How can philanthropy fund development better?

As development funding from donor governments falls away, more and more emphasis is falling on the role of philanthropy in funding development. But is the sector doing as good a job as it can at providing that funding? Not really, according to a panel of experts at a Devex event on how to strengthen philanthropic funding for development. Right now, the sector needs a “sea change,” but it hasn’t happened, said Elizabeth Dale, the Frey Foundation chair for family philanthropy at the Dorothy Johnson Center for Philanthropy, situated at Grand Valley State University in Michigan in the United States. Nonetheless, she said, there are “glimmers of improvement.” For many years, philanthropic leaders have studied how money is given away and identified changes in practice that would allow funding to be provided more effectively. Dale said that right now, those improvements in best practice constituted “isolated bright spots that are scattered about the sector,” rather than a widespread change. Benjamin Bellegy, executive director of WINGS, an international network dedicated to supporting the growth of philanthropy, agreed with Dale. “There are a number of obstacles that need to be addressed,” he said. “I think the trend is positive, but it’s just really too slow.” So where has progress been made, and where is there more to do? Flexible funding Grantees have consistently asked for philanthropy to fund more flexibly. Recently, Dale said, the philanthropic sector has seen a push toward trust-based giving, which involves more unrestricted funding, or at least more support for core costs, and a shift toward longer-term support, with funders showing greater patience and tolerance for experimentation and risk. One idea being trialed by some foundations, as part of this move to longer term support, is the concept of a front-loaded grant. It’s increasingly common for foundations to fund over long time periods — three or five years — as requested by grantees. So why not give most of the grant up front, so it can get to work as early as possible, rather than distributing it over the time period? It’s a technique being pioneered in the United States by some foundations. But, said Dale, it’s one she has rarely seen in international development philanthropy. The shift toward trust-based giving has been accompanied by a shift in how grantees are selected. Increasingly, funders are proactively identifying the organizations they wish to back, rather than relying on open applications. This has some big advantages — it cuts down the time spent on filling out forms — but it also comes with some potential problems. Application processes are at least democratic. There has been plenty of progress in these areas, Bellegy said, but also plenty more to do. “I think the discourse has evolved a lot in the field around all these topics Liz mentioned,” he said. “Unrestricted giving, multiyear, long-term vision, trust-based, and so on, but the translation of those words and concepts into practice has been really slow. We’ve also seen some improvements, and then gone backward a little bit.” Collaboration One of the key debates in philanthropy is around impact — what is it that really makes a difference, and how do you know? It’s a big challenge for funders — firstly to identify what work is effective, and secondly to track the evidence of your work without burying grantees in paperwork. But also, said Bellegy, beyond that, foundations should be cautious about thinking too much about themselves. He stressed that there might be a tension between those things that are easy to measure and those things that create real change. “I think the reason that the change is still too slow is really a question of mindset,” he said. “It's not so technical. It’s more political, almost philosophical, in the sense that what really drives funders and those who are sitting on boards and those who are, you know, creating foundations and giving the resources for them is still very much about their own impact. It’s still very much self-centered.” That focus on a foundation’s own importance, he said, might block it from bringing about real change. “We really need to decenter ourselves if we want to change systems at scale, and that means reworking, through trust and through collaborations and ecosystems, and losing, a little bit, the direct attribution of impact,” he said. Using every bit of the buffalo Bellegy also talked about the importance of using all of the resources available to a philanthropic organization — not just the 5% given away each year in grants. He highlighted two other aspects — first, the fact that foundations can use their influence and their platform to campaign for particular outcomes they support. And second, how foundations can use their investments to support their activities. There was no use trying to do good, he said, and then investing in companies whose aims were contrary to your own. “You may have grants,” he said, “but you also have a culture, you have a team, you have networks, you have a voice. And then you also have — especially for North American foundations and a lot of European foundations — you have endowments, right? And what do you do with these endowments? Are they sitting and contributing to unequal and destructive extractive systems, or are they also leveraged to bring about positive change in the world?”