1. Overview: Data on private philanthropy for action
This chapter provides an overview of private philanthropy for development over 2016-19. It summarises key findings of the report on the amount of funding and its recipients, on philanthropy in emerging economies, and on advocacy by foundations and strategies to mobilise additional finance and learn from investments. It also outlines challenges faced by foundations and offers brief recommendations for addressing them.
This report provides the most comprehensive view to date on what philanthropy contributes to development. Drawing on data from 205 of the largest philanthropic organisations worldwide, it provides an accessible perspective on philanthropy’s goals, scale and scope for the period 2016-19. In addition to unpacking information on philanthropic resources, the report describes the strategies used by foundations to harness investment capital, advocate for policy change and use monitoring and evaluation to promote learning.
This second edition of Private Philanthropy for Development goes well beyond the first in ambition and scope. It includes additional information on domestic philanthropy in developing economies, particularly in India and the People’s Republic of China (hereafter “China”), and introduces higher transparency standards for grants and project-level information – to make it accessible as open data.
Private philanthropy for development refers to transactions from the private or non-profit sector having the promotion of the economic development and welfare of developing countries as their main objective, and that originate from foundations’ own sources, notably: endowments; donations from companies or individuals (including crowdfunding); legacies; income from royalties; investments (including government securities); dividends; lotteries; and similar. Private philanthropy for development also includes financing towards basic or applied research that directly benefits developing countries, or indirectly benefits developing countries through global public goods.
The OECD invited more than 400 philanthropic organisations worldwide [foundations primarily, and also corporate social responsibility (CSR) in India] to participate in this research, aiming to include large organisations from the private and non-profit sectors that provide financing to development. The sample targeted the largest organisations according to their annual spending in grant making or project financing, based on previous OECD research and consultations with multiple regional networks of philanthropic organisations. The resulting database includes information from 205 organisations based in 32 countries that provide financing to organisations in over 140 countries. A detailed methodology can be found in Annex A.
More foundations are providing information on their funding, priorities and behaviour. Yet there is still much room to improve transparency on philanthropic resources allocated for development. This second edition of Private Philanthropy for Development, covering 205 foundations over the period 2016-19, evolved from an initial sample of 143 foundations over 2013-15. This increase can be explained by several developments. First, the number of foundations that report on a regular basis to the OECD’s Creditor Reporting System (CRS) increased from 15 in 2015 to 45 as of November 2021. OECD’s CRS publishes this information on an open and free online database (OECD, n.d.[1]). Second, in some emerging markets, like Colombia and South Africa, domestic foundations are working with associations of foundations to publish more information about their activities for better collaboration among themselves and have shared the information with the OECD Centre on Philanthropy. Finally, foundations’ obligations to register and publicly disclose financial data have become more stringent in some countries. Examples include India, through the regulation of Corporate Social Responsibility (Companies Act, 2013), and Colombia, through a 2016 tax reform mandating all non-profits to disclose their activities in order to retain tax-exempt status.
Private philanthropy for development, from 205 organisations, reached USD 42.5 billion over 2016-19. Private philanthropy for development amounted to USD 42.5 billion over 2016-19. This is on average USD 10.6 billion per year, approximately USD 2 billion per year higher than the level of funding over 2013-15 identified in the first edition of this report.
The difference can be explained by the expansion of the latest sample from 143 to 205 organisations to include more philanthropic organisations operating within emerging markets. Over 2016-19, official development assistance (ODA) from members of the OECD’s Development Assistance Committee (DAC)1 totalled USD 595.5 billion. Private philanthropy amounted to 7% of that level.
Cross-border private philanthropy remains key in health and education. While private philanthropy for development remains modest compared to ODA, aggregate volumes are particularly important in the health and education sectors. Total cross-border philanthropic giving in health and reproductive health ranked second after giving from the United States. In education, cross-border private philanthropy for development represented the eighth largest source of funding when compared with bilateral and multilateral ODA donors (Figure 1.1).
Note: Core contributions from the Bill & Melinda Gates Foundation to GAVI Alliance and the Global Fund are included in the foundation’s funding.
Source: OECD Private Philanthropy for Development survey and OECD Creditor Reporting System.
