oecd -理解慈善事业中的灵活融资 No strings attached - Making sense of flexible financing in philanthropy

THEMATICRESEARCH

Nostringsattached?Makingsenseof

flexiblefinancinginphilanthropy

OECDCENTREONPHILANTHROPYDataandanalysisfordevelopment

Nostringsattached?

Makingsenseofflexiblefinancinginphilanthropy

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Thisdocument,aswellasanydataandmapincludedherein,arewithoutprejudicetothestatusoforsovereigntyoveranyterritory,tothedelimitationofinternationalfrontiersandboundariesandtothenameofanyterritory,cityorarea.

©OECD2024

AuthorisedforpublicationbyRagnheiðurElínÁrnadóttir,Director,OECDDevelopmentCentre

TheopinionsexpressedandargumentsemployedhereindonotnecessarilyreflecttheofficialviewsofthemembercountriesoftheOECDoritsDevelopmentCentre.

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Foreword

ThisreportispartoftheOECDCentreonPhilanthropy’sthematicresearchprogramme,whichaimstoshowhowphilanthropycontributestospecificdimensionsofdevelopmentacrosstheworld.Itoffersactionablerecommendationsandlessonslearntfrommultipleorganisations.

ThereportwaswrittenundertheguidanceofBathylleMissika,HeadoftheNetworks,PartnershipsandGenderDivisionattheOECDDevelopmentCentre.NelsonAmaya,PolicyAnalyst,OECDCentreonPhilanthropy,ledresearch.MadeleineLessard,JuniorPolicyAnalyst,andValeriaStrusi,ResearchIntern,preparedthereport.RebeccaCambrini,RossanaTatulliandEmmaCislaghiprovidedkeyinputsforresearch.

WewouldliketothankGaëlleFerrant,Co-ordinatoroftheNetworkofFoundationsWorkingforDevelopment(netFWD),forhelpfulcomments.Wewouldalsoliketothankourpeerreviewers:YasminAhmad(Manager,DataCollectionsandDisseminationUnit,OECDDevelopmentCo-operationDirectorate),NatashaRidge(ExecutiveDirector,SheikhSaudbinSaqrAlQasimiFoundationforPolicyResearch)andAndrewHeiss(Assistantprofessor,GeorgiaStateUniversity).Finally,wearegratefultoHenri-BernardSolignac-Lecomte,DelphineGrandrieuxandAidaBuendíafromtheDevelopmentCommunicationsteamfordesignandeditorialcontributions.

ThisresearchwasmadepossiblethroughthecontributionsofSheikhSaudbinSaqrAlQasimiFoundationforPolicyResearch,FondationCHANELandtheLemannFoundation.

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Tableofcontents

Foreword3

Executivesummary6

1Introduction8

2Framingflexiblefinancinginphilanthropy9

Whatisflexiblefinancing?9

Advantagesanddisadvantagesofflexiblefinancing10

Grant-makingasacontract11

Grant-makingcanbuildtrustbetweenphilanthropicdonorandgrantee14

3Flexiblegivinginprivatephilanthropyfordevelopment15

4Flexibleportfolios:Thecaseoflargeinternationalphilanthropicdonors21

5Keytakeaways28

AnnexA.Glossary31

AnnexB.Data32

AnnexC.Probabilityofflexiblegivinganalysis37

AnnexD.Flexiblefundingportfolioanalysis41

References44

FIGURES

Figure2.1.Donor-granteerelationshipasacontract12

Figure3.1.Flexiblevs.earmarkedfinancinginPrivatePhilanthropyforDevelopment,2016-1917

Figure3.2.Probabilitiesofgeneralsupportbychannelofdeliveryandsector19

Figure3.3.Probabilitiesofgeneralsupportbyrecipientregion20

Figure4.1.Flexibleportfoliovs.flexiblegiving22

Figure4.2.Timetrendinflexibleportfoliosamonglargephilanthropicdonors23

Figure4.3.Predictedflexibleportfolioforlargephilanthropicdonors24

Figure4.4.Flexibleportfolioinrelationtoannualgivingandnumberofgrantees26

Figure4.5.TheAtlanticPhilanthropies,1982-202027

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FigureAB.1.Flexiblefundinginphilanthropybygeographicalregions32

