Private philanthropy funding for development modest compared to public aid, but its potential impact is high, says OECD
23/03/2018 – Though philanthropic flows are relatively modest compared to official development assistance (ODA), their contribution is substantial in certain sectors, according to a new OECD report. For the first time, Private Philanthropy for Development uses global, comparable data to analyse how private foundations are supporting development.
The report is based on a survey conducted by the OECD, in collaboration with the Global Network of Foundations Working for Development (netFWD) and applies OECD-DAC statistical reporting standards. The data is thus fully comparable to ODA flows.
“Philanthropy is increasingly important in our efforts to achieve the SDGs, eradicate poverty and provide quality access to healthcare. But to harness its full potential, we need better data sharing, coordination and policy dialogue,” said OECD Chief of staff Gabriela Ramos while launching the report. “The OECD report Private Philanthropy for Development is a milestone in providing deeper understanding and greater transparency on how the philanthropic sector can best contribute to the global development agenda.”
According to the report, private foundations provided USD 23.9 billion for development over 2013-15, corresponding to 5% of the amount given through ODA. Philanthropic flows from foundations provide substantial support to sectors such as health: in 2013-15, foundations were the third-largest source of financing for developing countries, following the United States government and the Global Fund to Fight AIDS, Tuberculosis and Malaria.
The sources of philanthropic giving for developing countries are highly concentrated. Of the 143 foundations included in the survey sample, the Bill & Melinda Gates Foundation (BMGF) was by far the most significant philanthropic donor, providing 49% of total giving in support of development. Additionally, 81% of the total philanthropic giving during 2013-15 came from only 20 foundations.
Almost three quarters of giving originated from foundations based in the United States, largely due to the BMGF’s share of funding. Other top countries for philanthropic funding for development are the United Kingdom (7%), the Netherlands (5%), Switzerland (2%), Canada (2%) and the United Arab Emirates (2%).
The report finds that 67% of philanthropic giving goes to middle-income countries such as India (7% of the total), Nigeria, Mexico, China and South Africa. Only a third of the country-allocable funding benefited the least-developed countries (28%). In addition, 97% of philanthropic giving was implemented through large, established intermediary institutions, most often international organisations and non-governmental-organisations (NGOs), such as Gavi, the Vaccine Alliance; the World Health Organization (WHO); PATH International; the United Nations Children’s Fund (UNICEF); or Rotary International.
Most foundations say they systematically engage with governments and donors – 67% and 45%, respectively – when designing or implementing programmes and projects, contrary to previously-held belief.
The report provides recommendations to further leverage global private philanthropy for development:
- Collaboration and dialogue: Foundations could seek closer co-ordination with governments and ODA-providers, especially in middle-income countries and in sectors such as health and education to avoid duplications.
- Enabling environment: Governments in developing countries could further strengthen the enabling environment for philanthropy by adopting or adapting existing regulation, from establishing a legal status clearly distinguishing foundations from Civil Society Organisations to possible tax incentives.
- New ways of engaging: The donor community could adopt more systematic approaches to engagement with foundations including the development of strategies acknowledging foundations’financial and non-financial contribution to development, appointment of focal points responsible for developing and maintaining relations and working with foundations, staff exchange programmes between foundations and donor institutions and more flexible partnership models taking into account the constraints of smaller foundations.
- Data: Foundations could make better use of existing platforms at the global, regional and local levels to improve the transparency and availability of data on philanthropic giving in support of development. There are already many country-level and international reporting initiatives, such as the OECD DAC statistics on development finance (to which the BMGF and the United Postcode Lotteries already report), 360giving, Glasspockets and IATI. Networks such as the OECD’s netFWD, together with the Foundation Centre and WINGS, could encourage the philanthropic sector to further share information and help make data a global public good.
Building on this research and existing dialogue, the OECD is setting up a Centre on Philanthropy to contribute to the global demand for more and better data and analysis on global philanthropy for development. The Centre will seek to bring together relevant efforts from existing research centres and projects, expand the OECD database, and provide research and analysis on global trends and impact of philanthropy for development in the context of the 2030 Agenda.