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Key Findings from This Chapter
The study identified three main areas of innovation in public and private sector philanthropy showing potential for adaptation or adoption across organizations or sectors:
Through the case studies, we identified three main areas in which innovations in philanthropy are arising: metrics and measurement; funding mechanisms; and administration and governance. Descriptions of examples of these innovations suggest ways in which they might be applied in other settings.
All funders must decide which problems to address, how to allocate resources, and whether to modify, continue, or wind up specific programs. Developing systematic approaches and analytic tools to support assessment and decision-making is therefore a high priority for many philanthropic organizations. Metrics and measurement can be used to guide decisions at various stages in the lifecycle of philanthropic initiatives: as part of formulation and planning, in support of implementation, and as a central element of the evaluation of initiative success and effects. Their use can also boost transparency (by making decisions and actions clear) and accountability (by showing the reasoning behind decisions), an important consideration for interactions between federal agencies and foundations discussed in the prior chapter.
This study identified a number of innovative uses of metrics and measurement. The Hewlett Foundation’s expected return (ER) metric and MCC’s 17 indicators used to determine which countries and sectors should receive compact funding are used in planning stages. MCC’s indicators also represent an innovative application of measurement to help guide implementation. The Robert Wood Johnson and Rockefeller Foundations use innovative approaches to measuring outcomes in the evaluation phase of programs and overall operations. Finally, the Gates Foundation is supporting the development and application of quality metrics for use across all stages of the lifecycle of public health initiatives.
In 2007, the William and Flora Hewlett Foundation undertook to increase the rigor of its grantmaking. Two primary approaches were developed: an Outcomes-Driven Grantmaking (ODG) strategy, and an expected return (ER) metric. The ODG process creates a strategic program plan. The plan sets measurable goals for specified outcomes, defines the program’s scope, establishes logic models that lay out how programs are expected to affect outcomes, and determines how to allocate resources to achieve outcome targets. The ER is a quantitative metric used to evaluate and compare clusters of potential investments in grants with similar purposes. It is created by estimating the potential benefits of a particular grant, its likelihood of success, and its costs. Both ER analysis and an ODG process require a clear definition of goals in terms of explicit outcomes that can be measured and used to evaluate potential program investments and estimate their likely success.
Though too imprecise to serve as the decisive factor in funding allocations, ER calculations have provided a structure for thinking about potential benefits and investment risk, according to Hewlett Foundation respondents. In their perception the ER fosters a common language for assessing tradeoffs, which is more important than the actual calculation of expected return. The ODG process and use of the metric forces program staff to be explicit about their program goals and assumptions and to clearly identify anticipated outcomes. With explicit goals and outcome measures established, the tradeoffs between different grant-making strategies have become more evident, providing a more objective framework for discussing trade-offs.
The possibility of applying a tool like ER in other settings is thought-provoking. Hewlett respondents were cautious about suggesting that ER could be used in other settings, particularly in government. They felt that appropriate use of the tool necessarily involves flexibility and the freedom to make subjective judgments, which they surmised might be limited in government settings. Still, the “investment attitude,” explicit assumptions, and common language fostered by such a metric could prove useful in many contexts in both the public and private sectors.
Using clear metrics and measurement can help to depoliticize sensitive decision processes. This was a core motivation shaping the MCC approach to foreign aid: using clear criteria for establishing countries’ eligibility for first receiving aid and continuing to receive it. Country eligibility for MCC assistance is based on the country’s performance in three categories: (1) ruling justly, (2) investing in people, and (3) encouraging economic freedom. Each category corresponds to the aims of the USG Foreign Assistance Framework. MCC publishes the indicators annually in the form of a “score card.” To “pass” on an indicator, a country must score above the median for countries at similar levels of economic development. Each country’s score is then considered along with other factors, such as opportunities to reduce poverty and spur economic growth in the country and the availability of resources, in deciding whether to grant assistance.
The origins of these indicators add to their credibility. They were “developed by independent third-party institutions that rely on objective, publicly available data and an analytically rigorous methodology” (MCC, 2009). These institutions include the World Health Organization, the World Bank Institute, Freedom House, and UNESCO—groups not entirely unaffected by politics, but independent and respected organizations whose involvement adds credence to the indicators as sound criteria for country selection. MCC has also sought indicators that can be used consistently over time and across countries, which adds to their apparent objectivity and credibility, and potentially supports the development of knowledge about successful aid practices.
