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Donor institutions

Flexible and innovative

by Yvonne Walter

In brief

A health centre supported by Novartis Foundation in Michenga, Tanzania.

A health centre supported by Novartis Foundation in Michenga, Tanzania.

Private foundations have stepped up their developmental activities in recent years. The German Development Institute (DIE-GDI) assessed their engagement in Tanzania in field research. By Yvonne Walter

Private foundations have stepped up their developmental activities in recent years. The German Development Institute (DIE-GDI) assessed their engagement in Tanzania in field research.

The Bill and Melinda Gates Foundation is obviously exceptional. In 2010, it spent almost as much on developmental measures as the US government invested in official development assistance (ODA). Other foundations matter too, however. Combined, their development budgets compare to Finland’s ODA expenditure.  

The DIE-GDI undertook a field study to understand the developmental impact of various foundations’ activities in Tanzania. Its researchers interviewed staff of foundations, relevant stakeholders, government officials and people from international agencies. Obviously, representatives of organisations that benefit from private foundations’ support figured prominently. The authors state two reasons for picking Tanzania: the country is a donor darling, and efforts to coordinate various parties in order to boost aid effectiveness have made considerable progress there.


Their report acknowledges that the term “foundation” is somewhat fuzzy. In the past, foundations were defined as agencies with a capital stock of their own, the proceeds of which are used for projects and programmes. In some cases, the capital stock might be consumed too. Today, however, some agencies call themselves foundations even though they rely entirely on donations. In the DIE-GDI study, only agencies that have at least some capital stock of their own are considered foundations.

The empirical data confirms the general impression that private foundations tend to be more innovative than other agencies. This was confirmed by foundations’ staff as well as the recipients of foundation money. According to the study, moreover, foundations tend to focus on topics that government bodies regard as low priority. Small foundations, in particular, are said to raise their profile by tackling highly specific challenges.

The scholars state that foundations do not tend to operate in isolation. Rather, some coordination is considered typical, though the extent may vary. According to the report, foundations hardly ever operate totally on their own. Smaller foundations, however, are said to find it more difficult than bigger ones to make themselves heard in coordination meetings with other partners. As the authors point out, more­over, coordination of public sector institutions and foundations often takes place at subnational levels.


Corporate links

Foundations that bear the names of multinational corporations (please note essay by Ulrike Wahl of Allianz Foundation on p. 476 f.) tend to regard their beneficiaries as business partners with considerable autonomy, the DIE-GDI paper reports. This is considered positive since the results are flexibility and low administrative costs. The authors praise foundations for generally being geared to tackling problems in an adequate manner.

Contact between donors and beneficiaries is typically established at the ­personal level, according to the study. ­Opportunities to make contact arise in business relations, conferences and through partner organisations. Only few foundations are said to accept open proposals. Once a relationship is established, partners on all sides agree that inter­action tends to be lively and marked by trust. The scholars write that beneficiaries do not tend to see a difference between foundations and other non-governmental organisations.

Their report spells out, moreover, that Tanzania’s government does not know about all foundation activities since independent agencies are not required to publish information about every transaction. Accordingly, it is quite a challenge to understand the financial flows and get an overview of what is going on. As the authors write, moreover, various government bodies do not share information on these matters among one another. As a result, there are cases of suboptimal fund allocation with certain regions or topics enjoying more support than others. Yvonne Walter

Link:
Lundsgaarde, E., Funk, E., Kopyra, A., Richter, J., and Steinfeldt, H., 2012: Private foundations and development cooperation: insights from Tanzania
http://www.die-gdi.de/en > Publications > Studies > 2012 > Studies 69