Indonesia Earthquake

My heart goes out to the Indonesian people affected by the recent earthquake in Indonesia. I travelled extensively in that area in 1984, and then I lived in Jakarta from 1987 through 1992. The Indonesians have been through so much over the past ten years - a huge financial crisis, a political revolution (where they finally kicked out Suharto), the tsunami, and now this.

The aid community and government are getting better at responding quickly, but this earthquake will still affect hundreds of thousands of people for years to come (on top of the 5,000+ who have died). Fortunately, we are entering a stage of history where it is now possible for us to reach across the ocean to help these families. To help through GlobalGiving, go here:

Provide Relief to Indonesian Earthquake Victims Provide medical and housing assistance to the victims of the Indonesia earthquake, which hit May 26. Immediate needs include medical care, food, and shelter. Theme: Health | Location: Indonesia | Need: $25,000

Ethan's Heart is in Accra

Ethan Zuckerman writes one of the best blogs on Africa out there, called My Heart's in Acra. Full of interesting content, insights, conundrums, and humor. While in college, Ethan was a founder of Tripod, and since then he has devoted much of his time to entrepreneurial approaches to international development. First, he founded GeekCorps, and now spends a lot of time on this blog.

One of my favorite recent posts is about a request he received from Nigeria to help fund a project there, and about how he tried to determine whether it is bona fide. We face this issue at GlobalGiving all the time. The challenge is how to help give grassroots maximize access, while weeding out the bad guys - and to do it at a cost that is not prohibitive.

Note: When Mari Kuraishi and I started GlobalGiving several years back, we schlepped our team up to Massachusetts to see Ethan, who spent a full day with us trying to get us prepared for the challenge ahead. His advice was invaluable. To the extent that we have accomplished anything since then (including facilitating $3 million of donations to 700+ grassroots projects), Ethan deserves significant credit. (As for our shortcomings, which are many, those belong to us alone.)

Remittances are larger than Philanthropy

The Wall Street Journal (5/13/06) reports on a study by the Hudson Institute on the size of international giving and remittances ("remittances" are funds sent by immigrats or migrant workers back to their family and friends abroad). While I don't always agree with all the conclusions and policy implications of the study, it does have good data about the extraordinary amount of private financial flows from the US to countries overseas. Here is an excerpt from the WSJ column:

...Then there is the charity from the U.S. private sector. In 2004, the latest year for which many numbers are available, Americans -- through schools, religious institutions, companies, foundations and families -- gave at least $71 billion to the developing world, more than three times what the government gave. The index authors say it is impossible to capture all giving, so if they've erred it's on the low side.

Almost $10 billion came from private groups, $4.5 billion from religious organizations and nearly $5 billion from corporations. But perhaps the most impressive private giving, and arguably the most efficient, is in the category of individual remittances, which the index puts at $47 billion in 2004. According to the authors, "The massive amounts of money sent home by immigrants and temporary workers -- involving little or no overhead and filling people's basic needs directly -- is changing the landscape of development and donor agencies."

US Philanthropy is huge

Here is a breakdown of philanthropy numbers in the US, with thanks to Mark Grimes via Omidyar.net. Note that the total amount of philanthropy going overseas (which is distributed through the different categories below) is about $20 billion by my estimate, based on work by Susan Raymond and Carol Adelman at the Hudson Institute. ( Note that this does not include an estimated $47 billion in remittances sent by workers in the US to their families and communities aborad, which is another form of private aid - see also Adelman's work).

From the Giving USA 2005 Annual Report

$248.52 billion given, here's the estimated breakdown per recipient organization type

1:	religious org, 88.3 billion, 35.5% of total
2:	educational institutions, 33.84 billion, 13.6% of total
3:	health orgs, 21.95 billion, 8.8% of total
4:	human services orgs, 19.17 billion, 7.7% of total
5:	arts, culture and humanities orgs, 13.99 billion, 5.6% of total
6:	public society benefit orgs, 12.96 billion, 5.2% of total
7:	environment/animal orgs, 7.61 billion, 3.1% of total
8:	international affair orgs, 5.34 billion, 2.1% of total
9:	foundations, 24 billion, 9.7% of total
10:	deduction carryover and unallocated giving, 21.36 billion, 8.6% of total

Small is Big

Sometimes people ask me whether small organizations operating at the grassroots level can make a systemic difference.

The answer is: Definitely.

Consider the US economy, which for all its problems in the most vibrant in the world.

Small businesses in the US account for 99.7 percent of all employers, pay 44 percent of the entire US payroll, generate 60 to 80 percent of net new jobs in the US annually, and create more than half of all US GDP.

Furthermore, small businesses produce 13x more patents than larger businesses. And those patents are twice as likely to be among the most cited.

And consider this: even the largest of US companies were small businesses when they began. That includes eBay, Amazon, Google, MySpace, and on and on.

Do all small businesses end up becoming big or contributing to growth and innovation? Of course not. At least half of them fail in the first four years of their existence. The good thing about the US economy - and others like it - is that it encourages lots of experimentation, and failure is generally not a stigma (as long as there was no fraud). Small business owners who fail often dust off their pants and try again. And again.

What are the implications for international development?

Source: Small Business Administration, "Small Business by the Numbers," 2003