Once countries are receiving MCC aid, they are evaluated against benchmarks derived from a consistent process. The criteria for evaluating aid recipients are not identical for all nations, since the interventions MCC supports are quite varied. However, the criteria are developed through consultation and with the same three overarching goals in mind (just rule, social investment, and economic growth).
The use of standard indicators to increase objectivity and diminish the role of politics in investment decisions might have applications for entities other than MCC. Respondents from MCC were enthusiastic about the use of indicators to depoliticize aid and bring accountability and transparency to the process. They felt that other donors, both in and outside of USG, could potentially apply such indicators in thinking about where to direct their efforts. Still, in a note of caution, they emphasized that their work was focused strictly on a group of relatively high-performing countries having clear opportunities for economic growth. They noted that U.S. foreign aid, as well as private philanthropy, includes multiple purposes, not all of which are entirely amenable to this approach (for example, disaster relief or national security).
Increased interest in accountability and effectiveness has led to the establishment of organizations dedicated to measurement and evaluation. The federal government’s Institute of Education Sciences, National Center for Education Statistics, and National Center for Health Statistics are three examples. Expanding this concept with a focus on the international arena, in 2007, the Gates Foundation made a grant of more than $100 million to the University of Washington to create the Institute for Health Metrics and Evaluation (IHME).
IHME is intended to inform the development of public health initiatives at all stages of the lifecycle. It has five purposes: (1) to develop more consistent and accurate public health data, (2) to improve the analysis of such data, (3) to make better use of data to identify the need for specific interventions, (4) to use rigorous evaluations to document the effectiveness of targeted health interventions, and (5) to use its data and analyses to inform policymakers as they formulate and plan initiatives or chart courses for sustainability. The IHME focuses on five operational areas: health outcomes; health services; resource inputs; decision analytics; and evaluations.
IHME takes a consultative and comprehensive approach to its work. This includes attention to developing, applying, and disseminating instruments, data, and evaluation findings to a broad variety of audiences. As part of its core principles of collaboration and consultation, IHME works with “the global health community”—including outside researchers, practitioners, and governments, as well as “those affected by an analysis”—to determine what ought to be measured and how best to measure it (IHME website, “Who We Are” n.d.). Another core principle, comprehensibility, leads IHME to make information available in formats that are understandable and useful to these same varied groups. In line with all of the Gates Foundation’s major initiatives, IHME also seeks to focus on areas where it can make the greatest contribution. It does so by seeking to identify and understand global disease burden, leading causes of death by country, greatest opportunities for health improvement by country, and methods for applying data to decision making.
Delivering funding to those efforts that have been determined to merit resources is a critical aspect of philanthropy. It involves making good decisions about the worthiness of recipients, then providing resources adequate to achieve goals. MCC’s indicator-driven process to determine countries’ eligibility for aid, described earlier, is one innovative approach to decision-making. Two other case studies focused on innovative funding mechanisms, one for determining who gets funding and the other for leveraging funds to ensure the availability and sustainability of resources.
Observing innovative models for finding solutions in the private, for-profit sector, the Rockefeller Foundation set out to test whether nonprofits could apply these models to addressing social problems. The foundation found that some private companies issue an open call and offer a reward for developing solutions to a defined challenge. Rockefeller adapted this approach as part of its Accelerating Innovation for Development program, yielding a “prize philanthropy” approach that encourages nonprofits, researchers, and private business to engage in problem solving together.
Rockefeller supports two kinds of prize philanthropy. The first, known as “open innovation” or “crowdsourcing,” offers individuals or groups an incentive to work independently to solve social problems. Rockefeller partnered with InnoCentive, a company that was helping private sector clients utilize crowdsourcing. Organizations working to address the needs of the poor can apply for Rockefeller funding to post a problem on InnoCentive’s website. Posted problems are viewed by roughly 125,000 engineers, scientists, technologists, and entrepreneurs, who can propose solutions that compete for financial rewards. The nonprofits that post the problems select the solution that best meets their needs. Rockefeller pays InnoCentive’s posting fee and half of the award for the winning solution (InnoCentive also receives a percentage of the award). The nonprofit organization that posts the problem initially pays the other half of the award, but Rockefeller reimburses them once the solution is implemented successfully.
