Maximizing the Value of Philanthropic Efforts through Planned Partnerships between the U.S. Government and Private Foundations: Introduction

Americans, through private donations and public resources, lend their support to the promotion of human and social welfare on a large scale. Giving USA (2007) estimates that private charitable giving in the U.S. totaled nearly $300 billion in 2006—roughly $1,000 for every American.^[1] These gifts—by individuals and households (76 percent of the total), bequests (8 percent), corporations (4 percent), and foundations (12 percent)—supported religious activities, human services such as food and shelter, health services and assistance, education, the arts and culture, the environment, and other causes undertaken both domestically and abroad. In addition to these private donations, Americans provided roughly $700 billion through grant and assistance programs operated by the U.S. government (USG) in fiscal year 2006—a form of public philanthropy.^[2] In total, then, Americans spent more than $1 trillion in private and public funds to promote human and social welfare in 2006. Of this amount, at least $26 billion went to aid developing countries.^[3] Total private and public philanthropic spending by Americans was thus larger than the gross domestic product of all but the 14 largest nations in the world in 2007 (adjusted for purchasing power parity).

A. Purpose of The Study

In an environment of increasingly urgent domestic and international challenges and finite private and public resources, there is a compelling policy interest in better understanding interactions between private and public philanthropic efforts and learning how to promote more effective collaboration between the sectors. To improve their knowledge of the intersection between private philanthropic efforts addressing health and social services and similar public initiatives funded by the federal government, the Assistant Secretary for Planning and Evaluation (ASPE) at the U.S. Department of Health and Human Services (DHHS) contracted with Mathematica Policy Research, Inc. (MPR) to study public and private philanthropic activity. The study was designed to explore whether and how public and private philanthropic efforts can complement each other to improve effectiveness of services and programs across the country and around the world.

Rather than studying private philanthropic organizations of all types, such as nonprofit service providers or religious organizations, ASPE and MPR focused the study on foundations and their interactions with the federal government. Unlike individual, household, and business donors, foundations and U.S. government agencies expend their philanthropic dollars through large, carefully planned and budgeted grant or assistance programs. While agendas and decision-making differ between foundations and federal agencies, their spending and programs reflect many overlapping interests and priorities.

The distribution and overlap of public and private funding are of interest not just as descriptive statistics, however, but also as potential opportunities. Philanthropy and its impact could be enhanced through more purposeful interaction between the federal government and foundations. Developing a greater understanding of the ways in which the USG and foundation sectors develop and implement their philanthropic endeavors could allow for a more informed approach to interaction, and ideally the more efficient use of this nation’s vast philanthropic resources. To promote this understanding, ASPE posed questions for the study such as: How often and in what ways do foundation and USG spending and efforts overlap? What options are there for more productive interactions between the two sectors? What can each sector learn from the other? What research or other activities could enhance prospects for productive synergies with foundations and other members of the philanthropic and nonprofit communities?

B. Methods Used and Data Collected

The study relies on three complementary sources of information to explore the interactions between public and private philanthropy in the United States and abroad. First, as background, public-use and secondary data sources were used to estimate total charitable giving and to analyze the distribution of USG and foundation spending on domestic and international health and social services. The analysis examined how aid flows to service sectors, program areas, and geographic regions. Second, MPR conducted a systematic review of the literature on USG and foundation philanthropic approaches. From the literature review, we developed a conceptual framework to explore public-private interactions and developed a focus and method for conducting case studies of selected philanthropic endeavors and organizations.

With the spending information and conceptual framework as background, MPR then examined specific cases of the development and implementation of different models for domestic and international health and social services initiatives, with a special focus on collaboration between the USG and foundation stakeholders. We identified potential cases after conducting a scan of USG and foundation entities, philanthropic initiatives, and tools. Based on selection criteria—including the geographic and programmatic area of focus, magnitude of financial contributions, prevalence of the problem addressed, and leadership or innovation status—ASPE selected ten cases for inclusion in the study, nine of which were completed (stakeholders in one case declined to participate). Table I.1 presents an overview of the cases. MPR conducted these case studies by reviewing publicly available documents and records and interviewing selected key leaders or experts associated with each case.

C. Background: Key Findings from the spending analysis and Literature Review

1. Foundation and USG Spending

Of the $1 trillion in private and public giving in 2006, U.S.-based foundations and USG together provided almost $750 billion of the total, at home and across the globe. Both groups of institutions focused more on domestic than on international work, though U.S. government spending was far larger than that of foundations.^[4] In 2006, foundations spent roughly $28 billion on programs in health, education, development, the environment, human services, and relief, with roughly three-fourths of that amount dedicated to domestic projects and with the greatest concentration in health and education.^[5] The federal government’s philanthropy totaled $720 billion in 2006 and was even more heavily weighted toward domestic needs: 97 percent of USG philanthropic spending in the six specified sectors occurred within the U.S. This government spending was highest in the areas of development (government and civil society, and social, physical, and economic infrastructure) and human services.