FigureAB.2.Flexiblefundinginphilanthropybydevelopmentsector33

FigureAB.3.Flexiblefundinginphilanthropybyorganisationtype34

FigureAC.1.Scatterplotofthedummyvariableforgeneralsupportwithalogisticregressionline38

FigureAD.1.Posteriorpredictivecheck43

FigureAD.2.Posteriorpredictivecheck-forestimatedproportionsinthe[0,0.05]range43

TABLES

Table3.1.Generalsupportfunding:Textidentifiers16

Table3.2.Fundingmodalitiesandchanneltypes16

TableAB.1.Dataonlargeinternationalphilanthropicdonorportfolios35

TableAC.1.ConfusionmatrixfortheBayesianlogitregressionmodelofgeneralsupport38

TableAC.2.Probabilityofaflexibledonation:Resultsfromthelogitregressionmodel39

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Executivesummary

Increasingly,philanthropicdonorsaremovingfromsupportingspecificprojectstoprovidinguntiedgeneralsupporttotheirgrantees.Inresponsetotheshift,thisreportshedslightonflexiblefinancing–thepracticeofprovidinggranteesunearmarkedfunding.Itexamines“trust-basedphilanthropy”tobetterunderstandbothadvocacyfor,andscepticismtowards,thisapproach.Insodoing,ithighlightstheneedforanempiricalunderstandingoffinancingpracticesinphilanthropy.

Thereportfocusesononeformofflexiblefinancing:corebudgetsupport.Itassessestheadvantagesanddisadvantagesofthisapproachforbothphilanthropicfundersandgrantees.Tothatend,itexploresboththedynamicsofgrant-makingasacontractandtheimplicationsofflexiblefundingondifferenttypesofgrantees.

ResearchisbasedonevidencefromtheOECDdatabaseonPrivatePhilanthropyforDevelopment.Itlooksatflexiblefundingfrommorethan180privatephilanthropicdonorsfrom32countries,andhistoricalyearlygivingfrom20largefoundations.Basedonthesedata,itanalysesthefactorsthatinfluencephilanthropicfinancing,usingBayesianstatistics.

Findings

•Flexiblefinancingisinfrequent,representingaround16%ofallphilanthropicdonations,or19%ofallfundingbetween2016-19.Mostphilanthropicdonorsadopttargeted,project-specificapproachestogrant-making.

•Non-governmentalorganisations,particularlythoseheadquarteredinlow-incomecountries,emergedasthemostlikelybeneficiariesofgeneralsupport.Thiscouldbeattributedtotheirfinancialconstraints,theirclosetiestophilanthropicdonorsandtheirproximitytoon-the-groundoperations.Multilateralinstitutionsanduniversities,ontheotherhand,showalowlikelihoodofreceivingsuchdonations.Thelarge-scale,structurednatureoftheiroperationsandthepresenceofmultiplephilanthropicdonorswithspecificagendaslikelycontributetothisresult.

•Theanalysisidentifiesdifferencesintheprobabilityofflexiblefundingacrosssectors.Organisationssupportingtheenergysector,aswellasthosesupportingcivilsociety,weremorelikelytoattractgeneralsupportanddonationsfromphilanthropy.Thehealthandenvironmentsectors,whichtendtooperatewithmoreconstrainedfunding,receivedlessgeneralsupport.Thefundingstrategiesofphilanthropicdonorsmaybeconsideringthecharacteristics,needsanduncertaintiesassociatedwitheachdevelopmentsector.

•Recently,afewlargeUS-basedfoundationshavemovedtowardsmoreflexiblegiving,whilemostcontinuetooperatethroughearmarkedfunding.Basedonhistoricaldatafrom20largeinternationalphilanthropicdonors,thereportidentifiesarecentupwardtrendtowardsmoreflexiblegiving,peakingat20%ofyearlygivingin2021onaverage.Thetrendisdrivenbyafeworganisationsthathaveincreasedtheproportionofgeneralsupportintheirannualfunding.Flexiblefinancingamonglargephilanthropicdonorswentfromabout5%to20%between2000and2021.Therewaslarge

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variabilityacrosstimeandphilanthropicdonors:fromthosethatdonotprovideanyflexiblefinancingtothosethatdevotemostoftheirfundingtogeneralsupport.In2021,forexample,theFordFoundationprovided80%ofitsgrantsasgeneralsupport.

