Private development assistance (PDA) – finance for development from private sources given voluntarily through formal channels – is an important resource in the fight to end global poverty. Like aid, and unlike many other resource flows to developing countries, it directly targets development. And as our 2013 report Investments to End Poverty report showed, there are substantial estimated amounts of PDA.
We need to understand PDA to take full advantage of its potential impact on poverty. This paper consolidates the existing evidence base and attempts to fill the information gaps.
If we are to recognise PDA’s true potential for reducing poverty, better data is also needed, ideally using an agreed standard. The International Aid Transparency Initiative is one such standard that is enabling improved traceability of PDA.
Trends in PDA: highlights from Investments to End Poverty
- OECD Development Assistance Committee (DAC) members provide an estimated US$45 billion in PDA annually – equivalent to around a third of their aid.
- The US provides the most PDA: US$30 billion annually.
- An estimated further US$1 billion of PDA comes from emerging economies, with Saudi Arabia providing the most.
- PDA and local philanthropy are set to have increasing roles in fast-growing developing economies, and could be more effectively focused on reducing poverty, especially as these countries receive less ODA.
- PDA provider types have different approaches to reducing poverty. NGOs are most likely to work in countries in crisis, while foundations favour more advanced developing countries.
- PDA grew faster than ODA between 2006 and 2011, with that provided by corporations and foundations growing particularly fast.