Topics: News, Canadian Charity Law, Global Giving, Canadian Charity Statistics, Ethics and Canadian Charities
The US-based Hudson Institute has released its 2010 Index of Global Philanthropy and Remittances. It contains lots of statistics about official development assistance (ODA), international philanthropy and remittances. On the plus side if you add ODA, international philanthropy and remittances together Canada scores second to Sweden in terms of overall GDP spent, with Canada spending 1.26% of GDP. “Canada jumps from fifteenth to second place, mainly as a result of the large remittance outflows from Canada to developing countries, which alone make up .83% of Canada’s G.N.I. [Gross National Income]” (see page 15 of the report)
Basically individual remittances are the most important reason why Canada did so well. People sending money back to their family, friends and communities. What that means is that a group which is largely made up of poor and lower middle class people in Canada, some of whom are not even Canadian citizens, sending funds back to their relatives and friends are the most important part of Canada’s “generosity”. This is more than a little embarrassing. Remember that those people sending funds back do not receive any tax incentives as this is not a charitable contribution. Canadian remittances were at 12.2billion (pg. 63) Remittances from Canada were the third largest after remittances from the US and UK. (page 61)
The report notes with respect to remittances and their effect on development:
“Remittances in development
Research has linked remittances with poverty alleviation and increased expenditures on human capital. New research also suggests that remittances act as a form of insurance for households in countries susceptible to natural disasters or civil crisis. In Ethiopia, remittance receiving households use their cash reserves during times of food shocks, while nonreceivers are more likely to sell valuable assets. Households receiving remittances in Burkina Faso and Ghana are more likely to have concrete houses as opposed to mud ones and have a greater access to communications, both of which help households overcome harsh conditions. In general, remittance flows increase during and after natural disasters and other crises, indicating that they are an important financial backstop.
New research also shows that remittances can increase the long-term well being of households, and possibly communities, by fostering access to basic utilities. A study of remittance-receiving households in Mexico found that they had better access to modern water and sanitation facilities than non-receiving households. Remittances allowed these households to build the infrastructure to connect to existing municipal water systems and to install septic tanks for sewage disposal. The question of how to channel remittances to have a greater development impact remains largely unexplored. Critics of oda note that country-level projects are inefficient because they get bogged down in bureaucracy and are a more expensive way of delivering aid because of high priced consultants with steep overheads. The cost of delivering aid theoretically should decrease and efficiency should increase by working at the community level. Remittances go beyond the community level directly to the individual, and, if channeled correctly, should have a significant development impact.
Economists and policymakers emphasize the need to increase the use of formal transfer channels for remittances. Easing regulation and decreasing the cost of transferring remittances would encourage migrants to send larger amounts of money and receivers of remittances to save and potentially invest some of the money they receive. Additionally, the banks providing the transfer services could use remittance inflows to improve their own credit ratings and the use of formal channels would enable governments to better measure these flows. Increasing the accessibility of formal remittance transferring mechanisms is key to improving the efficiency of remittances. Many rural areas in the developing world remain underserved by banks and financial institutions. The entire African continent has as many remittance payout locations as the country of Mexico. World Bank economist Ratha suggests that post offices in developing countries should serve as remittance-receiving locations. In Algeria, over 95% of remittance payouts are received through local post offices.”
The report is located at:
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Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.