Changes in funding strategies
Funding trends
World-changing events: funders watching closely but directions uncertain
Given the dramatic events in 2020, it’s been difficult to get a comprehensive picture of all the changes donors are undertaking. There are many other changes happening beyond Covid-19 — such as elections, the Black Lives Matter movement going global, impending debt crises and more — so it is hard to say what will happen. Many staff of funders are still processing all these changes, including through developing narratives of what is happening.
Some interviewees felt that Covid-19 may lead to an increased focus on governance as citizens see the importance of it in crisis responses. Increasing business sector interest in social issues could influence governments. In addition, young people in many countries have different kinds of expectations about government and new ways of working and using technology.
Some saw that more governments are restricting civic space and democratic practices due to Covid-19 (International IDEA, 2020), which could lead to future reactions. Transparency alone hasn’t been sufficient because governments ‘know how to use it in their favour’, so funders may renew attention to key rights, as well as addressing misinformation.
Still others expected that Covid-19 would not lead to much change in the TPA field. Previous trends toward increasing authoritarianism may just continue with funders focused on other topics.
Bilaterals: Renewed commitments to democracy, human rights and the rule of law, but UK cuts to ODA a big issue for the field
Some bilaterals (including the EU, Denmark, Germany and Sweden) are maintaining their focus on democracy, human rights and the rule of law due to concerns about democratic rollback and anti-democratic trends worldwide.
For example, the EU adopted its 2020–24 action plan on human rights and democracy and will be developing ‘human rights and democracy country strategies’ in 2021 (European Union, 2020). Sweden has convened a ‘Friends in Defence of Democracy’ group (Ministry for Foreign Affairs, Sweden, 2020).
USAID also continues to be a major democracy funder. US President Biden announced his administration would convene a summit of democracies (Biden, 2019), which indicates a stronger focus on democracy. USAID’s current major framework, the Journey to Self-Reliance, includes many TPA elements, including open and accountable governance (USAID, ND).
At the same time, the overall field has learned that prescriptive approaches to democracy and governance are rarely appropriate. One interviewee said that the field had moved to be problem-led, context-driven, and more iterative. Issues of inclusion, effectiveness and accountability continue to be discussed among bilaterals (Menocal & OECD, 2020).
Not all bilaterals are maintaining their funding. The UK government announced major cuts to the UK’s commitments to ODA, initially a cut of £2.9 billion in 2020. In the second half of 2020, it announced an additional cut that would reduce the UK’s commitment to ODA from 0.7% of GNI to 0.5% (Dickson, 2020). The overall reduction is expected to be about £4.5 billion compared to 2019 (Development Initiatives, 2021). This follows the UK government’s recent merger of its Department for International Development into the Foreign and Commonwealth Office, to form the FCDO.
Several interviewees commented that these cuts were of major concern for TPA organisations as the UK is an anchor funder in many TPA-relevant initiatives, including key trust funds at the World Bank. At the time of writing (February 2021) some organizations had received notice of cuts or are waiting for further news.
Philanthropies: Few new entrants and current philanthropies are evolving
The Chandler Foundation was the most-mentioned new funder of TPA. It is the newest member of TAI that is focused on anti-corruption. Otherwise, there have been almost no other new philanthropic funders entering the TPA space globally. The Skoll Foundation, BHP Billiton Foundation and Laudes Foundation were the other philanthropies mentioned as potentially relevant to TPA spaces.
Other large philanthropies like the Bill & Melinda Gates Foundation, the Rockefeller Foundation and the Packard Foundation remain focused on other approaches and sectors, e.g. global health and innovation.
Major philanthropies focused on TPA have a variety of goals and lenses on this work. Some are focused on inequality, while others are looking more at digital rights, while still others are undergoing strategy rethinks.
One interviewee noted that TPA can feel ‘narrow and niche’ and because it has not been consistent in making connections to other constituencies and sectors. ‘Our vocabulary limits us,’ and it continues to be difficult to communicate about an area that is viewed as less tangible, especially to leaders of other funding organisations.
Multilaterals: TPA is recognised but implementation is less clear
Interviewees suggested that the World Bank has evolved to increasingly embed some aspects of TPA in its global strategies and select lending operations (World Bank, 2020). It promotes budget transparency and open contracting. It is also calling for debt transparency.
However, the embeddedness of TPA may be stronger in the World Bank’s governance global strategy than its country operations. MFIs’ like the World Bank work closely with country governments when they make loans to governments. The interest of countries to engage on TPA issues strongly shape the World Bank’s operations. Country work is also shaped by the World Bank’s own country offices, which vary in their own interest in these issues. One interviewee emphasised that donor pressure on the World Bank and funding for TPA are needed to maintain TPA on the agenda.
It is less clear to what extent the African Development Bank (AfDB) is using or promoting TPA approaches based on online materials. The African Development Fund’s (ADF’s) plan for its previous replenishment included transparency in PFM; social accountability and citizen participation in monitoring and decisions; DRM and natural resource governance (African Development Fund, 2016).
However, the ADF has not published public documentation for the most recent replenishment other than meeting notices and a press release (African Development Bank, 2019). The African Development Institute has hosted an event on transparency in PFM since the emergence of the Covid-19 pandemic, suggesting that this issue remains salient (African Development Institute, 2020).
The Asian Infrastructure Investment Bank has been criticized on TPA issues, especially safeguards (Horta & Wang, 2020). At the same time, some countries prefer to work with it because it is able to lend more quickly than older MDBs.
