Privatised aid and NGOs

In the matter of foreign aid, the U.S. government and its non-governmental allies export the idea of the "third way", which promotes "civil society" or private development at the expense of the struggle for greater state involvement in delivering social justice.

IN the November/December 2003 issue of the influential United States Council on Foreign Relations' journal Foreign Affairs, Carol C. Adelman published an essay with the provocative title, "The Privatisation of Foreign Aid: Reassessing National Largesse". Adelman, a senior Fellow at the conservative Hudson Institute, contests the idea that the U.S. is miserly with its foreign aid. From the data on U.S. government donations, it is clear that the U.S. government gives one of the lowest percentages of its gross domestic product (under 0.1 per cent) in foreign humanitarian aid. Despite this, Adelman points out, private residents in the U.S. remit close to $35 billion to other countries, and that this "privatisation of foreign aid" should be the indication of the American largesse. The world of private donations and of non-profit organisations, Adelman argues, forms "the new landscape of foreign aid".

Adelman grossly exaggerates the amount of foreign aid ($35 billion) to point out that the U.S. is actually very generous. What she includes in the figure are the enormous remittances from migrants to the U.S. (many of whom are not citizens) who send money to their families. For South and Central America alone, the Inter-American Development Bank shows that migrants sent $20 billion last year - the largest financial investment in the region (an additional beneficiary of this are the banks who charge large transfer costs).

If we remove the private remittances sent by individuals to their families, the amount spent by the U.S. government and private foundations overseas is still significant. When you convert a few billion dollars into rupees and dinars, and when you consider that this money enters fields that are otherwise underfunded, the impact of the money is dramatic.

The quibble over the amount of money that the U.S. provides in foreign aid, however, obscures a very important point. The U.S. government and its non-governmental allies export the idea of the "third way" that promotes "civil society" or private development at the expense of the struggle for greater state involvement in social justice. The epoch of ideological competition between capitalism and communism is over, explain the "third way" theorists such as British sociologist Anthony Giddens and the head of the Democratic Leadership Council, Al From. The "third way" wants to "empower citizens" to take charge of society, as the state retreats from regulation and from the task of redistribution. Furthermore, the "third way" asks that we work with the "tolerant traditionalism" of family values, that we, in effect, accommodate ourselves to social prejudices. The U.S. government may not itself export capital for humanitarian development and aid, but it has certainly contributed to the export of this model of "civil society" politics to the entire planet.

The debate on funds is far too complex to summarise here, but what might be useful is to offer a brief history of the creation of the "new landscape of foreign aid" intimated by Adelman.

The "non-profit" sector did not arise in the 19th century with the express purpose of undermining the role of the state. In fact, it had the opposite impact. Take the case of one of the major figures in U.S. voluntary work, the legendary Jane Addams and her Hull House. In 1889, Jane Addams and her associates bought a house in Chicago's West Side, home to recent immigrants from Bohemia, Germany, Greece Mexico, Italy, Ireland, Poland, Russia and the U.S. south. They turned Hull House into a "social settlement", a place of service to the dislocated. Apart from citizenship and English classes, Hull House became a day care centre and kindergarten, an employment bureau, a library, and eventually an art centre (with a theatre, with music and art classes, as well as with an art gallery). Hull House created the Immigrants' Protective League, the Juvenile Protective Association and the Juvenile Psychopathic Clinic, and it led struggles to bring the state into the regulation of social life.

The disruption of rural life and the explosion of industrial cities intensified the suffering of workers and their families. Hull House and other such institutions came to the aid of the survivors of the new age of monopoly, and they fought the state not only to regulate the acts of industrial capitalism, but also to provide succour to the workers. Hull House's efforts led to the creation of the Federal Children's Bureau (1912) and the passage of an anti-child labour law (1916), among other important achievements. In addition, Jane Addams and Hull House worked tirelessly against warfare, which they regarded as wasteful expenditure of the people's wealth. Addams founded the Women's Peace Party (which became the Women's International League for Peace and Freedom). In 1931, Jane Addams won the Nobel Peace Prize.

Confreres of Jane Addams took this same energy and enthusiasm into relief work outside the U.S. In 1881, Clara Barton used her experience of giving relief to soldiers during the U.S. Civil War (where she earned the name "Angel of the Battlefield") and founded the American Red Cross. In its early years, under Barton's leadership, the Red Cross went across the world and put its resources to give support as well as to find the means to help struggles. In 1891, Barton went to Russia to help the famine survivors; in 1896, she worked in Armenia and spoke out against the Turkish massacres; and in the run-up to the U.S. invasion of Cuba in 1898, the Red Cross' ship gave aid to the Cuban insurrectionists and, later, to the U.S. forces. The Red Cross' early campaigns within the U.S. gave support to workers and farmers from the tyranny of the weather and the heartlessness of the government. The efforts of the American Red Cross pushed the state to enter into the field of disaster management as well as to create a fund for emergency relief.