•Thereportidentifiestypesofflexibledonors.Somephilanthropicdonorspredominatelyworkthroughearmarkedgrants,whileothersoccasionallyprovideflexiblefunding.Interestingly,afeworganisationsliketheFordFoundation,OakFoundation,andWilliamandFloraHewlettFoundation,havedrasticallyshiftedtheirgivingtowardsmoreflexibilityinrecentyears.Furthermore,philanthropicdonorswithlargerbudgetsandalargerpoolofgranteesareassociatedwithasmallerflexibleportfolioonaverage.

Recommendationsforphilanthropicdonors

•Assessthebalancebetweenflexibleandearmarkedfundinginaphilanthropicdonor’sentireportfoliotoensureitbestsuitsitsobjectivesandthoseofthegrantees.

•Considerthecompliancecostsandadministrativeburdenofgrantagreementsandreportingrequirements.

•Evaluatehowcommitmentstoflexiblefundingmayinfluencethetypesoforganisationsthatreceivesupport.

•Ensuretransparencyintheuseoffundsprovidedtore-granters,includingintermediaryfunds.

•Forfutureresearch,lookindepthatcharacteristicsofgrantees,extendingtheanalysisofflexiblefundingportfoliostootherorganisations,andinvestigatingthelong-termimpactoftheCOVID-19pandemiconphilanthropicfundingstrategiestowardsmoreorlessflexibility.

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1Introduction

Traditionalphilanthropicfinancingworksthroughatop-downframeworkinwhichphilanthropicdonorsdictatethetermsandprioritiesoftheirsupporttograntees.Yetmanygranteesandphilanthropicdonors,particularlyintheUnitedStates,haverecentlyadvocatedforashiftto“trust-basedphilanthropy”.Thisterm,coinedin2014bytheWhitmanInstitute,refersto"anapproachtogivingthataddressestheinherentpowerimbalancesbetweenfunders,nonprofits,andthecommunitiestheyserve[…]Onapracticallevel,thisincludesmulti-yearunrestrictedgiving,streamlinedapplicationsandreporting”(emphasisadded)(TheWhitmanInstitute,2022[1];Trust-BasedPhilanthropyProject,2022,p.1[2]).

TheWhitmanFoundationwentontoco-foundtheTrust-BasedPhilanthropyProjectin2020,inpartnershipwiththeRobertSterlingClarkFoundationandtheHeadwatersFoundation(allUS-based).Thispeer-to-peerfunderinitiativehasdefinedasetofgrant-makingpracticesforphilanthropicdonorstoengageintrust-basedgiving.Thefirstpractice:providingmulti-year,unrestrictedfundingtograntees(Trust-BasedPhilanthropyProject,2022[2]).

Morerecently,someofthelargestphilanthropicdonorshavepledgedtoincreasetheirflexiblefunding,particularlysincetheoutbreakoftheCOVID-19pandemic.In2020,forexample,theFordFoundationledajointcommitmentinwhichphilanthropicdonorspledgedtoreducegrantrestrictionsandincreaseflexiblegiving.Thispledgereceivedover800signatories(CouncilonFoundations,2020[3]).

Othershaveexpressedscepticismtowardsthisapproach,questioningitsfeasibility,scopeofapplicabilityandeffectiveness.In2022,SimonSommer,Co-ChiefExecutiveOfficeroftheSwitzerland-basedJacobsFoundation,criticisedthetrust-basedphilanthropymovementasmisleadingandUS-centric.Heargueditperpetuatedinequalitiesingivingandchannellingfundstoafewfavouredorganisations(Sommer,2022[4]).Hepointedoutthattrust-basedphilanthropists,infact,relyontheduediligenceperformedbyotherfoundationsandconsultants.Forexample,theunprecedentedlylargeunrestrictedgrantsgivenbyMackenzieScottthroughherfoundationYieldGiving“wouldnothavebeenpossiblewithouttheknowledgedevelopedandsharedbyotherfunderswithspecializedexpertise”(Levine,2021[5]).