Health and education received the most philanthropic funding. Looking at allocations of private philanthropy for development by sector (both cross-border and domestic), most financing went to the health sector over 2016-19, with health and reproductive health jointly receiving USD 18.4 billion (43%). The Bill & Melinda Gates Foundation accounted for 69% of total health-related giving. Education received the second most financing and was the top sector for domestic philanthropy, with USD 4.5 billion (11%). The agriculture sector and government & civil society sector followed, with USD 3.5 billion (8%) and USD 2.5 billion (6%) respectively.
Gender-related giving amounted to 8% of all private philanthropy for development. Funding in support of reproductive health, family planning, women’s rights and efforts to end violence against women and girls amounted to 8% of all private philanthropy for development in the sample over 2016-19. Of the 103 respondents, only 5 foundations make gender equality the main objective of their giving. A total of 29 foundations see gender equality as both a primary and secondary objective, while for another 30 respondents it is a secondary objective. For 39 foundations, gender equality is neither a primary nor a secondary objective of their grant making.
Foundations are taking climate change into account across their portfolios. More than half of respondents (58 of 103 foundations) include a climate-change lens in their grants or projects. Strategies include minimising the carbon footprint of their operations and grant making, asking partner organisations to account for and mitigate climate-related risks that can affect their work, and targeting grantees in climate-fragile geographies.
The Latin America-Caribbean region received the largest share of total funding
From 2016 to 2019, USD 24 billion (56%) of total philanthropic financing was allocable by country or region. The region that received the most philanthropic financing from international and domestic sources combined was Latin America and the Caribbean, with USD 6.7 billion (16%). This funding was provided primarily by Spain’s Fundación BBVA Microfinanzas and large domestic organisations in Mexico, Colombia and Brazil. South Asia was the second largest recipient region of both international and domestic philanthropy, with USD 6.3 billion (15%). In terms of international philanthropy alone, Sub-Saharan Africa was the top recipient region, with USD 5.5 billion (13%). The other regions – East Asia and Pacific, the Middle East and North Africa, and Europe and Central Asia – received relatively less funding (Figure 1.2).
Middle-income countries remained the main recipients of philanthropic financing over 2016-19. Approximately USD 9.9 billion (42%) of all country-allocable giving (international and domestic) was directed towards upper middle-income countries. Lower middle-income countries received USD 9.1 billion (38%). Only a small fraction of philanthropic financing was directed towards low-income countries, reaching USD 3 billion (13%) over 2016-19.
Domestic foundations in emerging countries provide substantial support locally. From the sample of 205 philanthropic organisations, a total of 116 are based in emerging markets. Together they provided USD 7.9 billion, or 19% of total philanthropic flows for development identified for this report over 2016-19. In some countries, like India, China and Mexico, domestic philanthropic financing in this sample surpassed the flows from cross-border philanthropy (Figure 1.3). To fully unpack philanthropy’s contribution to development, it is essential to consider the growing domestic philanthropic sector in the Global South by gathering more data and engaging in dialogue with other development stakeholders.
Philanthropy in emerging markets has yet to be fully grasped. Besides the private philanthropy for development funding from India and China described in this report, additional data collected by the OECD Centre on Philanthropy for the period 2013-18 – in Colombia (54 foundations), South Africa (31 foundations) and Nigeria (12 foundations) – suggest that philanthropy in emerging economies is a growing sector. In all of these countries, philanthropy tends to be concentrated in a few regions or provinces, and organisations tend to have a single sectoral or thematic focus instead of a wide-ranging portfolio. These organisations for the most part implement their own projects, but they often partner with and finance local grassroots non-governmental organisations (NGOs). More attention should be brought to the work of philanthropic organisations operating in emerging economies, as they not only provide philanthropic capital to development, but they also have experience and context-relevant knowledge about the role of the sector in each country.
Foundations are taking a more strategic approach to philanthropy. Many foundations report an ambition to move beyond narrowly defined charitable projects and use their funding purposefully to mobilise additional resources for development, advocate for broad social and policy change, and produce knowledge from evaluations that can improve development policy and practice.
