Private Foundations and Development Partnerships

American Philanthropy and Global Development Agendas

Michael Moran

• Publisher: Taylor & Francis
• Year: 2014
• Print ISBN: 9780415695602
• eBook ISBN: 9781317928126
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: International Relations
• Index: Politics & International Relations

This book explores the influence of private United States (US) philanthropic foundations in the governance of global problems. Through a close scrutiny of four high profile case studies of public-private collaboration, the work addresses the vacuum present in global governance scholarship regarding the influence of foundations, arguing the influence of these actors extends beyond the basic material, and into the more subtle and complex ideational sphere of policy and governance. This book:

• charts the growth of private forms of governance and foundations' role in deepening and extending private power in global politics
• provides a historical examination of private foundations in international affairs including their centrality in the development of the institutional architecture in international health and agriculture and the linkage back to domestic political systems
• analyses the new modes of philanthropy and giving styles – particularly venture philanthropy and 'philanthrocapitalism' – and how these are being rearticulated in the aid architecture and in development discourses
• evaluates distinctive features and unique attributes of foundations as transnational actors (including their limitations) – how they use these attributes when exercising policy influence and how they negotiate and collaborate with other state and non-state actors in global governance
• provides an introduction to three prominent foundations – Gates, Rockefeller and the Acumen Fund – and four key partnerships – IAVI, GAVI, AGRA and A to Z textile Mills.

This work will be of great interest to students and scholars of international organizations, international political economy and development studies.

1 The philanthrocapitalist turn Implications for the aid architecture

DOI: 10.4324/9781315855585-2

As we have seen, philanthropy and charitable donations in various forms have been an important feature of international affairs for decades. Nonetheless, a wide range of commentators argue that we have seen a series of shifts in recent years that are fundamentally altering the “aid landscape.”¹ These include the rise of private aid, a product of the relative decline of multilateral official development assistance (ODA) and increased private capital flows;² the emergence of new development actors, ranging from nongovernmental organizations (NGOs), to celebrities, to new foundations and philanthropists, which augment traditional bilateral and multilateral contributions while also generating donor fragmentation. At the same time new organizational forms and new modes of philanthropy, from mainstream collaborative arrangements such as public-private partnerships (PPP) for global health to more radical modalities that attempt to mirror “for-profit capital markets,” have emerged.³

• The “California Consensus”
• Philanthrocapitalism and its critics
• Private flows, private actors and aid effectiveness
• Private foundations and private aid
• Conclusion

This chapter explores the interplay of these two dynamics in the governance of global development: new approaches to philanthropy, typified by the (re)emergence of large-scale foundations such as the Bill & Melinda Gates Foundation (BMGF) and new styles of giving, and the rise of private development aid, which is said to be restructuring global development finance. However, while these new approaches and new entrants to the aid regime have given rise to new resources for tackling intractable global challenges, they have also, somewhat perversely, exacerbated policy failures including duplication, poor interagency coordination and fragmentation—precisely the problems that ostensibly nimble private actors are said to avoid.

The chapter begins by examining the first dynamic, the new philanthropy. The first section explores the changing character of the philanthropy project. The second section explores how this contest has extended its conceptual reach into debates concerning the fundamental nature of contemporary capitalism by outlining the debate surrounding “philanthrocapitalism.” In the third section the second dynamic—the rise of private development aid—is introduced. In the final section it is argued that in fact foundation flows remain relatively small when taken in isolation and that there is a tendency to overstate the importance of foundations in the international aid architecture when material influence is confined to a select few actors.

