Global organizations once rejected such donations, fearing they would corrupt their public agendas. But with many national treasuries overstretched, times have changed. The amount of money philanthropists give outside of our country is still a miniscule portion of our total philanthropy—less than 6.5 percent, according to figures from for-profit philanthropic advisory firm Geneva Global. But Americans still donate approximately $25 billion to the developing world each year, not much less than the $31.5 billion the government will distribute in foreign aid in 2006.

This money now enables wealthy donors to set foreign aid agendas. Bill Gates, Warren Buffett (via his new partnership with the Gates Foundation), George Soros, eBay founder Pierre Omidyar and Ted Turner are among those addressing global problems at a time when states and international institutions are increasingly constrained in meeting the gravest transnational challenges. Their generosity is extraordinary, but it is not a panacea. Indeed, the largest benefactors routinely work in partnership with states, international organizations and nongovernmental organizations. The idea that the private sector can replace government aid is quite simply unworkable.

This is not to say that private actors cannot deliver more effective aid in some ways. Philanthropists have a unique ability to come in where they are needed with great flexibility and speed. The Financial Times recently highlighted the experience of Amy and Larry Robbins, hedge fund managers who gave $200,000 through UNICEF to help a half-million people in Somalia obtain access to water and food. After the 2004 tsunami, private donors demonstrated an initial responsiveness that put many governments to shame.

Philanthropists are also less encumbered by bureaucratic hurdles or political considerations. For example, one-third of the $15 billion President Bush allocated to fight AIDS in Africa was earmarked for abstinence education—a move that placated the president’s conservative supporters. In addition, by working with NGOs and international organizations, philanthropists can circumvent state bureaucracies and avoid the endemic corruption that often plagues foreign aid.

While states must often focus on near-term exigencies, philanthropists can think more in the long term. Soros, for one, has supported democracy-building efforts geared not to elections, but the construction of a civil society’s infrastructure. Steve Case joined fellow philanthropists in a project that provides African countries with revenue-producing items, such as efficient water pumps. This program has generated $37 million and 35,000 new businesses.

The Visible Hand
But states and global institutions also have a crucial role to play. While philanthropists are greeted warmly by government officials, they understand that such charity may not last forever. Only states and international organizations can truly ensure sustainability—as has been the case in numerous public health and environmental challenges. Ultimately, states must be the ones to set priorities, enforce accountability and ensure sustainability.

Even the most well-meaning philanthropists can miss the mark. After the dot-com boom, many Internet millionaires set out to wire the world. They soon discovered that without running water, schools and even electricity, surfing the Web provided little benefit.

A few years ago, Soros spent millions to unseat Zimbabwean strongman Robert Mugabe—a commendable goal to support. But this left many observers wondering what happens when such efforts are launched against democratically elected leaders or run counter to U.S. national interests. Soros was pelted with eggs by Ukrainian hecklers who criticized him both for financing a foreign policy of his own and acting as a U.S. proxy. Without the assistance of civil society and international organizations, even the most generous philanthropists might find their efforts misguided, or at the very least incomplete and ineffective.

Policymakers will have to adjust to the reality that if private donors are to continue to enter what was once the domain of government aid, the public sector must still play an active role as regulator and partner. For private philanthropists, the challenge is to be aware that your efforts have the power to transform the way we think about foreign policy and, in turn, the world around us.

Michael Cohen and Maria Figueroa Küpçü are leaders of the Privatization of Foreign Policy Project at the World Policy Institute, The New School, New York.