Who will lead the 'next frontier' of governance funding?

SAN FRANCISCO — Bilateral donors, under pressure to justify aid spending, are having an increasingly difficult time supporting issues that don’t demonstrate immediate results.

Some development experts fear this could turn donors away from hard-to-measure work in governance, a trend that would lessen the potential for long-term gains won by supporting governments in low- and middle-income countries to work more effectively.

“As these donors have become more focused on value for money and evidence-based policy, some of their work with governments is being replaced by ‘Here are the things we know that work,’” said Rohini Pande, who was recently appointed as a professor of economics at Yale University and director of Yale’s Economic Growth Center.  

She noted that this potential retreat by bilateral donors in supporting governance gives West Coast donors an opportunity to step in to fill the gap.

The William and Flora Hewlett Foundation, which is based in Silicon Valley, has been focused on increasing government responsiveness to citizens, for example by supporting better data in decision-making with the goal of improving policy and reducing poverty.

Other West Coast donors are starting to enter this space as well. The Bill & Melinda Gates Foundation, which is sometimes criticized for being too focused on technological solutions such as vaccines for global health, is increasingly funding work in the governance space, with Pande pointing to their work supporting state governments to strengthen health systems in India. In February, GiveWell — a nonprofit charity assessment organization that is known for its focus on cost-effective and evidence-backed organizations — said it would begin to investigate opportunities “to improve government spending and influence government policy.”

And the Chandler Foundation, which has a stated mission of building and broadening prosperity in the Global South, is just one example of a new entrant to this space of philanthropy tackling corruption, improving transparency and accountability, and supporting good governance.

A missing element

Richard Chandler, founder and chairman of Chandler Foundation, initially focused his philanthropy on health, livelihoods, and education.

These sectors were relatively easy to navigate, since large communities of donors and NGOs would pull together smart investments, and new funders could support those solutions, said Leslie Tsai, director of social impact at Chandler Foundation.

But over time, Chandler observed that two core elements were missing from his initial strategy: good governance and a business environment to foster private sector growth.

The Chandler Foundation is currently exploring opportunities to support governance in low- and middle-income countries, focusing on organizations that are beyond the startup stage with a solid leadership and governance structure, a proven track record of impact, and strong financial health.

When the Chandler Foundation first began to explore the area of governance, it reached out to the Transparency and Accountability Initiative, or TAI — a donor collaborative — and Tsai suggests that other funders interested in this space do the same.

Growing momentum

Michael Jarvis, executive director of TAI, told Devex he is hearing from more and more funders who are running into barriers that have to do with governance.

“You’re seeing a deeper appreciation of the building blocks you need around an intervention that is quite narrow and very sector-specific,” he said.

There are a range of reasons for growing interest among foundations in governance, he added.

“You’ve got this internalization of what’s happening in the world,” Jarvis said. “People got complacent about how institutions work and the norms behind them, and you realize those can be eroded surprisingly quickly.”

Not all funders use the language of governance. Some describe this work as institutional strengthening. Others talk about transparency as a public good and driver of efficiencies.

“We’re actually thinking about how to more proactively reach out to funders whose starting point is an issue area where they might not naturally think of governance as immediately relevant, but are starting to see the linkages,” Jarvis said.

When Tsai and her team at the Chandler Foundation reached out to Jarvis, he connected them with the Hewlett Foundation, perhaps the best known funder in the governance space, and they have since started a dialogue to share examples of successes to build on and mistakes to avoid.

Building on what works

The Hewlett Foundation believes that purely technical solutions only go so far in addressing global poverty. For example, one of its grantees is the International Initiative for Impact Evaluation, or 3ie, which connects researchers who conduct impact evaluations with leaders who can use them to improve their decision-making.

“Governments have extremely large pots of resources that they’re mandated to use for the general public welfare,” said Norma Altshuler, program officer for global development and population at the Hewlett Foundation. "If we can support them in using those resources 5, 10, 20% better, then what potential for impact.”

The Hewlett Foundation is known for providing long-term, flexible, general operating support to organizations, so they in turn can work with governments over the long term, develop trusting relationships, and act on needs as they evolve.

Making governments work better will need to become an even greater priority for philanthropy as aid continues to be a smaller part of the picture in low- and middle-income countries, Altshuler added.

"The best organizations have this delicate dance between responding to what the government says its needs are and putting new ideas on the table and balancing those two opportunities,” Altshuler said. "It's also about philanthropists understanding that the priorities are going to change, and they need partners to have flexibility to respond to them, so they need to structure what their expectations are in the grant accordingly.”

Still, some funders are entering the governance space with their own priorities in mind, rather than a mandate to support governments to work more effectively across sectors, Altshuler said.

“There are fewer donors investing in things that are more cross-cutting public goods,” she said. “The next frontier is how do folks think about if there are cross-cutting opportunities to strengthen government."

At the same time, established funders in this space might help bring new donors into the governance space by making the connection of how projects such as investing in evidence lead to sectoral improvements, Jarvis said.

“You want those with a sectoral starting point to get to the value of investing in good governance more broadly, and those who have started from the perspective of good governance to do a better job of explaining how that leads to tangible outcomes,” he explained.

What Jarvis said he does hope to see moving forward is greater coordination between private donors and bilateral donors, who are currently talking in their own silos about governance and missing opportunities for collaboration.