Furthermore,themethodologyforprovidinggrantsmayneedtobetailoredtotheneedsofindividualrecipients.Advocatesoftrust-basedphilanthropyfocusontheimportanceofunrestrictedgrant-makingforgrassrootsnon-governmentalorganisations.However,foundations’granteesencompassabroadrangeoforganisationtypes–fromsmallnon-profitstolargeinternationalorganisationssuchastheGavi(theVaccineAlliance)orTheGlobalFund.Giventhatgranteeshavedifferentsizes,legalstructures,focusareas,geographiesandinternalstructures,thegrant-makingmethodologyappropriateforonegranteemaynotbeoptimalforanother.

Suchacontextisvitaltounderstandfinancingflexibility.Whogivesflexiblefinancing?Whoreceivesit?Whatfactorsinfluenceafoundation’schoicetotightenorloosencontroloverthegrantsitprovides?

Thisreportdelvesintothenuanceddynamicsofphilanthropicfundingapproaches.ItdrawsontheOECDPrivatePhilanthropyforDevelopmentdatabaseandonpubliclyavailablegrantportfoliosoflargefoundationstoshedlightonthefactorsinfluencingphilanthropists'choicesacrossthesefundingparadigms.Insodoing,itoffersinsightsintothemotivations,benefitsandpotentialchallengesassociatedwitheachapproach.

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Framingflexiblefinancingin

philanthropy

Whatisflexiblefinancing?

“Trust-basedphilanthropy”and“flexiblefinancing”canencompassarangeoffinancingtypes,butthisreportfocusesoncorebudgetsupport–themostfullyflexibleform.Itthenusestheterms“flexiblefinancing”and“generalbudgetsupport”interchangeably.Thus,flexiblefinancingisconsideredanyfinancingfromaphilanthropicdonor,intheformofagrantorotherinstrument,thatisnotearmarked.InOECDterminology,“anearmarkedgrantisagrantthatisgivenundertheconditionthatitcanonlybeusedforaspecificpurpose”(Bergvalletal.,2006,p.116[6]).1Thus,flexiblefinancingoccurswhenphilanthropicdonorsoffergrantswithoutimposingrestrictionsormandatesregardinguseoffunds.

Fundingmodalitieshavefurtherconsequencesforgranteesintermsofcompliancecosts,administrativeburdenandreportingrequirements,aswellasprojectimplementation:

•Byprovidinggeneralbudgetsupport,philanthropicdonorsoffergranteesmoreflexibilitytoadapttheirstrategiesandusefundsinwaysthatbestalignwiththeirexpertise,theiroverallprojectportfolioandtheevolvingneedsoftheirbeneficiaries.

•Incontrast,foundationsprovidingrestrictedorearmarkedfinancingseektoexercisegreatercontrolovertheuseoftheirresources,ensuringtheyaredirectedtowardspre-determinedobjectivesandoutcomes.Thisapproachaimstoenhancealignmentbetweenphilanthropicdonorintentandgranteeimplementation,minimisingpotentialdeviationsfromenvisionedgoals.Restrictedfinancingprovidesclearexpectationsandaccountability.However,itcouldlimitanorganisation'sflexibilitytoadapttochangingcircumstancesorseizeopportunitiesthatmightariseduringaproject.

Eventhoughthisreportfocusesgeneralbudgetsupport,itwouldbemoreaccuratetodescribeflexiblefinancingwithinawiderspectrum.Forinstance,theflexibilityofearmarkedgrantscandependontheirdegreeofspecificity.Agranttotheeducationsectoringeneralortoabroadgeographicregion,forexample,offersmuchmoreflexibilitythanonerestrictedtoasingularproject,suchasbuildingafixednumberofschoolsinaspecificsetofcities.Throughthematicfunds,philanthropicdonorscanensuretheirfundinggoestowardstheirgoalswithoutimposingproject-levelearmarking.TheInternationalFederationofRedCrossandRedCrescentSocietiesusespooledthematicfunds–whichitcalls“themostflexibletypeoffundingafterunearmarked”–todirectandreallocatefundstowheretheyaremostneededwhilestillworkingtowardstheoutcomessupportedbytheirphilanthropicdonors(IFRC,2018[7]).

