The Economic Value of the Charitable Sector
9.1 INTRODUCTION In this chapter we argue that the phenomenon of giving is part of what has come to be called ‘social capital’, the ‘glue’ that holds society together and which plays an as yet generally unquantiﬁed role in economic and social development. Social capital concerns the relationships between individuals, between institutions (including governmental institutions) and between individuals and institutions. Social capital includes the norms governing these relationships. It has been found that different societies can have broadly equal endowments of other forms of capital, but that some perform better in terms of economic and social development. The ‘missing link’ is thought to lie in the fact that the better-performing societies have less conﬂict between social groups, more participatory decision-making procedures and greater trust between economic agents. Thus Putnam (1993) found that one of the factors explaining northern Italy’s better economic performance compared to southern Italy was the presence of many more voluntary associations. Putnam’s focus was on horizontal associations between people and on the rules of behaviour for those associations, rules designed to ensure that members secured the full beneﬁt of mutual cooperation. Fukuyama (1996) identiﬁes successful communities and companies with the presence of reciprocity and trust. The breakdown of social capital results in more crime, more violence, family breakdown and more distrust. Others, such as North (1990), have emphasized institutions generally and political institutions and the rule of law in particular. Clearly, deﬁnitions of social capital vary in scope. World Bank (1997) suggests...
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