How much can Sri Lanka help itself?

A Sri Lankan child. An oft-heard claim in Colombo today is that 'charity begins at home'. Photograph: Eranga Jayawardena/AP
ndigenous charity and philanthropy could transform development in Sri Lanka – but will it be for better or for worse?

The role of charity and philanthropy in development is a subject of growing interest within the global aid community. As a result of slowing support from traditional funding sources, the activities of private foundations and voluntary initiatives now account for increasingly larger amounts of development assistance. Meanwhile, mounting calls for a more "moral capitalism" following the banking crisis have led to greater pressure on companies to develop inclusive business practices.

But much of the discussion so far has concentrated on the contribution of big global players such as the Gates Foundation. Less attention has been paid to indigenous charity and philanthropy in the developing world, and how local giving practices are being mobilised for development. Yet indigenous philanthropy has played an important rolein the development process, and that role is likely to increase in the future.

Our research in Colombo, Sri Lanka, is exploring indigenous forms of charity, philanthropy and development in the country. By scoping patterns of giving within the city and around Sri Lanka's global diaspora, we're building an understanding of the drivers and impacts of charitable and philanthropic activities on poverty alleviation.

An oft-heard claim in Colombo today is that "charity begins at home", and ostensibly levels of charitable giving in Sri Lanka are huge. For two years in a row, it has ranked eighth in the Charity Aid Foundation's World Giving Index, ahead of any other developing nation. The reasons are complex, but giving is central to the traditions of Buddhism, Hinduism, Christianity and Islam that exist in the country. Our research is highlighting the multi-layered relationships forming between different kinds of social engagement, from traditional gift-giving through communal religious charity to corporate social responsibility.

However, the long-term potential of these practices – and where they may lead – is an open question. Much depends on whose definitions of charity and philanthropy we use, and what counts as development. Our work is drawing attention to four key issues.

First, due to huge suspicion and hostility from the government and many ordinary people, civil society organisations are limited in how they raise funds. "We know we can't collect money locally," said the director of a Sri Lankan NGO, "because people think we're a front for the LTTE [Tamil Tigers]." It's also not uncommon for successful charities and philanthropists to be seen as a political threat by the ruling party of the day. The result has been dependency on foreign donors, but almost every organisation we've spoken to expects this money to dry up soon.

Second, although Sri Lankans do give generously, they don't give to the kinds of causes that international donors gave to. For many organisations we've contacted, the loss of foreign funding is creating a gulf that local charity is unlikely to fill. "Once people have given to poorer relatives, the temple and their old school, there's nothing left for us," said one local fundraiser. Greater space for non-traditional actors can only be a good thing, yet development organisations fear they are going to disappear.

Third, the traditions of giving that do exist tend to focus on humanitarian relief rather than long-term change. Preference is given to direct, in-kind donations to individuals, families and welfare organisations, including orphanages and elders' homes. Fear of corruption or financial mismanagement explains part of this, but so too does a reluctance to pay for charities' administration costs. It also reflects religious beliefs and obligations. Yet even the biggest beneficiaries of in-kind donations complain they struggle to pay utility bills and wages because of this, and would like to encourage more by way of cash donations if they could.

Finally, indigenous charity and philanthropy is rarely co-ordinated. Giving tends to be impulsive and private, and few organisations work together. Some large Sri Lankan companies are seeking to develop joint projects, as part of which they will conduct need assessments and impact evaluations. But private business owners – whose activities account for the majority of large-scale giving – pick and choose causes according to personal preferences, and rarely bother to follow-up. Although often donating very large sums, they avoid issues that require smaller but ongoing commitments.

Indigenous charity and philanthropy has the potential to transform development in Sri Lanka. A few years after the economy was raised to middle-income status by the IMF, there seems to be huge potential to encourage the growth of new development actors and opportunities. Yet there is also mounting uncertainty in the local development sector about which way things are going to go. Whether indigenous charity and philanthropy can be harnessed and leveraged for development, or whether what is meant by development will change to accommodate indigenous giving preferences – and what either of these mean for poverty alleviation – remains to be seen.

• Dr Tom Widger is a research fellow at the department of anthropology, School of Global Studies, University of Sussex