1Similarly,intheDevelopmentAssistanceCommittee’sStatisticalReportingDirectivesforofficialdevelopmentassistance,contributionstomultilateralorganisationsmustbeconsideredasearmarkedifthedonorcountrymaintainscontrolovertherecipient,purpose,amountorloanconditionsofthefundstoberegrantedorlentbythemultilateralorganisation(OECD,2023[49]).

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Evenwithinproject-basedgrant-making,philanthropicdonorscanloosenrestrictionsongranteesinseveralways.Theycanreducegranteereportingrequirements,forexample.Theycanalsoallowformid-projectdeadlineextensionsorbudgetincreasesratherthanholdinggranteestoapre-determinedbudgetortimelineforprojects.Lastly,multi-yeargrantscanhelpgranteesplanlong-termbudgets,reducingthetimeandresourcesspentinre-applyingforgrants.

TheMAVAFoundationdefinesthreeformsofgrantsthatarenotproject-specific:

•programmaticfunding:“flexiblefundinggrantedinthecontextoftheexistingstrategicplanofanorganisation–eitheratthelevelofaprogrammeorthewholeorganisation”

•corefunding:“flexiblefundingfororganisationaladministrationanddevelopment,toincreasetheoverallfinancialsecurityoforganisations”

•emergencyfunding:given“intheeventofacrisis(e.g.COVID-19)fororganisationstobemoreresilientandabletoovercomethecrisis”(Baetal.,2023[8]).

Whileprogrammaticfundingwouldtechnicallybeconsideredasearmarked,itismoreflexiblethanproject-basedgrants.Inprogrammaticfunding,philanthropicdonorsandgranteesalignstrategiesandagreeongoals.However,granteesarestillfreetoadjusttheprogramme,makepersonnelandorganisationalshifts,andadapttochangingcircumstances.

Thenextform,corefunding,canbefurtherdividedintotwovarieties:

•organisationaldevelopmentgrantsstrengthenagranteeorganisation’sleadership,financialmanagementorotheragreed-uponaspectsofitsorganisationaldevelopment

•generaloperatingsupportisfullyflexibleandcanbeusedatthegrantees’discretion(MacLeod,2021[9]).

Thesedifferentformsoffinancingcanbeadaptedandcombinedinvariousways.Forexample,philanthropicdonorsmaycombineorganisationaldevelopmentgrantswithprojectgrants.Thiswouldprovidebothlong-termfundingtobuildthegrantee’sorganisationalcapacityandsupportforitscurrentwork.Inanothercase,aphilanthropicdonorthatusuallyoffersgeneraloperatingsupportmayalsoprovideorganisationaldevelopmentgrants.Thiscouldhelpreinforceaparticularaspectoftheorganisationthatneedsattention.Confusingly,differentphilanthropicdonorsmaydescribeallthesecombinationsas“programmegrants”(MacLeod,2021[9]).

Advantagesanddisadvantagesofflexiblefinancing

Flexiblefundingoffersdistinctadvantagesforeachparty:

•Forthephilanthropicdonor,theuseofflexiblefundingcanreducetransactioncosts,sinceanyrestrictionsimposedonagrantwillneedtobeidentified,monitoredandenforcedbythefoundation(Thornton,2010[10]).Furthermore,itcanbemorecostefficienttoprovideonelargegrantratherthanmanysmallerprojectgrants(MacLeod,2021[9]).Withlowertransactioncosts,philanthropicdonorscanredirectresourcestowardsbroaderstrategicgoalsoridentifypromisingnewgranteesratherthanmicromanagingspecificallocations.