Many foundations are seeking ways to mobilise private finance for development. The assets of foundations are negligible compared to those held by private investors, governments and multilateral donors. Yet foundations can play their part in helping to mobilise private capital markets to support development. Of the foundations that responded to the OECD organisational survey for this report, 69% are endowed (71 of 103). They are based primarily in the United States, Latin America and Europe. Of the endowed foundations in the sample, 77% are practicing responsible investment. The most common strategies cited are the application of environmental, social and governance (ESG) criteria to define an investment portfolio and the positive screening of investments (Figure 1.4).
Foundations report using sustainable and responsible investing for a number of reasons (Godeke and Bauer, 2008[2]; Bolton, 2006[3]; Cooch et al., 2007[4]). By aligning assets with social goals, and particularly with foundations’ own programmatic objectives, foundations seek to extend the financial resources they devote to their mission. In the United States, for instance, foundations are legally required to disburse 5% of their net investment assets annually. Sustainable and responsible investing has the potential to leverage the “untapped 95%” (OECD, 2018[5]; Mahlab and Harrison, n.d.[6]). Foundations also use their assets to demonstrate how responsible investments yield competitive market returns alongside increased social value, in the hope of convincing more prudent commercial investors to follow suit (Kölbel et al., 2020[7]; Walker, 2017[8]; McCarthy, 2017[9]; Miller, 2012[10]). Furthermore, foundations have used sustainable and responsible investing to ensure a greater degree of consistency and avoid discrepancies between their values and programmatic priorities and the management of their own assets. At a time when public scrutiny of philanthropy is increasing, avoiding investments in industries at odds with a foundation’s mission – such as in fossil fuels, alcohol or tobacco – can help foundations protect their reputation and credibility. Finally, responsible investing can be a strategy for protecting the value of foundations’ assets in the long run. Societal values related to environmental protection and social inclusion are increasingly influencing consumer and investor choices, with a likely bearing on future corporate (and asset) performance (OECD, 2020[11]).
Note: Answers to the question “Does your foundation follow any of the investment strategies listed for its endowment?”. Based on 71 foundations with income from an endowment (out of 103 foundations surveyed). Foundations could choose multiple investment strategies.
Source: OECD Private Philanthropy for Development organisational survey.
Most foundations engage in advocacy to encourage change in policy and social norms
Foundations have broadened their ambitions, moving from narrowly defined interventions to bolder objectives aimed at influencing social systems and informing policy design (Powell and Steinberg, 2020[12]). The majority of foundations in the sample use advocacy to bring about broader change. Of the 103 that responded to the OECD organisational survey, 84 report engaging in advocacy. Most of them do so indirectly as part of a broader network or collaborative (70 of the 84, or 83%), or by supporting grantee’s efforts to advocate for a cause (60 of the 84, or 71%). A slightly smaller but substantial share (56 of the 84, or 67%) also use their in-house leadership or own advocacy teams.
More than three-quarters of foundations engaged in advocacy (directly or indirectly) aim to influence the public policy agenda and/or inform policy design (66 of the 84, or 79%) and a similar proportion aims to shift social norms and behaviour (69 of the 84, or 82%) (Figure 1.5). However, as foundations seek to change the structures and mechanisms that hold systems in place, their ambitions can conflict with the resources and strategies deployed. Foundations often provide short-term financial resources for specific purposes (OECD, 2018[5]), yet effective advocacy aimed at changing social norms requires long-term support and a high degree of flexibility.
Advocacy can also be used to raise additional resources for a cause, to hold policy makers accountable for their actions and to improve the enabling environment for philanthropy. In the OECD survey, more than two-thirds of the foundations that engaged in advocacy (59 of the 84, or 70%) reported using advocacy to mobilise more funding and to find co-operation partners by increasing the visibility of a cause. A smaller share (38 of the 84, or 45%) use advocacy to ensure that citizens are equipped with the information, oversight and tools they need to hold political representatives accountable. Finally, at a time when restrictions on domestic and cross-border philanthropy are growing, two-fifths of respondents that engage in advocacy use it to promote an enabling environment for philanthropy (34 of the 84, or 40%).
Note: Answers to the question “What are the objectives of your foundation’s advocacy?”. Based on 84 foundations that engage in advocacy (out of 103 foundations surveyed). Foundations could choose multiple options.
Source: OECD Private Philanthropy for Development organisational survey.
