The New World of Development Foundations

By Simon Scott, Counsellor, OECD Statistics and Data Directorate

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One of the compensations of growing old is that you may eventually find out what you always wanted to know.

Fifteen years ago I wrote an OECD study on Philanthropic Foundations and Development Co-operation which – despite its many glowing virtues – was decidedly thin on systematic financial and sectoral detail. Most of all, I found it almost impossible to get a handle on what the biggest development philanthropy of all, the Bill and Melinda Gates Foundation, was up to.

Now, in my dotage, my questions are answered by an excellent new study, Private Philanthropy for Development, a joint project of the OECD’s Development Centre and Development Co-operation Directorate.

How large is private philanthropy’s financial contribution to development? Answer: USD 24 billion from 2013 to 2015 inclusive, or USD 8 billion a year. What is the share of the Gates Foundation? 49%, which goes mostly to health, with agriculture next. And, by the way, the authors of these figures are not just guessing: they developed a special new data survey completed by 77 philanthropies and also gathered publically available information on many more. All the data – partly aggregated to protect confidentiality – are available here, and constitute a major new information resource.

Among the many interesting facts that emerge from the data is that India alone receives one-sixth of all private philanthropic development funding. That is triple its share of official development assistance (ODA).

So while India now gives more official aid than it receives, it remains open to private philanthropic flows. In fact, the new study shows that middle-income countries in general receive two-thirds of these flows, double their share of ODA.

Developing countries as a whole receive a far larger share of private philanthropic flows than they used to. My study had reported that “international giving” had risen from 8.7% of total US foundation spending in 1990 to 11.2% in 2000, but Larry McGill of the US Foundation Center now reports that this rose further to an average of 14% over 2002-14, and reached over 25% in 2015. The Gates phenomenon is clearly a major driver of this rapid internationalisation.

Beyond mere data, the study is enriched by numerous outside contributions giving insights into individual projects, new funding and implementation strategies, and new means of collaboration. Foremost amongst the latter is the Development Centre’s Global Network of Foundations Working for Development, netFWD, which is helping foundations share experiences on innovative projects and improve dialogue with governments.

Of course not everything has changed. As the study notes, foundations can still afford to take more risks than government aid agencies, and thus have more scope to test new ideas. On the other hand, they are still wary of reporting on their activities, though the Gates Foundation and a handful of others have shown commendable transparency in reporting to OECD statistical systems. Tax incentives remain a powerful driver of foundation activity, including in development, but also have to be watched to make sure they are not just used to avoid inheritance or capital taxes.

On the whole, though, the new report makes me feel like Rip van Winkle, awakening to a new world. When researching my study in 2002 and 2003, I felt I could still reach back to some of the great foundation achievements of the mid-20th century. Norman Borlaug, the father of the Green Revolution, was still alive, and staff at the Rockefeller Foundation in New York gave me chapter and verse of his continuing and controversial advocacy of genetic modification technology. Toyota Foundation staff in Tokyo could trace its entire history since its founding in 1974, from its early work on transport safety to a wide variety of social and cultural projects. By contrast, the Gates Foundation was only just getting off the ground, and private philanthropy in the developing world appeared both underdeveloped and under-researched.

The new report shows just how much has changed. As well as detailing the financial boom in private philanthropy, it gives detailed examples of new coalitions and public-private partnerships, many of them aiming to bring new technologies – from banking to cooking stoves – to developing countries. It discusses new financing mechanisms, including mission-related investments and development impact bonds, and new styles and philosophies of giving, such as systems change, “big bets” and venture philanthropy.

All in all, this new study is well-researched, well-documented and very readable, and will be a key reference in the field now and in years to come.