Foundation resources for development


Understanding the resource landscape

Private development assistance (PDA) is an international resource given voluntarily from private sources, and transferred across borders for international development and poverty reduction. PDA comes from non-governmental, foundations, and corporate giving. It is equivalent to approximately a third of official development assistance (ODA) and a tenth of foreign direct investment (FDI) to developing countries.

Resource flows to developing countries with PDA provider breakdown, 2011

Understanding the resource landscape

Source: Investments to End Poverty (2013)
Note: “Other” refers to PDA that cannot be allocated to a type of provider

 

To read more click on our key facts below or download the Foundation resources for development  pdf.

 

Foundations deliver at least US$7 billion in private development assistance – mainly from the US

PDA from foundations based in seven countries is estimated at US$7.1 billion in 2011, or 16% of total PDA. Some 90% of this was from the US. Data specifically on foundation spending on international development is lacking for many countries, including Switzerland, Germany and Sweden. For these countries, spending by NGOs and foundations could not be disaggregated.

The type of PDA from foundations varies from simple grant-making to establishing offices in developing countries for policy advocacy activities. Foundation finance usually originates from a high net-worth individual, often the founder, while finance from corporate foundations may be sourced from that company’s profits.

Foundation private development assistance by source country, 2011, US$ billions

Foundations deliver at least US$7 billion in private development assistance – mainly from the US

 

 

Source: Investments to End Poverty (2013)

Private development assistance from foundations increased by half between 2006 and 2011

PDA from 1,330 US foundations reporting to the Foundation Center totalled US$6.4 billion in 2011, up from US$4.0 billion in 2010. US foundation giving grew by 49% between 2006 and 2011. A fall in amounts in 2009 and 2010 may be due to the global financial crisis. The share of this total giving going to international development purposes is growing, reaching 26% in 2011. The proportion of US foundations awarding at least one international grant also increased from 57% in 2008 to 60% by 2010.In the UK, international development funding from foundations increased from 5% of their total funding in 2004 to 9% in 2009.

US foundation to international development, US$ billions, and share of total giving by US foundations

Private development assistance from foundations increased by half between 2006 and 2011

 

Source: Foundation Center (US), Development Initiatives calculations
Large foundations are growing in visibility and influence

The important role played by foundations in development is increasingly recognised. Larger foundations are comparable to official donors in terms of budgets and influence. For example, in 2012 the Bill & Melinda Gates Foundation was the second largest donor to health, after the Global Fund, larger than the US. The Bill & Melinda Gates Foundation is also the second largest donor to basic nutrition, after Canada.

The 10 largest foundations account for about 60% of international foundation giving. But international grant-making portfolios in the scale of several million dollars remain atypical among foundations. Beyond the US most foundations have no overseas activities, and operate within national borders.
Foundation funding tends to go to ‘more developed’ developing countries

Foundation giving to international development is often channelled through other bodies, such as global funds or NGOs. In 2011US foundations gave more of their international funds to recipients overseas than at home – for the first time since 1998. Organisations in developing countries received 15% of international development funding. India, China, Mexico and Brazil were among the largest recipients. Among developing countries, foundation giving goes mostly to the more developed countries. World Bank research has found that foundation giving is more concentrated and less poverty-focused compared with ODA, and recent data suggests this trend is likely to continue as foundation funding is attracted to more mature markets.

Foundation funding tends to go to global institutions or vertical funds rather than government systems or directly to communities. In 2011, three institutional recipients received a third of all US foundations’ international development funds (US$1.9 billion): the Global Alliance for Vaccines and Immunisation, the Global Fund, and the World Health Organisation.

Top 10 developing country recipients of US foundations, US$ millions, 2011

Top 10 developing country recipients of US foundations, US$ millions, 2011

Source: Foundation Center (US)

 

 

Foundations have a strong health sector focus

Foundations have varied interests, but often specialise in a few specific sectors. Some 60% of US foundation funds went to the health sector in 2011, compared with 6.6% from DAC bilateral donors. The Bill & Melinda Gates Foundation and the Clinton Global Initiative are both highly focused on health, with the former spending 54% of its grants on health activities and 18% on reproductive health in 2012.

Social services, the environment and agriculture/food security also are high foundation international priorities. The Bill & Melinda Gates Foundation and the Wellcome Trust are important funders for research in agriculture and science respectively. Health and education are the sectors that attracted most international funding from UK foundations in 2009/10.

 

US foundation private development assistance by sector, US$ billions

US foundation private development assistance by sector, US$ billions

Source: Foundation Center (US), Development Initiatives calculations

 

Foundations play a key role in domestic philanthropy in fast-growing economies

There are very little data on foundation funding crossing the border from developing countries. Most grants are allocated locally. International giving from Asian foundations is limited due to cultural and religious traditions that favour local philanthropy. The Middle East also has a strong philanthropic tradition, but data on transfers of these resources are not available. Domestic philanthropy is an important resource for poverty reduction in Brazil, South Africa and India that exhibit growth in national resources and individual wealth. Foundation networks and philanthropic events show the importance of local giving. These include WINGS in Brazil, Fondos a la Vista in Mexico, the World Congress of Muslim Philanthropists and the African Philanthropy Forum. The African Grantmakers’ Network also shows that foundations are rising within the continent, especially in South Africa, Kenya, Ghana, Nigeria and Egypt.