•Onthegranteeside,theadvantagesareevenclearer.First,corefundingprovidesgranteeswithoperatingstability,supportstheirorganisationaldevelopmentandallowsthemtoplanforthelongterm(MacLeod,2021[9]).Nolessimportantly,unrestrictedgrantsallowgranteestoallocatefundsaccordingtotheirownprioritiesandneeds.Thiscontrastswiththeconstraintsofrestrictedgrants,whichcanleadtooverfundingsomeprogrammesandunderfundingmorecriticalones(Thornton,2010[10]).Furthermore,flexiblecontributionsreducethetimeandresourcesgranteesspendinfundraising,andcanmakethemlessdependentonindividualphilanthropicdonors(Rose-Ackerman,1987[11]).Earmarkedfundinghasbeenshowntounderminebothcosteffectivenessand

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projectperformanceininternationaldevelopmentorganisations(Heinzel,CormierandReinsberg,2023[12]).Flexiblefundingalsoincreasesgrantees’resiliencetounforeseencrisesandopennesstounexpectedcircumstances.

Philanthropicdonorsthatprovidecorefundinggenerallyrecognisethesebenefits.A2021studyoncoregrantscommissionedbytheLaudesFoundationfoundthatphilanthropicdonorscitedfivegeneralmotivationsforprovidingcoregrants(MacLeod,2021[9]):

•helpingorganisationscovertheircorecosts

•allowinggranteesthefreedomtomakekeydecisionsinresponsetochangingcircumstances

•supportingarobustandindependentcivilsociety

•helpinggranteeorganisationstoscaleuptoanewlevelofoperation

•changingtherelationshipwiththeirgranteestobemoretrust-basedandlong-term.

However,flexiblefundingalsohasdisadvantages,includinghigherrisksforthephilanthropicdonor.KrehelyandHouse(2005[13])identifyfourmainreasonsforfoundations’reluctancetoprovidegeneraloperatingsupporttotheirgrantees:difficultyinevaluatingeffectiveuseoffunds;riskofgranteesbecomingoverlydependent;desiretoencouragecompetitionamonggrant-seekerstooptimiseperformance;andtheviewthatphilanthropyshouldfosternewandinnovativeprojectsratherthansimplysustaincurrentprogrammes.

Thornton(2010[10])summarisesthedifficultiesofprovidinggeneral,unrestrictedfunding:“ifnon-profitorganisationsneverbehavedopportunistically,thenunrestrictedgrantswouldbeefficient”.Unfortunately,numerousexamplesexistofnon-profitsactingagainstdonorgoalsandinterests–fromcross-subsidisingtheirownpriorityprojectswithfundingfromearmarkedgrantstooutrightfraudandembezzlement(Castaneda,GarenandThornton,2007[14];FismanandGlennHubbard,2005[15];Fremont-SmithandKosaras,2003[16])

Givenphilanthropicdonors’seemingpreferenceforrestrictedfunding,granteeshavesomeincentivesforenteringintosuchcontracts.Helms,ScottandThornton(2012[17])foundthepossibilityofrestrictedgivingledtohigherdonationrevenuefornon-profitorganisations.Thismaypartiallyexplainthewillingnessofgranteestoacceptearmarkedgrants.However,theymaybewillingsimplybecausetheyhavenochoice:thedonorholdsmorepowerintherelationship(OstranderandSchervish,1990[18];FairfieldandWing,2008[19]).Furtheranalysisofthisdynamic,whichcanbeframedasacontractbetweenaphilanthropicdonorandagrantee,canhelpshedlightonwhyfoundationsrestrictorloosentheirgrant-making.

Grant-makingasacontract

Contracttheoryprovidesausefulframeworkforunderstandingthedecision-makingdynamicsbetweenphilanthropicdonors(theprincipals)andtheirgrantees(theagents)thatexplainsflexiblevs.inflexiblefinancing.Inabasicprincipal-agentmodel,theprincipaldelegatestaskstotheagenttoachievecertaincommonobjectives.Therelationshipisoftencharacterisedbyinformationasymmetry(whereonesideholdsprivateinformationtheothersidecannotobserve)andmisalignmentofinterests,whichcanleadtoinefficiencies(Holmstrom,1980[20]).Inphilanthropicdonor-granteerelationships,thedonorprovidesfundingtoachievecertaingoals,maximisetheimpactofitsgrant,andensureitsresourcesareusedeffectivelyfortheintendedpurpose.Theagentisthecharitableorganisationornon-profitthatreceivesthefundstoimplementtheactivitiesorprogrammestoa