During Covid-19, the IMF has yet again become one of the most important funders to developing countries. The IMF has made progress increased its own transparency of documentation and has promoted some TPA themes and related issues like equity. Many advocates find its actions still insufficient, including in in the implications of conditionalities on loans.
Gender equality and social inclusion in funder strategies
Philanthropies take bespoke approaches to gender equality and social inclusion (GESI) based on their organisational goals, values and cultures
Philanthropies working on TPA take diverse and bespoke approaches to GESI and less commonly refer to human rights instruments compared to public funders. GESI approaches vary in terms of goals, values and philosophies, leadership commitments, management and resources these efforts, approaches and activities and application of GESI principles to internal issues.
A simplified way to understand this diversity is to group philanthropies by their level of formal commitment to, resourcing of and approaches to GESI.
At one end of the spectrum, some funders said they take note of specific inequalities only when they are relevant to their overall goal. This means GESI itself is neither a primary nor secondary commitment. Their approaches to GESI are informal, personalised and minimally-resourced. Rather than produce their own top-down requirements, these funders discuss GESI issues with grantees and are generally supportive of grantees’ actions.
Towards the middle of the spectrum are funders that are moving away from informality and are exploring or starting to define GESI approaches. Many are selecting a few commitments to start. Some are looking at relationships between intermediaries and subgrantees through the GESI lens. Others may look at issues regarding safeguards (Hodal, 2019).
On the other end of the spectrum, some funders have formal GESI portfolios with resources and an application of GESI across their organisations. The Ford Foundation is an example of this with grantmaking portfolios in gender, racial and ethnic justice and disability inclusion. It also has a diversity, equity and inclusion toolkit (Ford Foundation, ND) and a disability inclusion toolkit (Rublee & LaVant, 2020).
Racial justice internationally is a new issue for most US philanthropies
Philanthropies are reacting to the Black Lives Matter movement, and many have made announcements about increased funding for Black activism and racial justice movements in the US (Schultz, 2020) (Candid, 2020).
Candid has tracked billions in giving since 2011 to racial justice in the US, including over $1 billion from MacKenzie Scott and donor-advised funds at JPMorgan Chase, as well as $885 million from the Ford Foundation. The Hewlett Foundation has made a commitment to address systemic racism in the US, and it has joined the Democracy Frontlines Fund, which “supports a slate of 10 frontline organisations curated by a brain trust of women of colour with deep experience funding social movements” (Libra Foundation, 2020). The organisations receive unrestricted multiyear support.
The public discussion on racial justice and ‘decolonising development’ is dynamic. Advocates have suggested a variety of responses, including focusing on leadership and staff diversity, holding dialogues explicitly about race and systemic inequalities, amplifying diverse voices, funding local organisations, funding Black-led organisations, participatory grantmaking, challenging colonial thinking and re-examining priorities (Batten, Jones, MacKrell, & Petit-Frere, 2020) (Lawrence & Fine, 2021)(Weisenfeld, 2020) (Baguios, 2020) (Cheney, 2020).
Compared to articles and announcements on US-based work, there were few pieces speaking about philanthropies’ racial justice approaches to international work though.
In one of the few written pieces on racial justice and philanthropy internationally, Nicolette Naylor, International Program Director at Ford, and Aleyamma Matthew of the Collective Future Fund discuss addressing anti-Black violence against women and girls, building transnational solidarity connecting Black women leaders and going ‘beyond rapid-response funds: commit to Black-, Indigenous-, and women-of-colour-led organisations for the long haul’ (Mathew & Naylor, 2020). Since this article was published, the Ford Foundation supported the launch of the Black Feminist Fund working internationally (Ford Foundation, 2021).
Other mentions of racial justice work globally included the W.K Kellogg Foundation’s Racial Equity 2030 open call to advance racial equity globally with $90 million (Kellogg Foundation, 2020). OSF’s Human Rights Initiative addresses albinism in Africa and issues related to statelessness (Open Society Foundations, 2020). Echoing Green launched a Racial Equity Philanthropic Fund that plans to support social enterprise and leaders globally (Brown, 2020). There were even fewer mentions of bilateral or multilateral donors updating their strategies to account for racial justice issues.
Newer funder approaches to GESI: consultation, participation, and flexibility
For philanthropies, there is no roadmap for GESI. Interviewees advised that others starting to work on GESI and/or diversity, equality and inclusion should start from their values and then look at the specific problems in their fields and their own roles. Further advice from interviewees was to getting clear on frameworks, including naming specific philosophies or approaches, and making GESI everyone’s job rather than a silo.
Two examples were mentioned. The Equality Fund and Other Foundation demonstrate newer approaches to GESI in philanthropy.
The Equality Fund, a combined philanthropy and impact investor, underwent a consultation process with feminist movements, in line with Canada’s feminist foreign policy. It developed nine principles as a result, including a commitment to ‘undo patriarchal relationships’ and raise the power of ‘women, girls, and trans and non-binary people.’ The Fund supports the ‘nothing about us, without us’ principle and seeks to both improve on the immediate needs of individuals and structural issues like ‘policy, law, and institutions.’
Based on the principles, the Fund supports more flexible and multiyear arrangements, simpler grant processes, a relationship-building mindset, participation in collaborations, ongoing consultation and support to safety and wellbeing (Equality Fund; Canadian Women’s Foundation; Community Foundations of Canada, 2020).
The Other Foundation, which supports LGBTQI+ people in Southern Africa, has pioneered a participatory grantmaking approach. The Foundation’s board asked the public to ‘nominate a panel of peer reviewers to help review and assess grant applications.’ Applications were received through an open call, and peer reviewers played a key role in selection (Other Foundation, 2014).
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