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: http://www.oecd.org/document/39/0,3746,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 www.bellagioinitiative.org), 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: http://www.oecd.org/document/39/0,3746,en_2649_201185_46462759_1_1_1_1,00.html Back
9
Foundation Center, 2011 (http://foundationcenter.org) 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.
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