Private Foundations - International Development Committee Contents

1  Introduction

Private foundations

1. The way that international development and poverty reduction is funded is changing. Government and multilateral funders such as the United Nations are being joined by philanthropic private funders of aid and development. Philanthropy, defined as 'private funding in the public interest', can refer to either donations made by individuals or to giving made by private foundations or trusts.[1]

2. Foundations are highly diverse, ranging from a few, very large-scale and specialist funders often focusing on the Millennium Development Goals (for example, the US-based Bill and Melinda Gates Foundation, and the UK-based Children's Investment Fund Foundation), to small foundations for which international development is one focus of many, and which are often more detached from the policy arena.[2] In the UK the sector is characterised by a higher degree of diversity in size and type of foundations compared to the US.[3]

3. It is clear that there is a huge amount of funding being spent through foundations, but there are difficulties involved in calculating the total annual value of current spending. During our inquiry we came across a range of estimates. For example, the OECD Development Assistance Committee (DAC) reports a global total of $22.2 billion in private grant spending in 2009 (representing over a 100% increase since 2000). However, reporting to the DAC is voluntary and therefore this is likely to be an underestimate. Nor does it include corporate private giving—unlike, for example, the US-based Hudson Institute, which puts 2009 philanthropic giving at $52.5 billion, nearly double the OECD estimate.[4]

4. Whatever the exact total, it is clear that development funding by foundations is still some way lower than Official Development Assistance (ODA, funding paid by government donors), which was $120 billion in the same year (2009).[5] Graph 1 shows grants made by private voluntary agencies within DAC member countries for international development in comparison to total ODA.[6]

Graph 1: Development aid: net ODA compared to private grants (DAC countries)

Source: OECD, 'Development aid: Grants by private voluntary agencies - Net disbursements at current prices and exchange rates', online at:,3746,en_2649_201185_46462759_1_1_1_1,00.html

5. Foundation funding is dominated by a few large players, notably the Bill and Melinda Gates Foundation. In 2009, the Bill & Melinda Gates Foundation spent US$3 billion in grants and charitable expenses.[7] This represents 19% of total US grants by private voluntary agencies and 14% of total DAC grants by private voluntary agencies.[8] The Gates Foundation has assets of $33.9 billion, followed by smaller but still significant US funders such as the Ford and Rockefeller Foundations (assets of $10.9 billion and $3.3 billion, respectively—although only a proportion of this funding goes towards international development ).[9] UK-based foundations are smaller still, with the exception of the Children's Investment Fund Foundation, which has assets of £1.7 billion,[10] and The Wellcome Trust, which gives a significant proportion of its charitable expenditure to support research in low and middle-income countries (£71 million in 2009-10).[11] Comic Relief is different from most UK-based foundations in that it is not an endowed foundation and fundraises for the majority of its income. Since 1985 it has made grants totalling £360 million internationally.[12] Recent research puts the annual value of current spending by UK-based charitable grant-making trusts and foundations on international development at around £290 million.[13] Around £48 million of this amount is based on an estimate of the smaller trusts not included in the research, and those on which there is little published information.[14] We therefore believe that the extent of private giving to international development in the UK may be underestimated.

6. Developing countries are also witnessing the rise of foundations and philanthropists, as is evidenced by the formation of philanthropic trade associations such as the Africa Grantmakers Network. Mo Ibrahim, whose Celtel business helped propel the mobile phone revolution across Africa, is emerging as a lead philanthropist on that continent.[15] However, as the World Bank told us, most developing country-based foundations are small. Middle-income countries, such as India and China, have increasing numbers of philanthropists amongst their wealthy classes, but, according to the World Bank, "most have not yet established their own foundation and do not have a track record that is comparable to decades of experience of US foundations".[16]

Our inquiry

7. We began an inquiry into the work of private foundations in July 2011. We decided to focus on foundations specifically, rather than wider philanthropic flows (e.g. corporate giving).[17] Key issues that we wanted to explore included: the role of foundations in development; their relations with DFID and multilateral organisations, including the effectiveness of co-ordination and the avoidance of duplication; and their accountability. We also wished briefly to examine the role and influence of high profile advocates on international development, whether philanthropists such as Bill Gates and George Soros, or celebrities including pop singers and actors. We received 21 pieces of written evidence, chiefly from foundations themselves but also from non-governmental organisations and research bodies. We held two evidence sessions in October and November 2011 with: four private foundations, including the Gates Foundation; commentators on private foundations; and the DFID Minister and officials. We would like to thank all those who took the time to engage with the inquiry.

The structure of this report

8. This report presents the findings of our inquiry. Chapter Two will assess the strengths of foundations and their unique contribution to development as opposed to 'traditional' donors such as the UK's Department for International Development (DFID). Chapter Three will explore the limiting factors in foundations' work, and explore commonly-made criticisms of their work. Chapter Four will look at the implications of foundations' growing contribution to development for DFID, including how the Department manages its relationships with foundations.

1   Michael Edwards, 'The role and limitations of philanthropy' (commissioned paper for The Bellagio Initiative, November 2011, online at, p.3  Back

2   Ev w3  Back

3   Ev 44 Back

4   Ev w14-15. The Index of Global Philanthropy by the Hudson Institute includes giving by foundations, voluntary and religious organisations, corporations and corporate foundations in terms of in-kind and cash donations. The institute also accounts for private sponsorships and scholarships that support students from developing countries studying in the US and estimates the monetary value of volunteer time for developing causes (Ev 70). Back

5   Ev 35 Back

6   'Private grants' is used to refer to what the OECD terms 'grants made by private voluntary agencies'. Back

7   Gates Foundation Annual Report, 2010, Consolidated Statement of Activities Back

8   OECD, 'Development aid: Grants by private voluntary agencies - Net disbursements at current prices and exchange rates', online at:,3746,en_2649_201185_46462759_1_1_1_1,00.html Back

9   Foundation Center, 2011 (  Back

10   Ev 41 Back

11   Ev w41  Back

12   Ev w12  Back

13   Ev w4  Back

14   Ev w5 Back

15   Ev w24  Back

16   Ev w46 Back

17   We are aware that 'private foundations' is a US, rather than UK, concept that excludes fund-raising charities (e.g. Oxfam and Save the Children) and non-charitable private philanthropy (such as the Google Foundation) (ev w42 and Q 2). We use it in this report to include foundations operating worldwide on international development.  Back

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Prepared 20 January 2012