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Philanthropy and the Global Economy

Opportunities in a World of Transition
Philanthropy, and within it the broad impact of foundations, charities, and the voluntary sector, are important but not widely understood contributors to the global economy. The recovery from the COVID-19 pandemic creates an opportune moment to assess the key trends in philanthropy, and to ask how the role of philanthropy can better contribute to a healthy and inclusive world as well as to support the delivery of the UN Sustainable Development Goals.

Philanthropy has existed through most of human history, with the word philanthropy itself being derived from Ancient Greek with the meaning of “love of humankind.” The notion of philanthropy can stir up controversy for those who think that it is the role of the state to invest and to provide for its citizens, or for others who believe that individual philanthropists can exert too much power and influence through the causes that they support. However, it is important to understand that public and private funding play different and complementary roles. If the two are harnessed successfully, progressive outcomes are achieved.

On narrow definitions, the stock of philanthropy equates to just under 3% of global GDP. However, as we show in this report, in some advanced economies the fully adjusted value is 10% or even higher. The scale of this contribution needs to be more broadly recognized, especially within the policymaking world. Many of the world’s greatest challenges can be better overcome by a broader partnership between the public, private, and charity sectors.

Philanthropy is going through multiple transitions of which the response to the pandemic is only one. We believe that philanthropy can play a much larger role in the green transition and the move to net zero. There will also be material changes in the global supply of philanthropic capital driven by growing wealth in emerging economies. In addition, there are some notable other transitions, among the most significant of which are the changing aspirations of younger donors; the growing role of female philanthropists; and, critically, the impact that technology will have on the management and targeting of philanthropy. We review each of these transitions and several more in this report.

In this report our Citi GPS team has partnered with the Philanthropic Advisory team of Citi’s Private Bank as well as with outside experts to review the role that philanthropy plays in the global economy and what the future may bring. We have conducted an extensive literature review and participated in multiple sessions with expert commentators. We are particularly grateful to the experts listed in the author block of this report for their detailed contributions to our study.

Based on our calculations, the global value of philanthropy (i.e., donated time and money) is about $2.3 trillion per year, or just under 3% of global GDP. The number of people donating money or volunteering around the world has been relatively stable over the past 20 years. In addition, over the past decade we have seen an uptick in helping strangers, especially during the pandemic, indicating charitable sentiment may be increasing.
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The current value of $2.3 trillion in money and time donated actually creates materially more in terms of total economic value. Due to a multiplier effect, services and activities enabled by donations and provided by charities create downstream economic benefits. The size of the multiplier varies greatly across regions, donation type, and charities but the total value of philanthropic activity could make up 10% of GDP in many economies.
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While philanthropic giving has flatlined as a percentage of global GDP, three principal drivers could indicate a turning point this decade.
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Advancing technology is key to shaping the future of philanthropy. There are huge opportunities for charities in the digital future and they will also play an important role in steering the digital transition and ensuring its fairness.
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