A second approach, “cooperative competition,” offers a forum in which competitors can work together. In 2007, Rockefeller awarded a $2.5 million grant to support the infrastructure and rewards for Ashoka’s cooperative competition program, Changemakers. This online forum enables teams to develop and post solutions to social challenges identified by the communities themselves under the leadership of “Idea Reviewers”—typically individuals with grantmaking and/or technical expertise—again with a financial award for the best solutions. The solutions then are open for use to the entire community, which provides new ideas, helpful questions, and connections to resources. Competitors draw on the collaboration to refine their proposals.
Prize philanthropy could have applications in governmental and quasi-governmental organizations. USG frequently combats problems that may be suitable for prize philanthropy. The government’s scale and prominence could increase participation, and perhaps effectiveness of the approach. Several USG agencies and foundations have expressed interest in this model, and large and quasi-governmental organizations, such as GAVI and the World Bank, already have sponsored Advanced Market Commitments to place $1.5 billion in advance orders for a pneumococcal vaccine from whichever pharmaceutical company can develop the needed drug first.
Broadening the range of settings in which prize philanthropy is used could also bring new challenges, however. Open problem-development models like the two described here generate many more solutions than traditional approaches, so solution seekers or intermediaries need to develop an easily applied filter that can focus attention on the strongest candidates. Rockefeller Foundation respondents observed that open innovation is most successful when there is a tightly defined problem and clear criteria for the solution, as is typical with scientific and technological problems. Rockefeller is starting to test models with less structured problems, such as policy issues. Adoption of the strategy by USG for policy problems may be premature, therefore, since the method is still unproven.
To make progress in alleviating their most serious health problems often requires resources developing societies cannot muster. Without adequate funding, interventions occur only sporadically. Initial reductions in disease or infections may be outstripped by setbacks when funding wanes.
To create a stable flow of funding for immunization and other activities, GAVI in 2006 created the International Finance Facility for Immunization (IFFIm). In a unique financing approach, IFFIm issues bonds based on the financial pledges of donor countries. It delivers the proceeds from those bonds to the GAVI Fund Affiliate Account, which disburses funds to GAVI programs. The bonds are based on 10- to 20-year legally binding commitments from the Group of 7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom, and the U.S.). Using this mechanism, IFFIm aims to double the near-term aid available to developing nations. The World Bank manages the finances and implementation of IFFIm in addition to administering the GAVI Fund Affiliate Account.
Long-term donor commitments yield several benefits. They allow GAVI programs to budget and plan their activities for a longer time period, and allow donor countries that may be facing their own cash shortages to underwrite aid more quickly than if such aid could be extended only as they donated cash. GAVI notes that this mechanism also attracts new funding for immunization that otherwise would not have materialized. The more significant funding levels achievable due to bond leveraging, and the reliability of the resulting aid stream, also allow GAVI to negotiate lower prices for vaccines and to increase the magnitude of prevention and treatment services in the near term. Thus the mechanism should translate into more rapid movement toward eradication of targeted diseases.
The IFFIm mechanism has other potential uses and advantages. The GAVI website suggests that mechanisms like IFFIm, in addition to allowing funds to be leveraged, also can be effective ways to pool funds from various donors to enable more cohesive planning, budgeting, and reporting practices. This approach to leveraging funding could be most advantageous for initiatives in health or other sectors where the ability to accelerate near-term investments can pay off by reducing the scope of the problem and generating long-term benefits. Despite this attraction, USG has so far opted to contribute directly to GAVI rather than donating through the IFFIm, as do many European countries. (According to one respondent, this choice is related to USG’s desire to hold a permanent rather than cyclical seat on the GAVI supervisory board.) USG has long issued bonds itself but has not tied them to financing for such specific problems.
Global health or human services initiatives require substantial communication, coordination, and/or collaboration among multiple entities. This ranges from cooperation among federal agencies to collaboration in planning and funding across international agencies and national governments. Three examples from the case studies illustrate innovative approaches to the administration and governance of USG-foundation interactions and collaborative activities. PMI and PEPFAR are initiatives led and supported by a single, centralized Coordinator’s office in USG. GAVI was established with both public and private funding and has created its own Secretariat, whose growth underscores the substantial effort and resources needed for administering ongoing collaboration.
