Small bites and bit bets: The challenge of philanthropy
Abhijit Banerjee, co-founder and co-director of the Abdul Latif Jameel Poverty Action Lab (J-PAL) and Nobel laureate in economics, reflects in his monthly column in The India Times, about the challenges of philanthropy in the context of the global concentration of wealth and impact of private donation versus government funding.
In the column he writes, "According to the World Inequality Database, between 1995-2021, the wealth of the world's richest 750 people grew 2.5 times faster than the wealth of the top 1%. Wealth is moving from the merely rich (the famous 1%) to the super-duper-rich, the kind of people who find it worthwhile to use tax havens and complicated strategies to dodge billions in taxes (think of Apply moving its intellectual property to Ireland to avoid paying the higher US taxes).
"All of this might be less worrying if this accumulating wealth was being used for the social good. Reliable numbers are scarce, but a valiant attempt by the Global Philanthropy Tracker at the University of Indiana puts the total cross-border philanthropy in 2020 at USD 70 billion. Not all of that money goes to poor countries. Or is aimed at alleviating poverty - quite a bit goes to churches, mosques and temples, for one. Let us, in the absence of numbers, very optimistically assume that USD 35 billion went to the world's poor. This is less than USD 2 out of every extra USD 1,000 wealth that the world's richest 1% accumulated every year between 2020 and 2023. Of course, there are other ways to serve the poorest - for example, investments that create jobs or inventions that slow global warming - but the poor still need education and healthcare and help when they cannot support themselves economically. Just the Government of India spends something like USD 220 billion on that annually, seven times our estimate of global private generosity. Governments around the world fund a vast majority of the day-to-day fight against global poverty."