Adam Pickering, CAF


Originally published on CAF's website. To access the full report, visit here.

EXECUTIVE SUMMARY

Civil society finds itself at an inflection point. The next decade will see billions of people elevated from poverty and the creation of a vast new population of aspirant middle class people in emerging economies in the Global South. If the right conditions are in place, these people could become the driving force behind a global upswing in the fortunes of civil society, helping it to address some of the most pressing issues of our age. This report details the enormous potential of that engagement and finds that by 2030, were the world’s middle classes to dedicate just 0.5% of their spending to charitable causes it would amount to an astonishing $319 billion per year for much needed causes. However, it also identifies a number of barriers that need to be overcome if we are not to waste this one-off opportunity. Finally, this report makes a series of recommendations for how this can be achieved.

Charities Aid Foundation’s (CAF) Future World Giving (FWG) project, which ran from 2012 to 2016, attempted to build on existing and new research to identify what governments could do to encourage more people to give. The initial report of the project; Unlocking the potential of Global Philanthropy[1], focused on trying to quantify the scope for growing global philanthropy by looking at economic and demographic trends and projections. The report identified a gap in contemporary thinking about the potential for a growing middle class to engage in giving and fuel the development of locally founded, accountable and resourced civil society which could be key to sustainable and equitable development. This report provides an indepth update of that research and simultaneously launches a new campaign - Groundwork for Global Giving - to develop the charitable infrastructure required to ensure mass engagement in charitable giving across the world. The project identifies the following key themes;

We have a one-off opportunity to create a global culture of giving

We are living through the greatest transition from poverty to relative affluence in history. Projections by the Brookings Institute suggest that up to 2.4 billion people could enter the middle classes globally by 2030 and that their spending could almost double from $34 trillion to $64 trillion over the same period. However, the future will be much brighter if this new upwardly mobile generation embrace a culture of giving. If this new aspirant middle class were to dedicate just 0.5% of their spending – about the same as people in the Republic of Korea and just over a third of what people in the USA give on average - to charitable causes it would generate an astonishing $319 billion a year in funds for civil society organisations (CSOs).

The vast majority of this newly affluent population reside in fast growing middle and lower-middle income nations. However, whilst giving is growing in many of those countries, much more needs to be done to catalyse that growth and ensure that it is sustainable.

We need to focus on mass engagement in giving

Western countries with established civil societies enjoy high rates of giving at all levels of society. Indeed, in some cases, the least wealthy give away the highest proportion of their disposable income. This drives an expectation that the wealthy ought to give back. However, too often, we try to impose a top down approach when thinking about emerging economies in which we see the very wealthy as the obvious starting place to resource civil society. The reality is that, without a pervasive culture of giving, countries lack the necessary social contract to compel wealthy donors. The solution is to prioritise mass engagement. This also has the advantage of ensuring that civil society is reflective of society and locally trusted.

Sustainable development cannot be achieved without building civil society support

Sustainable development cannot be achieved without a strong, vibrant and locally supported civil society that can expose abuse, hold politicians to account, drive better policymaking and provide a pressure gauge for the constructive release of social dissent. Building an inclusive culture of giving locally will not only help to resource the delivery of the sustainable development goals (SDGs), it will help ensure that the public are engaged in the process, provide an accountability mechanism and help to deliver on Goal 16: “Promote just, peaceful and inclusive societies.”[2]

We need to build trust in civil society to encourage giving

We are experiencing a global crisis in institutional trust. Civil society is both a victim of this trend and a crucial tool for addressing it. The way legal status is awarded to CSOs, the standard of regulation and the fairness, openness and ease of access to a regulated space for CSOs has a determinate impact of the level of public trust, and therefore engagement with civil society. The job of continuously pushing for improvements in this system whilst educating both CSOs and donors about governance is crucial. Increasing funding for this work, ideally through local charity and philanthropy support organisations, is therefore essential.

The independence of civil society needs to be buttressed by local support

Civil society can play an important role by acting as a ‘critical friend’ to government. However, without legal protection and carefully defined rights and freedoms for CSOs, there are no guarantees that governments both present and future will not act to quash criticism and silence civil society. As such, work must be undertaken both to build an understanding of the value of civil society’s voice for good governance, and to construct a legal framework that provides appropriate expectations, rights and obligations on both sides of the relationship. Whilst making this case is important, key to protecting civil society from attacks is simply increasing the level of committed local support of, and engagement with, CSOs than through any other measure.

More needs to be done to motivate and incentivise donors

Tax incentives or reliefs tell the public a story about what the state considers to be sufficiently in the public interest to be worth foregoing revenue on. For this reason, every country with a strong culture of giving offers tax incentives which help to encourage people to give money to charity. However, the way incentives are offered, the process for claiming them, the progressiveness of the system and its simplicity all have a bearing on the extent to which they motivate greater generosity over and above their cost to the state in lost revenue (price elasticity). As such, undertaking research, working with governments to improve incentive systems, offering services to make the process more straight forward, and educating donors and CSOs are all crucial to building a culture of giving.

International aid and philanthropy need to think local

Governments which are net providers of aid, as well as philanthropic funders, need to move beyond funding large international non-governmental organisations (INGOs) to operate or issuing grants in the developing world. Indeed, even providing funding directly to domestic operational entities may not offer the maximum impact compared with an approach that results in domestic giving which increases with (and helps to boost) economic growth. As such, aid agencies should ─ both for optimal development outcomes and also greater value for taxpayer money and a longer-lasting legacy – look to fund activities which aim to improve the environment for giving. Upon ending aid to a particular country, aid agencies should aim to leave in place both an enabling legal environment through technical assistance, but also philanthropy infrastructure and charity support bodies that can continue this work. Transitional funding should be applied to ensure this takes place.

To read more about the key recommendations and details of the report, visit Groundwork for Global Giving.