TABLE I.1
OVERVIEW OF CASE STUDIES
Case Name	USG	Private	Focal Region	Program Area and Focus	Reason for Inclusion in Study	Number of Individuals Interviewed
Bill & Melinda Gates Foundation – Global Health Program		X	Developing world	Health, including malaria and HIV/AIDS. Focus on problems with large, immediate impacts.	Major foundation actor re: finances, influence, partnerships.	2
Global Alliance for Vaccines and Immunization (GAVI)	X	X	Developing world, mainly Africa and Asia	Childhood infectious diseases. Focus on vaccine development and access to immunization.	Influential public-private partnership.	1*
President’s Malaria Initiative (PMI)	X		Africa	Malaria. Focus on prevention and treatment.	Major public initiative (useful comparison to PEPFAR).	2
President’s Emergency Plan for AIDS Relief (PEPFAR)	X		Mainly Sub-Saharan Africa	HIV/AIDS. Focus on prevention and treatment.	Major public initiative (useful comparison to PMI).	2
Ashoka Fellows		X	All regions	Social entrepreneurship. Focus on individuals working for systemic change.	Innovative foundation initiative.	1
Millennium Challenge Corporation (MCC)	X		Mainly Africa, East Asia, and Latin America	Development, governance, sustainable economic growth. Focus on high-performing countries.	Innovative public initiative and tools/metrics.	2
Rockefeller Foundation – Accelerating Innovation for Development		X	U.S. and international	Development, innovation. Focus on incentivizing identification of problems and development of solutions.	Innovative foundation initiative and tools/metrics.	1
William and Flora Hewlett Foundation – Expected Return Metric		X	Sub-Saharan Africa, South Asia, and Mexico	Development, evaluation. Focus on funding for social returns.	Innovative foundation tools/metrics.	3
Robert Wood Johnson Foundation		X	U.S.	Health. Focus on advocacy and convening around major public health issues.	Major foundation actor re: finances, influence, partnerships.	1
* Indicates that respondent was from outside of the organization.

In the international sphere, priorities for foundation and USG spending appear to be similar. In 2006, the largest proportion of international spending from both sectors went toward health and development. Geographically, nearly half of international foundation spending was directed to sub-Saharan Africa, while two-thirds of USG spending supported projects in Africa and the Middle East.^[6]

2. Philanthropic Approaches

Efforts to maximize philanthropic spending could benefit from more explicit efforts to exploit the relative strengths of the public and private sectors. The literature suggests that foundations are comparatively advantaged by their independence, agility, flexibility, and ability to take risks and innovate. They often engage in cutting-edge work where they can “plant a seed,” but they are not often directly involved in large “scaling-up” activities that expand implementation of the intervention beyond initial demonstration programs or sites. Since foundations have more limited resources than the federal government, many of their investments aim to leverage other resources or influence the activity of larger players—potentially governments.

In contrast, the U.S. government has greater resources and potential influence, relatively more stringent accountability structures, and often longer time horizons. The federal government more typically implements proven solution strategies rather than high-risk experiments, and it can play a special role in bringing solutions to a broader target population. Foundations and USG both may play an important convening role—bringing the relevant actors together to address social problems—although some foundations may be advantaged by their perceived neutrality.

Despite these differing strengths, the processes by which foundations and federal agencies identify problems to address, develop and implement interventions, and monitor progress are similar, and the literature indicates that both private and public sector actors are keenly interested in cross-sector collaborations. But successful partnerships require that all parties involved understand the interests, capacities, and approaches of the other actors, which may be difficult to achieve (Fosler 2002). Indeed, one study found that private sector partners felt the USG did not understand their interests and looked to them only to “fill gaps,” even as USG actors felt they were ill-equipped to deal with private sector partners and that bureaucratic structures hindered the development of partnerships (U.S. Department of State 2008). Opportunities for partnership exist at each stage in the development of philanthropic initiatives, but stakeholders must work to address these and other challenges to ensure success.

A theoretical framework useful for analyzing public-private partnerships categorized foundation interactions with government along a spectrum of collaboration (Sandfort 2008). At one end, termed “supplementary” interaction, one organization or sector may explicitly seek to fill perceived gaps in the work of another organization or sector. Such cases of supplementary interaction require relatively little communication or coordination between the organizations involved. At the other end of the spectrum, full and formal partnerships require a high level of communication and coordination between actors. Through the case studies, MPR further developed this framework to describe five types of overlaps, interactions, and partnerships underway between foundations and the federal government. The case studies identified contextual and organizational factors that influence program approaches and the feasibility of partnerships. Several focused on emerging innovations in philanthropic decision-making, funding, and governance.

