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Private Foundations House of Commons International Development Committee Private Foundations Thirteenth Report of Session 2010–12 Volume I: Report, together with formal minutes, oral and written evidence Additional written evidence is contained in Volume II, available on the Committee website at www.parliament.uk/indcom Ordered by the House of Commons to be printed 11 January 2012 HC 1557 Published on 20 January 2012 by authority of the House of Commons London: The Stationery Office Limited £0.00 The International Development Committee The International Development Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Office of the Secretary of State for International Development. Current membership Rt Hon Malcolm Bruce MP (Liberal Democrat, Gordon) (Chairman) Hugh Bayley MP (Labour, City of York) Richard Burden MP (Labour, Birmingham, Northfield) Mr Sam Gyimah MP (Conservative, East Surrey) Richard Harrington MP (Conservative, Watford) Pauline Latham MP (Conservative, Mid Derbyshire) Jeremy Lefroy (Conservative, Stafford) Mr Michael McCann MP (Labour, East Kilbride, Strathaven and Lesmahagow) Alison McGovern MP (Labour, Wirral South) Anas Sarwar MP (Labour, Glasgow Central) Chris White MP (Conservative, Warwick and Leamington) The following members were also members of the committee during the parliament: Mr Russell Brown MP (Labour, Dumfries, Galloway) Mr James Clappison MP (Conservative, Hertsmere) Ann McKechin MP (Labour, Glasgow North) Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the internet via www.parliament.uk. Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at www.parliament.uk/parliament.uk/indcom. A list of Reports of the Committee in the present Parliament is at the back of this volume. The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in a printed volume. Additional written evidence may be published on the internet only. Committee staff The current staff of the Committee are David Harrison (Clerk), Marek Kubala (Second Clerk), Anna Dickson (Committee Specialist), Chlöe Challender (Committee Specialist), Anita Fuki (Senior Committee Assistant), Vanessa Hallinan (Committee Assistant), Paul Hampson (Committee Support Assistant) and Nicholas Davies (Media Officer). Contacts All correspondence should be addressed to the Clerk of the International Development Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 1234; the Committee’s email address is [email protected] Private Foundations 1 Contents Report Page Summary 3 1 Introduction 5 Private foundations 5 Our inquiry 7 The structure of this report 7 2 The contribution of foundations to development 9 Innovation and risk-taking 9 Contributing to policy development 12 Venture philanthropy 13 High profile advocates 15 3 Concerns about foundations 17 Single-issue interventions 17 The education sector: left behind by foundations? 19 Accountability 20 Transparency 22 Improving transparency 22 4 DFID’s relationship with foundations 25 How DFID works with foundations 25 The Gates Foundation 25 Smaller foundations 27 DFID’s funding relationship with foundations 29 Working with foundations based in developing countries 30 Conclusions and recommendations 32 Formal Minutes 36 Witnesses 37 List of printed written evidence 37 List of additional written evidence 37 List of Reports from the Committee during the current Parliament 39 Private Foundations 3 Summary Private foundations—philanthropic bodies making private contributions for charitable purposes—are of increasing importance to development. Foundations, especially the well- endowed US-based organisations such as that funded by Bill and Melinda Gates, are spending large sums, although precise amounts are currently difficult to determine. It is clear, however, that the total sums are far smaller than those spent by Governments. Foundations’ contribution to development goes far beyond mere expenditure. They have the capability to innovate and take risks, although in practice not all do so. They are having increasing influence on international development policy. Their work is widely welcomed. However, some concerns exist, namely that foundations can create new, parallel structures alongside government initiatives and that they are only accountable to small boards. Foundations should be brought into global structures for donor coordination and should sign up to International Aid Transparency Initiative guidelines. Foundations currently spend most of their money in the health sector. Where appropriate, the UK’s Department for International Development (DFID) should encourage them to become more involved in education. DFID’s collaboration with the Nike Foundation on the Girl Hub is worthwhile. The Hub should be replicated in other countries, notably the Democratic Republic of Congo. There is concern that in working with foundations on large programmes, such as the Global Alliance for Vaccines and Immunisation, DFID’s own spending priorities may be distorted and that DFID’s spending may be switched from other sectors to health. We do not believe that this has happened to date. It is important that it does not in the future. Inevitably, DFID engages more with large foundations than with small. Small foundations can play a useful role, for example in working with the private sector in developing countries. DFID could make use of such organisations and channel more funds through them. We appreciate that DFID is a lean organisation and that Ministers’ and staff time is precious. Nevertheless, improvements could be made that need not necessarily involve substantial time. We recommend that a DFID Minister hold an annual meeting with smaller foundations, that a designated contact official for foundations be established to hold more frequent meetings (biannually or even quarterly) and that DFID produce a simple publication indicating what DFID funding foundations might apply for and how to apply. Private Foundations 5 1 Introduction Private foundations 1. The way that international development and poverty reduction is funded is changing. Government and multilateral funders such as the United Nations are being joined by philanthropic private funders of aid and development. Philanthropy, defined as ‘private funding in the public interest’, can refer to either donations made by individuals or to giving made by private foundations or trusts.1 2. Foundations are highly diverse, ranging from a few, very large-scale and specialist funders often focusing on the Millennium Development Goals (for example, the US-based Bill and Melinda Gates Foundation, and the UK-based Children’s Investment Fund Foundation), to small foundations for which international development is one focus of many, and which are often more detached from the policy arena.2 In the UK the sector is characterised by a higher degree of diversity in size and type of foundations compared to the US.3 3. It is clear that there is a huge amount of funding being spent through foundations, but there are difficulties involved in calculating the total annual value of current spending. During our inquiry we came across a range of estimates. For example, the OECD Development Assistance Committee (DAC) reports a global total of $22.2 billion in private grant spending in 2009 (representing over a 100% increase since 2000). However, reporting to the DAC is voluntary and therefore this is likely to be an underestimate. Nor does it include corporate private giving—unlike, for example, the US-based Hudson Institute, which puts 2009 philanthropic giving at $52.5 billion, nearly double the OECD estimate.4 4. Whatever the exact total, it is clear that development funding by foundations is still some way lower than Official Development Assistance (ODA, funding paid by government donors), which was $120 billion in the same year (2009).5 Graph 1 shows grants made by private voluntary agencies within DAC member countries for international development in comparison to total ODA.6 1 Michael Edwards, ‘The role and limitations of philanthropy’ (commissioned paper for The Bellagio Initiative, November 2011, online at www.bellagioinitiative.org), p.3 2 Ev w3 3 Ev 44 4 Ev w14-15. The Index of Global Philanthropy by the Hudson Institute includes giving by foundations, voluntary and religious organisations, corporations and corporate foundations in terms of in-kind and cash donations. The institute also accounts for private sponsorships and scholarships that support students from developing countries studying in the US and estimates the monetary value of volunteer time for developing causes (Ev 70). 5 Ev 35 6 ‘Private grants’ is used to refer to what the OECD terms ‘grants made by private voluntary agencies’. 6 Private Foundations Graph 1: Development aid: net ODA compared to private grants (DAC countries) Graph comparing net ODA with private grants (DAC countries) US$ million 140 000 120 000 100 000 80 000 Net ODA Private grants 60 000 40 000 20 000 0 2003 2004 2005 2006 2007 2008 2009 Source: OECD, ’Development aid: Grants by private voluntary agencies – Net disbursements at current prices and exchange rates’, online at: http://www.oecd.org/document/39/0,3746,en_2649_201185_46462759_1_1_1_1,00.html
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