Foundations use a range of strategies to advocate for a cause
Common advocacy tactics include demonstration pilots, research and dissemination, capacity building, media outreach and financing grassroots organisation. Of the 84 foundations in the sample that engage in advocacy, 76 reported that they always, often or occasionally used demonstration pilots – the small-scale implementation of programmes to generate knowledge about policy or programme alternatives that can be implemented at scale if proved successful (Figure 1.6). Research and dissemination of the findings of academic scholars, think tanks or other experts is conducted by a similar proportion of foundations that engage in advocacy (73 of the 84, or 87%). This strategy may use primary research, reviews of existing evidence, policy analysis and evaluation, with the aim of bringing rigorous evidence to policy debates and encouraging evidence-based decision making. Furthermore, of the foundations that engage in advocacy, 83% invest in capacity building to help other organisations improve their advocacy efforts (70 of the 84). Finally, about four-fifths of the foundations that engage in advocacy regularly use social media, the press or television to share evidence and arguments for why and how change should happen (68 of the 84, or 81%); and 57 of the 84 foundations (68%) support movement building or grassroots mobilisation to increase the visibility of public efforts to advocate for a cause.
Note: Answers to the question “Since 2016, how frequently did your foundation use the following strategies to change policy, practice and/or attitudes?”. Based on 84 foundations that engage in advocacy (out of 103 foundations surveyed). Foundations selected a frequency for each available option.
Source: OECD Private Philanthropy for Development organisational survey.
Foundations are developing fit-for-purpose monitoring and evaluation systems to assess their efforts and achieve better results. More than half of foundations in the sample (55 of 103, or 53%) have a dedicated evaluation person, unit or department that reports to the CEO or the head of programming, strategy or research. Foundations use a variety of tools to support programme design, monitoring and evaluation. A large majority of foundations (more than 73%) frequently conduct needs assessments, develop theories of change and deploy process evaluations to learn from their efforts.
In spite of these encouraging developments, this report also identified a series of challenges that limit foundations’ potential to amplify their contribution to development. These include risk aversion, limited time and resources for rigorous learning, lack of transparency, and limited capabilities to mobilise finance and advocate.
Lack of time and limited internal capacities create a common bottleneck to mobilising private finance, advocating and/or producing high-quality evaluations. More than one in four foundations in the sample (29 of 103) describe their lack of internal capacities as a major limitation on the use of alternative methods of funding, such as guarantees, equity and loans. Most foundations in the sample use grants, matching grants and prizes/awards. Instruments like loans, guarantees or equity are less widely used, with 63% of foundations in the sample not currently using any of these three financial mechanisms.
Similarly, the most frequently cited barrier for advocacy by foundations is a lack of time, resources and knowledge to advocate successfully. Almost one in three foundations in the sample (32 of 103 foundations, or 31%) report that constraints on resources and time as well as a lack of knowledge pose obstacles to their engagement in advocacy. Successful advocacy requires staff that have the skills to assess when advocacy efforts are promising and how to allocate time and resources effectively. It also requires staff to have a profound understanding of the local context, relevant stakeholders and different advocacy strategies in a given policy environment. Finally, foundations need staff or partners who can provide quick feedback and data to advance advocacy efforts and be responsive to changes in the external environment (Atlantic Philanthropies, 2008[13]).
Note: Answers to the question “Which of the following are challenging for your foundation?”. Based on 103 foundations that responded to the organisational survey. Foundations used a Likert scale for each available option. The figure only shows the number of responses for “Very challenging/Challenging” levels.
Source: OECD Private Philanthropy for Development organisational survey.
A majority of respondents (60%) find it particularly challenging to ensure that evaluations are of sufficiently high quality (Figure 1.7 above). A similar share (60%) highlight that this can be explained by the inadequate capacity of their partners to collect and report reliable data, while one in four foundations views the limited capacity of foundation staff as a major constraint. These findings suggest that there is still much room to consider how to enhance partners’ capacities to gather and use high-quality data throughout the programme cycle.
Fear of negative publicity also poses a barrier to foundations’ advocacy efforts. Despite the widespread use of advocacy, almost one-third of foundations that responded to the OECD organisational survey (30 of 103 foundations, or 29%) fear that engagement in advocacy could lead to negative publicity or adversely affect perceptions of their work (Figure 1.8). This fear may be partially grounded in adverse public perceptions of lobbying and political influence. In public discourse, the line between lobbying and advocacy is not always clear-cut, with lobbying often seen as an unaccountable channel of power that distorts policy decisions towards corporate interests (Keidan, 2020[14]).
