"Giving Better, Giving Smarter."

National Commission on Philanthropy and Civic Renewal, 1150 17th St. N.W., Ste. 201, Washington, D.C. 20036. 130 pp. $20

Nearly 70 percent of American households in 1995 reported making charitable contributions. Their gifts totaled $116 billion, accounting for 80 percent of all charitable giving in the United States. (Other major sources of philanthropy: bequests from individuals at death, $10 billion; foundations, $10 billion; corporations, $7 billion.) Yet few Americans know how effectively their charitable dollars are being used, according to the National Commission on Philanthropy and Civic Renewal, a private body headed by former secretary of education Lamar Alexander. Americans give only nine percent of their charitable donations directly to "human services" organizations aiding the poor. But they give 57 percent of their donations ($66 billion) to churches and other religious organizations, which devote nearly a third of their outlays to aid for the poor. Many of the organizations supported by the United Way (which, with some 2,000 local chapters, raised $3.1 billion in 1995) and other federated charities also help the poor.

But "far too much" of all this private largesse, the commission believes, "is misspent or misdirected," making "scant difference in people’s lives or the well-being of communities." Generous donations to large national organizations serving the poor, while "not to be discouraged... often represent a missed opportunity to strengthen more innovative, if less prominent, local institutions and organizations," the commission says. Most Americans "treat charity as an obligation or a habit," without thinking carefully about how their dollars are used. Actively seeking out more effective local charities requires more effort on the part of the donor, of course, but the investment may "do more good for the poor and needy and for one’s community."

Private foundations are also missing the mark, in the commission’s view. They "are engaged in too much study, too little direct service, and too little hard-nosed evaluation of what they get for their money." Many foundations also are too inclined to see themselves as a "laboratory" for government. Instead of spending large sums "to ‘study’ or ‘pilot-test’ various programs aimed at systemic change," the commission says, the foundations ought to help effective community organizations pay their bills. "Good charitable organizations deal with concrete facts and real people, not abstract theories about combating poverty."

"World Development Report 1997: The State in a Changing World."

The World Bank, 1818 H St. N.W., Washington, D.C. 20433. 265 pp. $25.95.

Ahalf-century ago, it was widely thought that "undeveloped" countries would make the speediest economic and social progress by relying on strong government, guided by technocrats. Now, after the failure of the world’s centrally planned economies, the emphasis is on markets. The World Bank, which helped make the first view conventional wisdom and has more recently embraced markets, warns that this latter approach can be carried too far. The "miracle" economies of East Asia, in which the state has been deeply involved, and the recent agonies of Somalia and Liberia, which collapsed into anarchy, point up the importance of the state, the World Bank report says. "An effective state is vital for the provision of the goods and services— and the rules and institutions—that allow markets to flourish." The new view among development specialists, according to the report, is that the state should operate "not as a direct provider of growth but as a partner, catalyst, and facilitator." Unfortunately, in many countries today, governments are failing to perform even their most basic functions, such as providing law and order and protecting property rights. Private businesses in 27 of 69 countries surveyed—including more than three-fourths of the firms in the Commonwealth of Independent States (the former Soviet Union), and about half of those in Latin America and Africa—say that official corruption, crime, and an arbitrary judiciary are major obstacles. Still, the report notes, some developing countries, including many in East Asia and others elsewhere, such as Botswana, Chile, and Mauritius, have done well at "managing the fundamentals."

After establishing a foundation of law and taking up other "fundamental tasks" (such as protecting "the vulnerable" and the environment), the report says, states in many cases need to scale back government’s role through privatization and deregulation. This has worked not only in such countries as China and Poland, which previously had command economies, but in countries with mixed economies as well. In 11 of 12 carefully studied cases in Chile, Malaysia, Mexico, and the United Kingdom, divestiture of state assets resulted in increased productivity and investment as well as more efficient pricing. In the United States, deregulation of airlines, railroads, and three other industries that had been tightly regulated yielded, by 1990, estimated gains to consumers of at least $33 billion.

Besides cutting back overgrown governments, states need to strengthen public institutions, the report says. "Policies that lower controls on foreign trade, remove entry barriers for private industry, and privatize state firms in a way that ensures competition—all of these will fight corruption." Recent efforts in Uganda along these lines have had some promising results.

The worldwide trend toward democracy, with the number of independent democracies increasing from 39 (or one in four) in 1974 to 117 (or two out of three) today, is another encouraging development. In addition, decentralization of government "is bringing many benefits in China, India, much of Latin America, and many other parts of the world." Nevertheless, the report says, "central government will always play a vital role in sustaining development."