In 2006, the United States government gave $23.53 billion in overseas development assistance. In absolute terms, this is the highest figure, almost twice the $12.46 billion given by the UK, the next highest. As a share of the American economy, it is, however, a low figure by comparison with most wealthy nations (0.18% as opposed to an average 0.31%). This latter figure is often used in isolation, and presented as demonstrating America’s lack of generosity and lack of engagement with the outside world, but is not a complete picture.
Considered in a broader context, American aid makes an overwhelming contribution to international development. What sets the United States apart is its extremely high levels of private philanthropy, variously distributed by foundations, voluntary and religious organisations and universities. The 2008 Index of Global Philanthropy, published by the Hudson Institute's Center for Global Prosperity found private aid to developing countries from the United States adding up to $34.8 billion. Next highest were the United Kingdom and Germany, which gave $1.61 billion and $1.35 billion respectively. See below from The Economist.
One reason for this difference is the major advantages the US tax system creates for private charity, allowing Americans to reduce their taxable income by charitable donations. Arguably, the US Treasury is therefore helping ensure high overall levels of aid in a less direct but no less effective way than in countries with a greater share of government expenditure on aid.
A breakdown of private aid
- There are over 71,000 grant-making foundations in the United States, responsible for $4 billion of aid in 2006 – a substantial increase on $2.4 billion for the previous year. The majority of grants went into health programmes, with other causes including international development and relief and the environment.
- America corporations gave $5.5 billion in aid to developing countries in 2006.
- American private and voluntary organisations gave $10.6 billion.
- American universities gave $3.7 billion in scholarships, grants and other support.
- American religious organisations gave $8.8 billion.
- In terms of volunteer time, Americans donated an estimated $2.2 billion of their time to development assistance causes abroad.
A further way in which America’s economy and work force makes a difference to the developing world is through voluntary transfers by people working in the United States to family living abroad. Although not a direct form of aid, the impact of remissions on developing economies is considerable. Total global remittances from the OECD’s Development Assistance Committee donors to the developing world were $122.4 billion in 2006. Of this figure, America is far ahead of other countries, with $71.5 billion of this total coming from the United States. Next highest are Canada and Germany, each with $6.8 billion.
Overall private charity
The Fraser Institute in Canada has compared overall levels of charitable donations (domestic and international) in the United States with overall levels in Canada, controlling for differences in income and exchange rate. It found a major difference between the two countries:
“When the depth of generosity in each country is compared, the gap widens significantly. In 2005, Americans gave 1.77 percent of their aggregate personal income to charity, resulting in a total of US$182 billion in donations. This rate of giving is more than double that of Canadians, who gave 0.75 percent of their aggregate income (Cdn$7.8 billion in total) to charity in 2005. If Canadians had given, in aggregate, the same percentage of their incomes to charity as Americans did, the Canadian charitable sector would have received an additional $10.4 billion in privately-donated revenue.”
The high levels of foreign aid America gives to developing countries can be be understood in the context of America’s continuing engagement with the world, also demonstrated by the broader benefits of American military power. American defence and intelligence facilities such as satellites provide early warning of crises and support for the delivery of emergency aid during humanitarian disasters. The US Navy’s patrols ensure a general freedom of the seas. This combats sea banditry and piracy, a growing problem in Southeast Asia and off the Horn of Africa, and ensures the Strait of Hormuz is kept open. America’s contribution to 22% of the UN’s overall budget helps support more than one thousands UN peacekeepers in missions around the globe, with the US military further supplying much logistic and intelligence support.
 ‘The 2008 Index of Global Philanthropy’, The Center for Global Prosperity, The Hudson Institute, p.15, at https://www.hudson.org/files/documents/2008%20Index%20-%20Low%20Res.pdf
 Ibid, p.48
 'Overseas charity', The Economist, 13 May 2008, at http://www.economist.com/displayStory.cfm?story_id=11333149
 ‘The 2008 Index of Global Philanthropy’, The Center for Global Prosperity, The Hudson Institute, p.23, at https://www.hudson.org/files/documents/2008%20Index%20-%20Low%20Res.pdf
 Ibid, p.26
 Ibid, p.30
 Ibid, p.37
 Ibid, p.30
 Ibid, p.65
 'Generosity in Canada and the United States: The 2007 Generosity Index', The Fraser Institute, December 2007, p.4, at http://www.fraserinstitute.org/commerce.web/product_files/generosity.pdf