The “California Consensus”

A prolonged and protracted debate has been taking place in the philanthropic sector and beyond regarding the effectiveness of institutionalized philanthropy. Foundations have often been portrayed as staid, conservative, and ultimately ineffectual in driving social change. “Discontent,” as it has been described by Peter Frumkin, “runs deep in some quarters.”⁴ This follows a long tradition of “criticism” of foundations that charges them with a range of offences, chief among them a tendency toward “risk aversion.”⁵ These critiques can be reconciled around not what private foundations have achieved, but what they have not, namely the somewhat ill-defined—and contested—ideas of impact and effectiveness.⁶

New modes of philanthropy

The terminology used to describe the apparent transformations in philanthropy has shifted frequently over the past decade or so, subject to the whims of management fads, from strategic to effective to venture philanthropy. Perhaps the most revealing (and controversial) label to surface is philanthrocapitalism, originally coined by Matthew Bishop in The Economist ⁷ but quickly gaining a footing in the lexicon as an umbrella term among both advocates and critics for changes occurring in philanthropy.

Helmut Anheier and Diana Leat call this the “new scientific philanthropy” and identify it as the third phase in the history of giving in the Western world.⁸ Stanley Katz shares this sentiment, but rather than seeing the new philanthropy as novel, and it should be noted that Anheier and Leat also stress continuity, Katz remains instinctively “skeptical about the direction—or directions—of philanthropy in recent years.”⁹ He channels his critique at the “abstract” managerial rhetoric which oftentimes seems to be stating the obvious (e.g. that donors act strategically when they are unlikely to opt for the counterfactual anyway); is sometimes contradictory (e.g. champions the virtues of interventions such as the Green Revolution when this occurred under the old regimen); but more often again, appropriates the central mantra of the tradition’s founders (e.g. that the “stress on causes rather than symptoms” is an invocation of scientific philanthropy’s fundamental rallying call that pure charity is ameliorative, while philanthropy tackles roots). This, he argues, leads to a “powerful feeling of déjà vu.”¹⁰

Augmented patterns of interaction: measurement and engagement

While the terms are contested there are a number of attributes that distinguish new approaches to philanthropy. A core feature of the new philanthropy is an emphasis, some say “obsession,” with measurement.¹¹ Various metrics, loosely modeled on financial analytics, have been tested over the course of the last decade to quantify a firm or organization’s social and environmental, as well as financial, performance. These metrics appropriate concepts from accounting such as cost-benefit analysis in an attempt to capture less tangible impacts to demonstrate that a grant, or investment as these are now often dubbed, has achieved measurable outcomes.¹²

There has not just been a shift toward the introduction of metrics but a fundamental shift in discourse around philanthropic practice. Angela Eikenberry and Jodie Kluver see this as a largely donor-driven process and one that is a direct carry-over of the migration of philanthropists from the business and technology sectors, with consultancy firms and other interested parties also contributing to take-up.¹³ Not surprisingly, an outcomes focus has proven controversial. Proponents have argued that while at an experiential phase and applied on an inconsistent, ad hoc basis, advances in method can yield processes that can benchmark approximate performance. Moreover, as many of these supporters have experience in the business world, where creating (and demonstrating) so-called stockholder value is an imperative, there is a sense that foundations and their grantees should be able to demonstrate outcomes, thus sending a signal to donors and foundation decision makers that grants have not been distributed without appropriate accountability. Countering claims of the critics, Paul Brest therefore posits that while there is an innate complexity to monetizing social phenomena, “with or without attempting to quantify social returns, the investment metaphor embodies an attitude that presses foundation staff to use their donors’ resources as effectively as possible.”¹⁴

Resistance to quantitative measurement of what are seen to be inherently social and political processes has also been strong. Critics argue that it is intrinsically difficult, if not impossible, to quantify the seemingly intangible goals of many foundations. They argue that foundations are challenged with multifarious tasks that cannot, and should not, be reduced to neat, objective, replicable, quantitative assessments. Moreover, one “pernicious consequence” of this reductionism, according to Dennis Collins, is the potential for foundations to divert energy away from “big, complicated, messy, seemingly insoluble problems,” and somewhat perversely given the fundamental centrality of increasing risk appetite to the new philanthropy, “problems rife with uncertainty, risk, and inefficiency, and projects whose potential for failure is high.”¹⁵ Mission drift may also arise as foundation decision makers shift priorities to programs that can demonstrate clear, short-term outcomes to the board over those that are not easily reduced to acquittal statements, quantifiable measures or a predefined timeframe.