Hull House and the American Red Cross worked to lift the sorrows from the shoulders of the overworked, but more importantly to join the workers' political struggle to make a better world. People like Jane Addams and organisations like Hull House, alongside the well-organised union movement and the burgeoning Left parties, provided the infrastructure for President Franklin D. Roosevelt's New Deal. When Roosevelt tried to reconstruct the economy and put fetters on corporate activities, he took advantage of the social power of Addams, the unions and the Left, to back him up on the streets.

Harry Hopkins, an aide to Roosevelt, once said of this world of Jane Addams and relief: "People do not eat in the long run, they eat every day." In other words, the state had to be involved not just in the management of the long-term economic health of the country (on behalf of big corporations), but it must also work to ensure that the "less fortunate" are fed in the short term.

During the Cold War, the U.S. state transformed the legacy of Barton and Addams. A domestic and foreign policy driven by zealous anti-communism transformed the terrain of political activity. The new Cold War notion of "development" and "aid" removed the politics from social work and made the ills of capitalism into the ills of the poor. If the poor have a problem, U.S. funds and ingenuity can deal with it, but there is no question of allowing an interpretation that sees the perpetuation of poverty in the practices of imperialism.

In his inaugural address in 1949, President Harry Truman laid out four points on the role of the U.S. in the world. The President pledged to support and strengthen the United Nations (Point 1), to promote stability in the world economic system (Point 2) and to make military alliances against the Soviet Union and to export military hardware to these new allies (Point 3). Point 4 of this "Four Points Programme" acknowledged that force alone will not win the day, and that the U.S. would need to help in social and economic development. People live, Truman said, "in conditions approaching misery", so the U.S. must make "the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas".

As a result of Truman's new policy, the U.S. State Department began to promote and regulate foreign aid. The State Department's Agency for International Development (AID) introduced a political test for the organisations that would receive its funds. Whereas most non-governmental organisations (NGOs) and foundations had worked without governmental interference in the past, they now felt chuffed at the new political oversight.

But that tension did not last long. Most NGOs and the foundations went along with AID's broad policy of using "social development" to contain the spread of communism. As Merl Curti wrote in his 1963 classic American Philanthropy Abroad, the Ford Foundation chose to work in South and West Asia because of the region's "proximity to the Soviet Union and Communist China and the opportunity for channelling rising nationalism into constructive humanitarian purposes within a democratic framework". In other words, to promote U.S. ideas of free market capitalism in opposition not only to communism but also to radical nationalism (such as the Arab world's Nasserism).

Within the U.S., the restrictions on the activity of non-profit organisations came from the revision of the tax code. In 1954, Democratic Senator Lyndon B. Johnson of Texas pushed through an amendment to the tax code that forbade tax-exempt non-profit organisations from "political" activity. Johnson's law entered the tax code to define a special new kind of organisation named for its place in the code, 501(c) (3). Any organisation that conducts voluntary work (examples given include "testing for public safety, literary or educational purposes, or for the prevention of cruelty to children or animals") is exempt from taxation if it did "not participate in, or intervene in (including the publication or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office". This language has been broadly interpreted to mean that non-profit organisations may work to ameliorate the suffering of people, but they must not involve themselves in the fundamental question of political and social transformation: you can feed the hungry, but you cannot organise the impoverished to fight against the system that makes them hungry.

The restrictions on the "non-profit" sector constrain its political possibilities. The U.S. government and the World Bank are now able to encourage freely the growth of this sector. They can only do so because the creative hands of those who receive the funds are officially tied. As McCarthyism and the legacy of the Cold War ensured that the world of the "non-profit" left the field of political change, neo-liberalism currently welcomes NGOs and non-profit organisations to take over large tracts of work that the formally accountable state once did. Health, education, welfare, and other such areas of social life are now given over to the non-profit and private sectors.

Since many NGOs are beneficiaries of U.S. foundations, the fields of health, education and welfare moved from the area of political action into charity. The very best of people who work in this sector, whose own intentions are beyond question, are yet inhibited by the "new landscape of foreign aid", by the privatisation and depoliticisation of civil society.

In 2000, Carol Adelman wrote the following for the European edition of the Wall Street Journal: "Private donors - whether they are charitable philanthropies or profit-seeking corporations - are generally better than governments at targeting money where it's needed most, tracking projects closely, cutting out waste, eliminating fraud and getting real results." But why is that so? The "third way" Democrats joined the "my way" Republicans to slash the regulatory powers of the formally accountable state. Private donors can now appear to be most efficient, even as they have no formal mechanism for democratic accountability. If you do not like the fact that the very rich donate to foundations that then push policies that benefit the very rich, you cannot do a thing about it: it is after all America's largesse to the world.