Development Centre

Search for impact takes centre stage for foundations, says new OECD netFWD report

 

The face of philanthropy is changing. In their efforts to achieve greater impact and higher social returns on their investments, some foundations are adopting practices more commonly associated with commercial enterprise and venture capital, according to the OECD netFWD Venture Philanthropy in Development study.

These foundations are employing alternative financial instruments including debt and equity, and providing non-financial resource to the social purpose organisations (SPOs) they support, such as management and technical assistance. They take a more strategic and evidence-based approach to identifying issues to work on. And they increasingly fund market-based solutions and social enterprise to reach greater scale.


This transformation towards more results-driven practice, along with the unprecedented levels of funds under philanthropic management, is bringing new attention from the bilateral aid community. And with the global economic crisis seeing notable cuts to official development assistance (ODA), foundations are increasingly attractive partners. Yet foundations have historically benefited from high levels of autonomy and low external accountability. Creating effective development partnerships thus requires significant and meaningful collaboration and co-learning across the philanthropic, impact investment, and official aid sectors.


This study is a first step towards offering an in-depth insight on how foundations working for development are evolving in their search for greater impact and provides lessons and insights from the field.

 

Venture Philanthropy in Development includes detailed case studies from four foundations - Emirates Foundation for Youth Development, Lundin Foundation, The Rockefeller Foundation, and the Shell Foundation- that provide insight into their modus operandi, ranging from what constitutes effective partnerships with the social purpose organisations they support to the methods of impact evaluation which were used.

Key steps toward greater impact for foundations include:

  • Undertake a complete strategic review of the philanthropic foundations’ current operating model and theory of change
  • Identify the cultural and institutional barriers to change, recognising that some of these may be ideological as well as constitutional
  • Consider adding market-based approaches to interventions and fund the development of new business models
  • Invest in specialist technical (issue-based) and managerial as well as financial expertise
  • Increase risk tolerance and be open to longer-term “patient investments”

 

For further information about Venture Philanthropy in Development: Dynamics, challenges and lessons in the search for greater impact, journalists are invited to contact Bochra Kriout at the OECD Development Centre (bochra.kriout@oecd.org +33 1 45 24 82 96).

 

Related Documents