Moving beyond measurement, another defining feature of the new philanthropy centers on the issue of engagement. The notion of the passive philanthropist and/or foundation decision maker was premised on a distanced relationship. The aim was to preserve the purported (political) integrity of the funder and was characterized by a preference for “projects rather than [direct] support for nonprofit organizations”—particularly in “the last third of the [twentieth] century.”¹⁶ In newer forms of philanthropy this has been partially superseded as donors and foundations seek to bridge the gap as a means to improve effectiveness.

The primary point of differentiation between traditional and newer modes of philanthropy is around this issue of engagement—or what can be characterized as deep rather than shallow patterns of interaction. Some form of active interface, whether through monitoring, feedback, evaluation or consultation on programmatic design, has been a constant feature of inter-organizational cooperation, and strategic approaches have obviously always constituted the norm in some form or another. Yet in venture philanthropy, as in venture capital, there is a highly augmented pattern of interaction between the donor (or “investor”) and recipient (or “investee”).¹⁷

Thus most accounts cite the manner in which funders interact with recipients as the most conspicuous departure from traditional approaches. For example, efforts are made to improve organizational capacity “focusing on management, leadership, governance and problem solving” in recipient entities.¹⁸ Engagement takes the form of managerial advice, secondment of employees or access to management or financial consultants, the aim being to promote inter-organizational learning through cooperation. Peter Frumkin does not see this as a one-way street. He notes that “rather than cut a check and run,” the donors (or “principals” as he terms them) do not merely advance various forms of material and in-kind support, but also receive some benefit which “satisfies the desires of many wealthy people to find meaning in their lives outside business.”¹⁹

Linked to the notion of augmented engagement with grantee organizations is an additional emphasis on the deployment of continuing resources beyond an initial seed grant, and in keeping with the venture capital orientation, taking account of long-term investment horizons.²⁰ Until relatively recently it has been commonplace in the literature to view big philanthropy as something of an incubator for social innovation. After a program had proven a success and its effectiveness duly demonstrated to public officials it was expected that the state would step in and scale the program up through expansion, mainstreaming and replication. This dominated philanthropic strategy and government and international organizations (IOs), such as the United Nations (UN) agencies, were the natural partner in any strategic alliance that would ensue. As government has progressively taken a less overtly interventionist approach philanthropy has been forced to adapt. In the venture and strategic paradigms, therefore, “large blocks of capital [are] delivered over an extended period of time” in an effort to create a financially sustainable sector as government lacks the resource capacity—or at least the inclination—to engage in large-scale programmatic expansion.²¹

Convergence and organizational cultural change

The arrival of alternative modes of philanthropy is opening up some minor, yet not insignificant, distinctions between private foundation organizational types. First we have the traditional large-scale grant-making foundation. As an ideal type—labeled here first generation—these are modeled on the early and mid-twentieth-century entities established by the likes of Carnegie, Rockefeller and later Ford. The type also includes other large-scale foundations such as the Andrew W. Mellon Foundation, the ...

Table of contents

• Cover Page
• Half Title Page
• Series Page
• Title Page
• Copyright Page
• Table of Contents
• Foreword
• Acknowledgments
• List of abbreviations
• Introduction
• 1 The philanthrocapitalist turn: implications for the aid architecture
• 2 Private foundations and global health partnership formation: the Rockefeller Foundation and the International AIDS Vaccine Initiative
• 3 New organs of global health governance: the Bill & Melinda Gates Foundation and the GAVI Alliance
• 4 Private foundations and agricultural development policy: Rockefeller, Gates, and the Alliance for a Green Revolution in Africa
• 5 The new venture foundations: sectoral “blending” in international development cooperation
• 6 Private foundations and global governance: current influence, future directions
• Select bibliography
• Index
• Global Institutions Series