In early February, the Rethinking Development Cooperation (RDC) Working Group convened a meeting on how development agencies are engaging with philanthropic organizations as partners in development. At a time when official development budgets are declining and needs remain high, development agencies are increasingly looking to new forms of partnerships to make the best use of the resources available.
In this blog, we draw on our recent RDC conversation to highlight current approaches for partnering with philanthropy. Our discussion revealed that while most recognize that philanthropic funding is unlikely to fill the sizeable gap left by public sector withdrawal, the distinctive characteristics of philanthropic actors – including higher risk tolerance and greater flexibility – offer opportunities to leverage complementary strengths to support shared development aims.
Philanthropy in global development: what do they spend and what makes them unique?
The OECD’s latest report on Private Philanthropy for Development notes that from 2020-2023, a sample of 506 philanthropies collectively disbursed $68.2 billion for developmental purposes (~$17 billion per year). Of this, roughly 77 percent was considered “cross-border” philanthropy from international sources, with Africa emerging as the largest recipient region. The remaining 23 percent was “domestic” finance allocated from organizations within receiving countries, much of which came from foundations within emerging markets including China, India, and Mexico. While total philanthropic flows are sizeable, they represent under one-tenth of the value of total official development assistance (ODA) spent over the same period.
Beyond financial volumes, philanthropic funding is unique in its flexibility, risk tolerance, and ability to catalyze resources from others, particularly in support of innovative or underfunded priorities. Supported by the ability to allocate different types of finance—grants, loans, equity, and guarantees—philanthropic organizations are important complements to both public and private development actors and can play a transformative role in the cooperation landscape through de-risking investments and proving support for early-stage innovations.
How are agencies currently engaging with philanthropy?
Our conversation revealed that several development agencies (in both global North and South) are exploring approaches for engaging with philanthropy to support shared aims, and many are in the early stages of developing strategic partnerships. Though nascent, these efforts tend to focus on ways to mobilize the unique mix of philanthropic resources available at home.
One member of the OECD Development Assistance Committee highlighted ongoing work that aimed to bring together a group of domestic ultra-high net-worth individuals and family foundations to pool resources to achieve greater impact with the money available. The strategy seeks to find opportunities for collaboration amongst philanthropic actors, with the development agency playing both a convening role and using its expertise to identify options for collaboration ranging from single-project co-financing to creating a pipeline of projects that could be supported by philanthropic actors. In this way, projects which have already been vetted and identified as potentially cost-effective, but which ultimately prove to be either too small or too risky for a public institution, can find other champions.
One emerging provider agency shared their philanthropic strategy that aims to encourage investment at home. The agency has developed a two-pronged approach, hoping to engage both the “big” international philanthropies as well as the country’s wider diaspora networks, tourists, and smaller local actors. To do so, its strategy seeks to strengthen the domestic environment for philanthropic funding, by 1) building better connections with larger philanthropic players by introducing new roles dedicated to partnership building with philanthropy, and 2) helping “match” potential funders with local organizations, including via a new web-based platform presenting a pipeline of fundable opportunities.
Three recommendations for working with philanthropy
Building on the experience of participants, which included a representative from the philanthropic sector, the discussion highlighted three main recommendations for agencies seeking to collaborate more closely with philanthropies in the years ahead.
1. Leverage each other’s comparative advantage:
Development agencies and philanthropies have distinct but complementary strengths that can be leveraged through cooperation. For example, philanthropies are well-placed to invest in riskier and innovative projects, such as providing seed funding for new technologies. However, they often lack official relationships with partner countries, making their work susceptible to political cancellation and delays. By contrast, development agencies have lower financial risk tolerance, but operate through established partnerships that can be used to support the uptake, scale-up, and use of new innovations. Partnerships which leverage the comparative advantages of both actors could improve results via a more strategic division of labor.
2. Philanthropies are diverse; agencies should match asks to interests
With a diverse range of foundations and philanthropies offering support for development, requests for funding are more likely to succeed when interests align. Indeed, the OECD reports that limited awareness of each other’s objectives continues to constrain collaboration. This means that understanding the priorities of potential philanthropic partners and working to highlight shared interests is critical for deeper collaboration.
3. Invest in relationships with philanthropic partners
RDC members’ approaches to philanthropic engagement involve strategies to build relationships as a basis for dialogue, trust, and collaboration. In the absence of competitive tenders for philanthropic funding, identifying opportunities for engagement can be supported through developing networks with key actors or domestic stakeholders over the medium-term.
Deepening engagement with philanthropic partners
For development agencies, investing in new and differentiated partnerships is a necessity, with philanthropies emerging as substantive players in the development landscape. As agencies continue to develop strategic models for working with philanthropy, building deeper networks with philanthropic actors can provide a starting place for strengthening awareness of shared priorities, deepening understanding of how philanthropy operates, and identifying opportunities for collaboration. With development finance under pressure, finding ways to leverage the complementary skills that exist across the development system will be critical to advancing shared development goals.