Both PMI and PEPFAR are structured so that a central office coordinates all relevant USG programs. In PEPFAR, the Office of the Global AIDS Coordinator (OGAC) was established in the Department of State, answering directly to the Secretary, and mandated to coordinate and oversee the work of all USG agencies implementing HIV/AIDS programs in the focus countries. It thus oversees programs of USAID, the Departments of Health and Human Services, Commerce, Defense, and Labor, as well as the Peace Corps. The U.S. Malaria Coordinator’s office, located in USAID, oversees cross-agency collaboration between USAID and the CDC and includes other federal partners in its interagency steering group.
The distinctive feature shared by OGAC and the U.S. Malaria Coordinator is that they have ultimate decision-making and budgetary authority. While both coordinators are linked to a specific agency, they have the authority to make decisions and determine funding for other agencies’ programs. They have stature as well; both coordinators are appointed by the President, which offers both practical and symbolic assets; in addition the OGAC appointment is an ambassador-level position.
OGAC and the U.S. Malaria Coordinator represent innovative ways to structure and support executive leadership with the goal of enhancing the coherence of and reducing fragmentation and redundancy in USG efforts around a specific public health problem. This executive leadership model used by PEPFAR and PMI could be adapted for other settings, such as other USG efforts, linking various agencies and possibly private sector stakeholders, although it is perhaps most appropriate for clearly defined problems. Where there is great variation in the understanding of a problem and/or the programmatic approaches applied to it, it likely would be more difficult to justify or win acceptance of a central decision-making authority. Such a model also might be used by very large foundations that need to coordinate different operational units.
For a global health alliance to be successful, an appropriate organizational structure receiving adequate resources and support is critical. The GAVI Secretariat is a central office that supports key alliance functions and is located and staffed separately from the various donor organizations. One study of GAVI’s governance suggested that the Secretariat structure works well for relatively formal partnerships that have a group of members operating as equals. It is “often most appropriate when the partners seek deeper combination gains [and] when a large number of diverse partners are involved” (McKinsey 2002, p. 4).
While GAVI’s Secretariat was formed during the birth of the alliance, its structure and role have changed over time. The initial Secretariat, hosted by the UNICEF office in Geneva, aimed to be lean and efficient, with only six staff members. With no technical staff, the Secretariat played a limited role in assisting the GAVI board. Instead, the Working Group, consisting of mid-level technical staff from the founding partners, conceptualized and operated GAVI (CEPA 2007). GAVI was created with this skeletal Secretariat because some of its founding partners feared the creation of a new implementing agency. The Secretariat’s only responsibility was the internal management of the Alliance. All other activities were to be left to the partner organizations. Yet as GAVI grew, the size and the responsibilities of the Secretariat also increased. By 2007, the GAVI Secretariat had 88 staff positions.
GAVI’s experience highlights the need to invest in partnership governance. Although GAVI is not an implementing agency, its managing of the grant portfolios, providing technical support to recipient countries, and engaging in advocacy required the development of a substantial Secretariat. Currently, the GAVI Secretariat is responsible for the day-to-day operations of the Alliance, including mobilizing resources for funding programs, coordinating program approval and funding disbursements, legal and financial matters, and administration of the supervisory board. As of January 2009, the Secretariat is independent of UNICEF and Secretariat staff is employed by the new GAVI Foundation, established as a Swiss entity.
While the growth of the GAVI Secretariat may have streamlined decision making and increased accountability, this evolution has presented challenges for the partnership. As the Secretariat internalized its framing of policy issues, there has been concern about whether partners felt the same level of ownership, and commitment to, decisions arrived at this way (Chee et al. 2008).
GAVI’s struggle to find the correct balance between optimal decision making with accountability and full partner involvement may offer important lessons for USG. In many ways, the Secretariat model is similar to OGAC. One crucial difference is the accountability structure. The GAVI Secretariat is accountable to the GAVI Board, which includes senior representatives of all founding partners and many other key stakeholders. In contrast, OGAC is responsible to the Secretary of State rather than to representatives of the various USG agencies participating in PEPFAR. Perhaps the most valuable lesson from the GAVI Secretariat is that the administration of complex partnerships appears to merit significant resources, and in some circumstances it may be beneficial to establish an administrative structure separate from participant organizations.
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