The Role of Philanthropic Foundations in Development Finance: Actual versus Potential Olga Sulla The World Bank
Presentation Outline 1. Foundations role in development main messages 2. Global Development Finance: Private and Official capital flows 3. American foundations: amounts, sectors, channels of aid implementation 4. European and Asian foundations 5. Topics for discussion
Main Messages Foundations play increasingly important role in development assistance (data availability challenge). International development activities represent a small part of the foundations work The phenomenon of philanthropy for development is US dominated The poorest countries are not yet the main direct recipients of aid, due to mechanisms of foundations operations
Potential role of Philanthropy in International development is significant Experience: since 1920 Number: Now more than 100,000 foundations Financial capacity: Total Assets of the US foundations account for $950 billion; ; ~700 billionaires in the world
ACTUALLY: Most of the foundations are not active in international development: 1% of ~ 100,000 of the world s s foundations, have activities affecting developing countries The total of the world s foundations giving for development is about $ 5 billion annually at most How does it compare with official ODA grants $103 billion? and with the total private capital flows to developing countries ($550 to 600 billion)?
Private net capital flows to developing countries are concentrated in the middle income countries of Emerging Europe and Asia (few in Africa ) 600 $BLN 500 AFR $24 bln 400 300 EAP ECA LAC MENA SA SSA LAC $96 bln ECA $207 bln 200 100 EAP $170 bln 0 2000 2001 2002 2003 2004 2005
Official net flows (aid+debt) to developing countries are most important for Africa Official Grants in 2005 favored Asia and Africa 60 $ BLN 40 Africa $30 bln Official Grants by region 20 0-20 ECA $-32 bln 2003 2004 2005 Africa 27% Asia 40% -40-60 LAC $-26 bln -80 EAP ECA LAC MENA SA SSA MENA 25% ECA 3% LAC 5%
The role of the World Bank in ODA DFs IDA IBRD 30,000 25,000 20,000 15,000 10,000 5,000 - Total IBRD, IDA and Donor Fund Disbursements $ million FY02 FY03 FY04 FY05 FY06 WB continues to play the main role in the poorest countries through IDA (more than 50% of which goes to Africa) The World Bank as a multilateral attracts some of the foundations through its Donor Funds mechanism
Foundations based in the United States: 90% of grants support Domestic activities International Grants Total Grants 31,8 30,3 30,5 30,4 3,3 3,2 3,2 3,5 3,8 36,4 3,8 billion international grants 68,000 grant-making foundations Top 12 account for 50% Types: independent (Gates, Ford, Moore), corporate (CitiGroup, Coca-Cola), community 2001 2002 2003 2004 2005
Grants-Distribution Scheme, US Foundations US foundations annual total grant-giving (30bln) International giving (10%, $3 bln) Domestic giving (90%) Domestic giving (90%) Foreign recipients (1/3, $1 bln) US-based recipients, (2/3, $2 bln) Developed countries/organizations Developing countries (60-70%, $600-800 mln)
Main Direct recipients of the Foundations' aid are a few emerging economies, not the poorest countries Channels of Foundations Aid Implementation: Direct work in developing countries: Ford, Kellogg, MacArthur, and Soros Foundations through offices (12 foundations have offices in IDA countries 50 30 22 21 20 15 Through existing organizations: Gates, Hewlett Packard Foundations and the Rockefeller Fund Hybrid models (ebay, Aol,, Google) South Africa India Mexico Brazil IDA countries (est.) Russia
Sectors of Foundations International Grants and of the Official Development Grants Foundations: Health ~50% of the total (Gates accounts for 1.2 of 1.4 billion) Other sectors: International development (11-13%) Environment (6%) Education (5%) Human rights, art, religion Debt related action 30% Official Development Grants Emergency assistance 11% Multisector 7% Production Sector 6% Social Infrastructur e 34% Economic Infrastructur e 12%
European Foundations European foundations developed slower: greater propensity to state over private action, a stronger welfare system. Amount: International grants by European foundations currently at about $600 million annually Number: European Foundations Center lists about 200 foundations Countries: Foundations are concentrated in Sweden, Denmark, Britain, Germany and Switzerland Sectors: Education, research and health care are the main sectors that benefit from European Foundations
Asian Foundations Asian Foundations play an increasingly important role in their Region Asian Philanthropy is mostly directed at local community needs and social welfare Asian foundations are in Australia, Japan, China, Korea, but also found in Vietnam, Malaysia, Philippines, Thailand Japan Foundations Center reports about 60 million of international grant making Total international giving by Asian foundations can be estimated at $400 million
Topics for Discussion Complementarily with Official Development Assistance on the following aspects: 1. Sectors (production/ social sectors, research/projects) 2. Forms of aid (grants/loans) 3. Beneficiaries (public institutions/communities) 4. Accountability and Governance (public/private) 5. Aid implementation (country-based/global funds) 6. Partnerships (official agencies, foundations, private sector) 7. Aid effectiveness and results measurement systems Centralized data collection system is needed on the capital flows from foundations for development