Maximizing the Value of Philanthropic Efforts through Planned Partnerships between the U.S. Government and Private Foundations. A. FRAMEWORK: KEY TERMS AND OVERVIEW OF FOUNDATION AND USG PHILANTHROPY

05/01/2009

This study and the present literature review reflect study parameters and priorities established in the study specifications and early discussions with ASPE. To frame the literature review, we have implemented these parameters and priorities by defining the studys scope and focus. This included developing operational definitions, and deciding which private and public philanthropic entities and activities to examine.

For purposes of this study, we use the term philanthropy to refer to an active effort, usually taking place over an extended period of time and involving the contribution of money, goods, time, or other resources, to promote human welfare. Philanthropy may have charitable or public policy purposes and goals and may involve private donations or taxpayer funds. This stands in contrast to more conventional uses of the term, which typically refer to charitable giving. For simplicitys sake, throughout this review we use philanthropy in referring to both private and public aid efforts.

In delimiting our approach, we focus on philanthropic initiatives. We define an initiative as a course of action, system, or program deliberately developed by an organization, under which action is taken to achieve some specific philanthropic objective. Initiatives can be defined broadly to include the provision of aid or assistance through ongoing program activities or, more narrowly, as individual projects focused on specific geographic regions or target populations and implemented over a limited period of time. This more narrow definition will be appropriate when selecting case studies, but for this literature review, we use the term in both broad and narrow senses.

Our understanding of public and private philanthropy and philanthropic initiatives also requires some explanation. While private philanthropy can also encompass the volunteer efforts and charitable giving of individuals, religious groups, and corporations, we limit our scope to the philanthropic efforts of foundations. Foundations have the capacity to develop and fund major domestic and international initiatives, and unlike individuals, foundations have the capacity to interact and collaborate with USG. While foundations have always played an important role in domestic philanthropy, over the last decade, U.S.-based foundations have significantly increased their grant funding for international activity (Renz and Atienza 2006).

By definition, foundations are nonprofit corporations or charitable trusts established to give grants to organizations, institutions, or individuals for scientific, educational, cultural, religious, or other charitable purposes. The Internal Revenue Service makes a distinction between private and public foundations. Private foundations derive their wealth from an individual, family, or corporation, whereas public foundations rely on donations from multiple sources, including the general public. Almost 90 percent of private foundations are independent foundations established with a gift from an individual or family. The other two types of private foundations are operating foundations, which implement their own programs, and corporate foundations, which receive their wealth from a publicly held company. Public foundations, often termed public charities, primarily make grants and typically receive their assets from multiple sources; this may include private foundations, individuals, government agencies, and/or fees for service. To retain their status as public charities, public foundations must continue to raise funds from diverse sources. While most of the foundations we will consider are independent private foundations, there are a few notable public foundations that play an influential role in international and domestic philanthropy, such as the William J. Clinton Foundation and Ashoka.

Foundations vary dramatically in size and influence. Many independent foundations are small family-run entities with no endowment. Only 6 percent of the independent foundations tracked by the Foundation Center have any staff (Collins 2008). While the charitable giving of small foundations is certainly an important piece of global philanthropy, most do not sponsor initiatives that could serve as useful comparisons to the efforts of the public sector. Instead, we focus on the largest independent foundations as defined by levels of annual giving, as well as several others identified in the literature as significant innovators or influential agenda-setters.

We limit our investigation of government-sponsored philanthropy to those efforts most comparable to the private philanthropic initiatives of most interestthat is, those focusing especially on international efforts in the sectors of health, human services, the environment, education, development, and relief. USGs international assistance takes five major forms: bilateral development aid, economic assistance supporting U.S. political and security goals, humanitarian aid, multilateral economic contributions, and military aid. In fiscal year 2005, the largest share of the U.S. foreign aid budget was allocated to bilateral development aid (35 percent) followed by military (24 percent), economic and political security (22 percent), humanitarian (13 percent), and multilateral development aid (7 percent) (Tarnoff and Nowels 2005).

The most prominent agency for international public philanthropy is the U.S. Agency for International Development (USAID). USAID has primary responsibility for managing bilateral development aid, including economic growth, global health, and democracy programs. Additional bilateral development aid is channeled through other USG organizations, including the Peace Corps and the Millennium Challenge Corporation (MCC). MCC directs large grants towards countries that are on a specific developmental trajectory and have also met criteria such as commitment to good governance and economic freedom. The State Department manages the bulk of the humanitarian aid, as well as funds allocated to support U.S. political and security goals. The Treasury Department directs U.S. contributions to multilateral organizations, such as UNICEF and the World Bank. For this review, our examination of international public philanthropy focuses heavily on USAID and MCC because these entities pursue philanthropic initiatives most comparable to the efforts of foundations.

Defining domestic public philanthropy is somewhat challenging. DHHS is responsible for significant health and social service initiatives, but many other federal departments also engage in philanthropic efforts in multiple areas including, for example, education, the environment, housing, and community development. Our emphasis again will be on specific USG efforts comparable in their intent and operationalization to the efforts of foundations.

A final issue requiring some explanation is the role of intermediary organizations in public and private philanthropy. Examples of prominent intermediaries are the United Nations, the International Red Cross, and the Carter Center. Intermediary organizations may receive both public and private funding. While they may implement initiatives of their own, they are more important to this study in their role as advocates and conveners. By making issues part of public dialogue and bringing stakeholders together to discuss them, they can play an important role in setting the agenda for philanthropic efforts, though they are not the focus of the study.

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