S. federal government gives approximately $26 billion (0.2 percent) of our gross national income (GNI) to support development efforts around the world. This money often comes with bureaucratic stipulations and measurements that must be met in order to secure this government-to-government funding. But critics argue that all economically developed nations should be giving around 0.7 percent of their GNI to development efforts.

Critics, however, fail to realize that this $26 billion only takes into account the U.S. government funds that are transferred to developing nations. This sum does not recognize the enormous amount of money that Americans also give outside the channel of official government spending. In addition to what the federal government provides in foreign aid from our taxes, Americans contribute directly from their wallets to international charitable organizations. They donate time to build houses for the poor or displaced in other countries. American churches, corporations and foundations support numerous projects overseas. And American colleges and universities give scholarships and other educational support to foreign students. All of this giving and support directly helps people on the ground in developing nations.

So, how much money does America really give to the developing world? In addition to the $26 billion of government-sponsored aid, the Hudson Institute's Center for Global Prosperity reports Hudson Institute's Center for Global Prosperity reports that in 2009 Americans gave an additional $37 billion to support private philanthropy overseas. And as impressive as this figure is, it pales in comparison to the amount of money that people in America are sending directly to family and friends in other parts of the world. In 2009, over $96 billion was transferred from individuals in the U.S. to individuals in other nations, and it is entirely private and voluntary giving.

Oh, and did I mention that this kind of funding comes with no strings attached, with no bureaucratic overhead? We might think of these transfers from family and friends as the most direct, but in some ways the most accountable, form of foreign aid. For example, Uncle Joe sends $100 a month to his brother in Peru. Brother Ramon uses the money to repair the family home, purchase inventory for his business, send his children to school and support his mother and father. If Ramon doesn't use the money wisely, Joe can stop sending it, he can send less or he can instead send the money to his more dependable sister Luisa. This money is a vital lifeline for families of immigrants and for communities in their native countries.

When we add the additional sources of foreign aid donations, we discover that Americans gave at least a whopping $161 billion in 2009. This is 1.12 percent of our GNI: well above that 0.7 percent target figure.

At this holiday season, as they do throughout the year, Americans live up to one of their truly American characteristics — they give.

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