The role of philanthropy in economic development


Even though the term "philanthropy" is relatively new to the citizens of our country, the concept of doing something for the greater good has always been part of our culture. Nevertheless, even today, philanthropy is often mistaken with humanitarian interventions and charity, thereby neglecting the potential of using philanthropy as an instrument to foster economic development.

Kosovo features an under-developed economy compared to its neighboring countries. Even though the country has seen an average GDP growth rate of 5% over the past decade, this is mainly due to large capital investments by the Government. Our economy is still heavily dependent on the Diaspora and international community for financial and technical assistance. Remittances from Diaspora account for about 14% of GDP, whereas financial aid from international donors accounts for another 7.5% of GDP. Additionally, the alarming unemployment rate of 43% is a constant figure for years and the Kosovo Government remains the largest employer in the country.

All of these facts clearly indicate the need to identify new methods to foster economic development for Kosovo. Even the most developed countries in the world are going back to the community level to identify new methods of fostering economic development, and we should not be an exception. By switching the focus to community economic initiatives, we can restore local ownership, encourage mobilization and strategic use of local resources,and help in generating innovative, socially-responsible and sustainable ideas that could directly impact unemployment and poverty alleviation.

For example, if we were to take a specific community in Kosovo andundertake an initiative to transform remittances received from Diaspora for this community into philanthropic funds for fostering community economic development, the impact in the community would be far greater than the one from remittances. This is due to the fact that only a certain number of families from that community will benefit from remittances, and the largest portion of that capital will go into consumption. In the other hand, if the same capital goes to a philanthropic fund which would help fund 5 business initiatives in the community, the results will be remarkably different. Those 5 businesses will help create more jobs and employ people within the community, thereby creating a longer and sustainable impact in the community. This would also mean a high reduction in the dependency from remittances and would foster local ownership for the community.

Such initiatives would help organize and engage local communities in becoming more sustainable, socially-responsible and consecutively have more people benefit rather than concentrating the wealth in the hands of few. Eventually, such initiatives will foster the development community-based markets through the strategic mobilization of local resources, talent, values, culture and tradition. The concept of using philanthropy as an instrument for community economic development has shown remarkable results in countries throughout the world, such as China, India, Egypt etc.


In the case of Kosovo, the business enabling environment faces many challenges. Hence, non-profit organizations (foundations, institutions) could play a major role in this aspect, in terms of using philanthropy to help create a climate conducive to economic growth. One way this could be achieved is through a series of philanthropic grants targeted at capacity building, sharing of know-how and experiences, efficient use of local resources, etc. In order to achieve a sustainable future for economic development, tackling the issues of community economic development is equally essential for growth. However, this also requires strong commitment from central and local government institutions to work hard at building an environment of trust, of caring institutions, and of genuine fairness.

Philanthropy can do things that institutions and the market can’t however it can’t do it all alone either Therefore a triangular form of collaboration is needed for us to maximize our impact. Meaning civil society, government and private sector all fill an important role in transforming communities and in creating a bit more equal societies for each day that goes by. We need a Trans-Atlantic model of cooperation, a place where philanthropy does not replace state funds with private support but instead a model where the two of them complement each other. Kosovo has a lot to learn from this model, a model in which FIQ believes can assure long-lasting impact, contribution and change to the lives of many. Kosovo is today one of Europe’s poorest countries but we as FIQ believe that philanthropy can change the conditions of disadvantaged communities here and beyond.


Kushtrim Puka

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