Note: Answers to the question “What are the main barriers for your foundation to engage in advocacy?”. Based on 103 foundations that responded to the organisational survey, including foundations that do not engage in advocacy. Foundations could choose multiple options or “No barriers to advocacy”.
Source: OECD Private Philanthropy for Development organisational survey.
Foundations find it particularly challenging to share relevant lessons with policy makers. Communicating evaluation findings can lead to the scaling up of effective programmes. However, 54% of foundations find it challenging to use the results of evaluations to provide useful lessons for policy makers (Figure 1.9). Close to half of respondents (45%) highlight that their staff have limited time to analyse and communicate evaluation results. In addition, not all international foundations have an in-country presence, which might limit their capacity to engage directly with national and local stakeholders. This might hinder their understanding of the local political economy (that is, of the incentives and interests of local decision makers) and of government learning needs. It might also limit their capacity to directly engage with national stakeholders to share evaluation findings.
Note: Answers to the question “Which of the following are challenging for your foundation?”. Based on 103 foundations that responded to the organisational survey. Foundations used a Likert scale for each available option. The figure only shows the number of responses for “Very challenging/Challenging” levels.
Source: OECD Private Philanthropy for Development organisational survey.
Lack of transparency limits foundations’ potential to partner and learn. Transparency is not yet the norm in the philanthropic sector, limiting the potential of foundations to find suitable partners and learn within and beyond the philanthropic sector.
The OECD survey asked which barriers to collaboration were the most binding. Respondents who are part of a collaborative, as well as those who are not, indicated that the biggest barrier is finding partners who have aligned interests. This indicates a lack of awareness among donors about each other’s objectives (private philanthropic donors as well as providers of ODA).
In addition, foundations lack transparency when it comes to sharing evaluation results. Foundations are more likely to share information about their strategy, priorities and inputs (e.g. annual expenditures, annual budgets) and sometimes outputs (e.g. annual reports) than evaluations of their programmes and grant results or information about the foundation’s performance (Figure 1.10).
Note: Answers to the question “What information do you make available on your website or other publicly accessible sources?” Based on 103 foundations that responded to the organisational survey. Foundations could choose multiple options.
Source: OECD Private Philanthropy for Development organisational survey.
Invest further in rigorous learning, and back up initiatives with robust evidence on effectiveness. Given constraints on time and resources, foundations should prioritise impact evaluations for approaches that have not been evaluated substantially, apply high quality standards to these evaluations and create incentives and capacities to ensure that the evidence is used to inform decisions.
Share data on philanthropic giving to better identify funding gaps, avoid duplication, explore synergies with other funders, and inform the broader public. Publicly available data on philanthropic assets, grants, advocacy work and evaluations can help build trust with grantees and end beneficiaries, and inform the public on foundations’ role in society. This is all the more important in light of growing ambitions to mobilise private capital and influence the public policy agenda.
Increase internal capacities, including the financial skills of boards, management and staff, and co-ordinate with other donors to pool funds for joint learning and advocacy.
Encourage greater transparency in the philanthropic sector by establishing annual reporting requirements that mandate online publication of philanthropic activities, and strengthening the capacity of national statistical offices in monitoring development finance from foundations, ODA providers and other sources in their territories. In the absence of mandatory reporting requirements, networks of foundations or other organisations can help collect and disclose data on philanthropic giving.
Consider removing constraints on cross-border philanthropy, including differential tax exemption for activities carried out domestically vs. abroad, or denial of tax exemptions for activities whose beneficiaries are foreign public benefit organisations (PBO). Governments should consider reassessing the specific situations when a more equal tax treatment to domestic and cross-border philanthropic financing could be provided.
Involve foundations in the monitoring and evaluation efforts of ODA providers. These providers should continue to build capacity for monitoring, evaluation and learning, and share evaluation results transparently. They could also facilitate joint learning with foundations in specific sectors and develop local learning agendas. ODA providers could also share their expertise on blended finance to encourage its use by private foundations, and help them evaluate the results.
References
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