Conclusions and recommendations
Innovation and risk taking
1. Foundations
can take political, 'focus' (in terms of project choice) and financial
risks that official donors cannot. The world's largest foundation,
created by Bill and Melinda Gates, has shown that risk-taking
and innovation can produce outstanding results. The Foundation
has made significant contributions to reducing the burden of malaria
in developing countries. Thanks partly to funding from Gates,
it is hoped a malaria vaccine will come to market in less than
five years' time. New vaccines for rotavirus and pneumococcal
infection, to be funded through the latest replenishment of the
Global Alliance for Vaccines and Immunisation (GAVI, which receives
around 18% of its income from foundations) hold the promise of
reducing millions of child deaths from diarrhoea and pneumonia.
(Paragraph 17)
Contributing to policy development
2. In
order for their increasing contributions to global policy
development to be maximised, foundations must be brought
inside global development processes. Chief amongst these
are efforts to improve aid effectiveness, known as the Paris Agenda.
It was encouraging that, at the recent High Level Forum on Aid
Effectiveness, held in Busan, Korea, in November 2011, philanthropy
was given a higher profile than at previous international fora.
We recommend that DFID make efforts as far as are practicable
to engage foundations as fully as possible in future development
events and processes, including: follow-ups to Busan in 2012; the
'Rio+20' UN Conference on Sustainable Development in June 2012;
and discussions of a post-2015 Millennium Development Goal Framework including
the MDG 'special event' in 2013. (Paragraph 23)
Venture philanthropy
3. 'Venture
philanthropy' or 'philanthrocapitalism' represents an exciting
new direction for some forms of development funding by the private
sector. The idea of 'profit with a purpose' products, whereby
funding brings about financial as well as social returns, merits
serious consideration as a new way to incentivise the business
community to become more involved in development. DFID is clearly
aware of the potential offered by this form of philanthropy work
and has indicated it would like to do what it can to support it.
We recommend that DFID now take some practical steps to build
its support for venture philanthropy where it is appropriate to
do so. For example, it could open a 'partnership office', possibly
within DFID's Private Sector Development Department, to facilitate
collaboration with foundations and businesses, as donors such
as the US Agency for International Development have done. (Paragraph
27)
High profile advocates
4. High
profile advocates are good at communicating development ideas.
They attract new audiences and draw on contacts in a way that
neither foundations nor official donors can. At a time when national
and global aid budgets are being squeezed by the financial climate,
advocates have an especially important role in underlining 'good
news stories' about aid that can help counteract the negative
view of aid sometimes portrayed in the media. (Paragraph 33)
Single-issue interventions
5. Critics
have argued that the focused, 'problem-oriented' interventions
followed by many foundations can risk focusing on isolated issues
rather than wider obstacles standing in the way of development
such as inequality, conflict and poverty. However, equally, for
small foundations, choosing a single issue gives a focal point
around which trustees and grant-seekers can unite. As we noted
in a previous recommendation, DFID has contributed generously
to the Global Alliance for Vaccines and Immunisation—a classic
'vertical' intervention—but this is just one of a wide range
of DFID health inputs, many of which focus instead of strengthening
wider health systems. To avoid the risk of too many parallel,
single-issue interventions springing up in the health sector,
DFID should seek to engage foundations with global development
structures such as the Paris Agenda, and use these fora to highlight
the importance of sector-wide and 'systems strengthening' approaches.
(Paragraph 40)
The education sector: left behind by foundations?
