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Declining Charity Industry

The world is becoming a more equal place in terms of wealth disparities between countries, but within those countries—between urban and rural people, skilled workers and unskilled workers, men and women—inequality is actually growing in geometric progression, thanks to globalisation. In 2012 1 billion people were obese but 800 million suffered from starvation, mostly in third world countries. There is wide gap in India’s income distribution, social justice and living standards despite continuing swan song about growth and emerging economy. If anything India has registered little improvement in reducing malnutrition, lagging far behind China, Vietnam and Laos. As government is kidnapped by interest groups, economic growth benefits only a tiny minority.

True, growth shifted to emerging economies, which were net savers on their capital accounts while developed countries somehow maintained their high per capita levels of wealth, but deeper into debt. For developed countries globalisation now acts as a double-edged sword. With less trade barrier they now command a wider global market hegemony. But globalisation is also the culprit that is strangling their manufacturing and a kind of de-industrialisation is visible in the industrialised West. There is no exceptions even to Russia, a country heavily hit by the collapse of the Soviet Union. With economic crisis affecting the major economies, no crucial turning point will come in the near future. In other words more and more governments, both developed and developing, are resorting to austerity to tide over the crisis. But austerity again fuels social tensions and the possibility of mass upheaval even in some unexpected places seems real. To pacify the aggrieved NGOs are regarded by many governments as safety valves. So the demand for the services of non-profit global charity organisations is on the rise but funding NGOs too is a big problem as donations from smaller individual gifts to philanthropy, continue to contract. No doubt it’s a direct effect of financial meltdown in the North.

With the world financial crisis taking a toll on assets, individual donations, bigger gifts and endowments from philanthropists have shrunk sharply in many western countries. Philanthropic donations in the USA have contracted from $43 billion in 2007, to $11 billion in 2012. In UK donations dropped 15% in real terms to 9.3 billion pound in 2011-12, the biggest decline in eight years. Large multinational organisations have been affected by government austerity plan. Income of the UN’s children agency, UNICEF, declined by 7% to $ 3.4 billion in 2012. Many states trimmed contributions, even though donations remained robust from strong growth countries of Asia and Latin America. Charities in UK and some countries, have been hurt by a dependency of public sector outsourcing contracts. These have been cut or cancelled with austerity. Charities have had to contend with increased demand for their services. The number of visitors to charity soup kitchens in USA has risen up 15% since the financial crisis.

Frontier
Vol. 45, No. 46, May 26-June 1, 2013

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