D. Overview of the Report

Empirical findings from the case studies are the main focus of the report. It has been developed with several potential audiences in mind. First, the report seeks to help policymakers understand the ways in which the federal government and foundations can and do interact and the opportunities that different modes of interaction, including formal partnerships, may provide for more effective use of federal dollars. It also cautions that partnerships may not always be wise, if the transaction costs associated with forming and maintaining them exceeds their potential benefits, or when foundation and government players’ incentives and approaches differ even when they seek similar goals in a program area. Second, the study addresses program and grant planners and practitioners within the federal government, identifying important considerations for deciding whether and when to seek partnerships with foundations, and how these interactions might be optimally supported. The study may also be of use to individuals working with the foundation sector, as well as practitioners in other nongovernmental organizations who are working to address international or domestic health and development needs and may be considering possible partnerships with the federal government.

1. Organization of the Report

Subsequent chapters of the report provide information for both of its primary audiences: policymakers and practitioners. Chapter II describes our findings on USG-foundation interactions and types of interactions, using examples from the case studies. It may be of special interest to policymakers as a “primer” on existing interactions and opportunities for partnerships. Chapters III and IV focus on specific components of interactions. These chapters are aimed primarily at planners and practitioners. Using cross-case analysis of the data collected through the nine case studies of public and private philanthropic endeavors, both chapters present key issues relating to potential interactions and partnerships, which USG officials engaged in philanthropic efforts may wish to consider as they identify problems, develop solutions, and assess progress. These chapters identify factors that influence the appropriate and achievable types of interactions between USG and foundations. In Chapter V, we examine innovations in philanthropy in the public and private sectors, highlighting innovative metrics and measures, funding strategies, and administration and governance structures, and suggesting ways in which the innovations might be adopted or adapted by other philanthropic actors. Finally, Chapter VI suggests next steps that could further inform USG-foundation interaction in addressing health and social service needs at home and abroad. Suggested steps build on this exploratory study to develop more knowledge about how partnerships might be employed to enhance the value of philanthropic spending.

The appendices provide additional data and analysis that support the findings and recommendations in the body of the report. Appendix A contains detailed profiles of the nine cases studied. Appendix B is the full literature review, which provided background and an analytic framework for the case studies. Appendix C presents the analysis of public-use and secondary data on USG and foundation spending patterns.

2. Limitations

This study highlights many factors that may influence the feasibility and effectiveness of public-private collaboration. It is important, however, to acknowledge three limitations. First, while the cases include many prominent initiatives, they are not broadly representative of either USG or foundation activities in international or domestic philanthropy. Cases were chosen purposefully to provide both variation and comparability, particularly with respect to problems addressed and innovative strategies pursued. Second, while the study findings are informed by the review of many documents and the observations of key participants, we could not include all initiatives or interactions that might pertain to the focal organization of each case. Finally, comments on the possible effectiveness of the endeavors described herein are based mainly on the perspectives of participants, rather than the results of independent evaluations.

Endnotes

[1] 2006 is the most recent year for which data were available.

[2] For purposes of this report, we use the term “philanthropy” to refer both to foundation and USG spending on comparable health and social service programs. Where specific USG figures are cited, these exclude large health and social service entitlement programs such as Medicare, Medicaid, and Social Security. For an expanded discussion of what is treated as philanthropy, see Appendix C.

[3] This amount represents international spending in developing countries by U.S.-based foundations and USG; it excludes spending in other international regions, as well as spending by other types of nonprofit or philanthropic entities (for example, public charities or religious organizations).

[4] There is no single, authoritative source for data on philanthropic spending by the different sectors. The main sources for our analyses were: GivingUSA Foundation for broad private sector spending; the Foundation Center for all foundation spending; the Organization for Economic Cooperation and Development for U.S. government spending on foreign aid; and the Federal Assistance Award Data System for federal domestic spending. For more detail on data sources and spending patterns, please see Appendix C.

[5] The proportion of foundation grants awarded domestically and the proportions dedicated to different program areas reflect proportions of the $14 billion in 2006 foundation grants that are included in the Foundation Center database. We estimate that these proportions hold for the entire $28 billion of grants awarded by all U.S. foundations. The discrepancy between the total grants ($28 billion) and the grants included in the database ($14 billion) results from the fact that the database includes only those grants awarded by the 800 largest U.S. foundations and the 15 largest from each state.

[6] Public and private data sources reference slightly different geographic regions, making direct comparisons somewhat difficult. For more information on data and analytic classifications, see Appendix C.