6. Education
in poor countries receives far less support than the health sector
from foundations. DFID should encourage foundations to move into
education sector, especially girls' education, in line with DFID's
prioritisation of girls and women. It should look at either strengthening
the Global Partnership for Education (formerly the Education for
All Fast Track Initiative), or helping set up a new independent
Global Fund for Education—either of which could help facilitate
increased funding from foundations. (Paragraph 44)
7. The Nike Girl Hub
is an innovative approach that has scope to be scaled up, and
possibly replicated in other sectors. We recommend that DFID extend
Girl Hub activities to eastern DRC, where many girls and women
face extreme hardships—especially gender-related violence—on
a daily basis. Initially, a DRC Girl Hub could operate out of
the Hub's base in Rwanda, but the long-term aim should be for
an independent Hub in DRC operating within DFID's expanded programme
there. (Paragraph 45)
Accountability
8. The
fact that foundations are accountable only to their board members
and trustees, rather than to the public, brings both advantages
and disadvantages. Poor accountability limits co-operation between
foundations and official donors, and thus it is in the interests
of DFID and other agencies to support foundations to strengthen
accountability. We recommend that DFID offer its skills and experience
to build the capacity of the trustees within smaller, UK-based
foundations, who may have limited exposure to the international
development sector. This training could emphasise other ways to
strengthen accountability such as: setting up decision-making
structures that involve local grantees and funding partners; increasing
co-ordination with partner country governments; and improving
monitoring and evaluation. (Paragraph 50)
Improving transparency
9. The
volume, distribution and targeting of foundation spending is currently
unclear. Compared to traditional donors, foundation reporting
is weak, especially within Europe. In the US, foundations are
required to list every grant made and pay out 5% of the value
of their endowment each year to charitable purposes. Improved
transparency amongst foundations would help pre-empt the need
to move to this kind of mandatory regulation in the UK. DFID deserves
credit for its leading role in setting up the International Aid
Transparency Initiative (IATI). The Department has taken steps
to ensure that the NGOs it funds are becoming IATI-compliant.
It is encouraging that the Hewlett foundation has also achieved
compliance. DFID must now seek compliance from other foundations,
including the Gates Foundation, which has already taken the step
of voluntarily reporting its health sector data to the OECD Development
Assistance Committee. DFID should encourage other, smaller foundations
to report their spending to the DAC as a precursor to full IATI
compliance. This would recognise the limited capacity within some
smaller foundations to increase their reporting burden, and would
facilitate a phased move towards increased reporting requirements.
(Paragraph 57)
The Gates Foundation
10. It
is important that large bodies such as the Gates Foundation do
not create parallel structures or skew the priorities of other
donors and importantly, recipient governments. Both DFID and Gates
denied that either of these risks pose a current problem. Based
on the evidence we received, we agree. However, as foundations
continue to grow in size and influence, this is a situation that
needs watching. (Paragraph 64)
Smaller Foundations
11. DFID's
relationship with foundations appears to be somewhat ad hoc. The
Gates Foundation spoke of having an identified contact in the
Department, and of interaction on a weekly basis. Meanwhile, smaller
foundations held a widely-shared view that it was difficult to
have any kind of regular contact with DFID staff. We recommend
the Department become more outward-facing in its approach to foundations,
although we accept that DFID officials cannot meet regularly all
the foundations that would like to meet with them. DFID has responded
to our concerns and the Minister has offered to offer to host
an annual meeting of a collective group of smaller foundations.
We recommend that, in addition to the Minister-hosted annual event,
DFID officials host meetings with foundations at more frequent
intervals (at least bi-annually or even quarterly). We recommend
that DFID identify a named contact point, probably within its
Private Sector Department or Global Partnerships Department, with
whom all foundations—large or small—can engage on
a regular basis. (Paragraph 68)
DFID's funding relationship with foundations
12. Over
the course of the inquiry we heard from several UK-based foundations—including
those with considerable expertise in areas in which DFID is seeking
to work more (for example, private sector development)—that
they do not think there are sufficient opportunities for DFID
and foundations to co-operate over funding. Funding co-operation
between DFID and foundations could be mutually beneficial, bringing
business expertise into DFID and helping transfer development-specific
knowledge to foundations. Foundations may also have the human
resources to manage funding too small for DFID to administer.
We recommend that our suggested new contact point within DFID
produce a simple publication indicating what DFID funding streams
foundations might apply for and how to apply. (Paragraph 71)
Working with foundations based in developing countries
13. The
number of foundations based in developing countries is growing.
This is clearly to be welcomed but it means the number of development
actors with whom developing country governments must engage is
also increasing. We recommend that, as part of its wider efforts
to improve aid effectiveness, DFID ensure that its country offices
assist partner governments co-ordinate foundations and philanthropists
seeking opportunities in the country. Further, DFID is only in
the early stages of engaging with developing country-based foundations.
We suggest it increases its engagement in order to form partnerships
with these important new philanthropic actors. (Paragraph 74)
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