Philanthropy is More Effective Than U.S. Foreign Aid


In an attempt to balance the federal budget, policy makers have proposed reducing foreign aid. While this move has raised liberal eyebrows and voices, it may not be such a bad idea. Both altruistic and strategic goals of foreign aid can be better achieved through philanthropic grassroots efforts, which are easier to initiate, are less prone to corruption, and provide cultural exchange opportunities to their volunteers.

The work of the U.S. Agency for International Development (USAID) is a large portion of non-military American economic aid. My personal experience with USAID was in the Managua, Nicaragua, office where I was asking for a grant to fund a municipal recycling program. Ten thousand dollars would have been enough to give my newly formed nonprofit a good start. The gentleman on the other end of the table gave me a big smile when he heard my request. USAID was looking to fund projects closer to the million-dollar range. I left empty handed, in spite of having a shovel-ready project that fit USAID’s focus areas of environment, economic growth, health, and education.  

Soon thereafter, my organization, Comunidad Connect, brought together a large hotel, the municipal government of San Juan del Sur, and a German aid agency, all of which contributed a total of $20,000 to the municipal recycling program. Within a month, we hired 12 people and began collecting over two tons of plastic bottles on a monthly basis. We partnered with the Nicaraguan ministry of education and many local businesses to bring environmental education to more than 400 students and more than 3,000 residents of San Juan del Sur. The program has since then expanded to rural areas and other municipalities. In a word, it has been very successful in achieving USAID’s goals without tapping into any of their resources.

In a realpolitik world where “aid” is a euphemism for “development,” which itself is a euphemism for exploitation, I don’t regret not receiving support from USAID. If a cut in its budget can reduce American long-term debt, then I would say it’s a good place to cut. Many USAID projects do not account for the needs or the wishes of the local populations and are not concerned with long-term sustainability. Instead, they are developed to support American economic and military interests and provide a profit to American contractors. The last factor in the equation is the top-level corruption in the recipient country that usually clears the way for the projects. If you’re skeptical, I recommend Confessions of an Economic Hitman by John Perkins. On the other hand, small nonprofits work collaboratively with local residents, identifying impacts on the community, economy, and environment, in an effort to maximize the net benefit of their work. In addition, because they aren’t driven by the profit motive, they do not have the pressure to “grease the wheels.”

Furthermore, many international nonprofits like Comunidad Connect welcome American volunteers who participate in the implementation of their projects. The cultural exchange facilitated by these volunteer experiences is a much more effective strategy for curbing extremism and anti-American sentiment than faceless megaprojects, like hydro-electric dams, which often encounter local opposition due to their environmental impacts and encroachment onto the local way of life.

The amount of foreign aid the U.S. government gives out every year is impressive, but American philanthropy eclipses this amount. In 2008, American philanthropy to developing nations totaled $37 billion compared to $27 billion in Official Development Assistance that year. Nearly a third of the philanthropic contributions came through private organizations. So, the resources for nonprofits are out there. Not only does this type of aid go directly to its causes, as opposed to the trickle down mega-projects implemented by USAID, it also improves the battered image of the United States abroad.

The key to leveraging the efforts of small grassroots organizations is communication within the nonprofit sector. This is the reason why Comunidad Connect joined a number of other organizations with ties to Syracuse University in a project called Orange Impact. Together we hope to water the roots of development rather than sprinkle water on the top branches where it evaporates before trickling down.

Photo Credit: USAID_IMAGES