This draft discussion paper suggests some of the forms that foundation collaboration can take and the reasons that foundations may wish to join with other donors in grantmaking. It also provides suggested criteria for deciding whether or not to join or form a collaborative funding arrangement.
Private foundations partner with a variety of donors including: other private foundations; community foundations, government agencies/ministries; multilateral organizations (such as the World Bank); and business corporations. The following categories of partnership are arrayed along a continuum beginning with partnerships that are the most engaged, involving joint decision-making about the overall direction of a project or field, to the least engaged, involving a loose alliance of grantmakers in a field.
Categories of collaboration
1. Consortium to pool resources and govern projects
In this most involved mode of partnering, donors contribute financial resources to a single fund, provide direct oversight, and serve as a governing board. Decision-making is carried out in a corporate, unitary manner, with project identification and management often carried out by a jointly funded and separate organization or staff. Such a consortium can include government agencies and institutional recipients of the funding, as well as private foundations. Examples are the advisory council for the Basic Research in Higher Education (BRHE) project in Russia, the Economics Research Consortium in the former Soviet Union, the Energy Foundation, and the Neighborhood 2000 Fund based in New York City. Each of these brings together major donors, sometimes including government agencies and multilateral institutions, to oversee and direct the project, as well as to provide funding.
Purposes and benefits of pooled resources consortium:
- Pool resources to create large funding base
- Directly influence funding decisions of other donors
- Direct and govern the project or grantmaking in an area
- Keep funders involved, engaged, and supportive
- Raise additional funding by asking donors to join
- Coordinate funding, especially timing of grants, and timing of exit
- Increase visibility of issues and institutions that are being funded
- Share information to improve judgments in grantmaking
- Achieve greater policy impact
- Reduce risk to donors-especially when embarking on new area of grantmaking
2. Federation to align resources
In a federation structure, donors develop regular channels of communication to share information and align funding around a common region or purpose. Each may provide grants to organizations that they choose to fund individually, but knowledge is shared and notes about the progress of grantmaking and project development may be compared. In its origins, the National Community Development Initiative (NCDI) is perhaps the prototypical example of this model of partnership. NCDI provides financial support to community development corporations in inner city neighborhoods. Its membership is made up of the senior leadership of institutions that have made substantial financial commitments in keeping with NCDI's strategy, and includes foundation presidents, corporate leaders, and federal officials. Financial resources, however, were not pooled at the beginning of the arrangement, nor was there an attempt to impose a unitary decision-making structure to identify, investigate, and award grants to community development corporations. After the first ten years, NCDI changed so that it now resembles a consortium arrangement where resources are pooled and governance shared.
Another recent example is the Africa universities partnership. Ford, Carnegie, Rockefeller, and MacArthur came together to raise the visibility of higher education issues African countries. Each focuses its grantmaking on a particular country or set of universities, but they all agree on the need to provide funding for the rebuilding of universities, to enlarge their capacity and improve performance. Foundation representatives meet regularly and have developed a series of case studies at the beginning of the grantmaking process to provide a needs assessment of each university, to guide grantmaking, and to provide a baseline to be used in future evaluation efforts.
Purposes and benefits of federated collaborations:
- Share information about conditions and outcomes
- Increase visibility of the issues and of the grantmaking
- Influence direction of public policy
- Coordinate across a geographic region
- Pool evaluation tasks; make comparisons easier
- Generalize from lessons learned across larger number of organizations
- Improve judgments about grantmaking
- Attract other donors by sharing information widely beyond original donors
3. Affinity Groups
Donors have created affinity groups to share information about a policy or grantmaking field. Such groups may evolve beyond occasional meetings and information sharing, to include attempts to gain more visibility for the field, and to attract and recruit new donors. Such a group coordinates through information exchange rather than through pooling of funds or purposive alignment of grantmaking. Donors make grants to organizations they favor, and to ones that are within the scope of their respective guidelines, but there is little attempt to coordinate before the fact about the division of resources among applicant organizations. Funders may decide from time to time to engage in common evaluation of projects that are funded by several of the donors in the group, but this often develops out of conversations on the side of the major business of exchanging information about issues and trends in the field and funding priorities.
In the affinity group mode, donors exist in an ecology of grantmaking, where each may develop a niche within a grantmaking field, each niche adding to the whole community of activity. For example, in the international security field, Carnegie Corporation had developed a niche in convening high-level political figures for discussions to resolve conflicts, especially between the U.S. and the Soviet Union at the height of the cold war. The Corporation also invested in policy research to feed into those discussions. Ploughshares Fund has favored advocacy groups and grass-roots efforts to influence public opinion and policy on nuclear disarmament, while Ford has supported these efforts both in the U.S. and in key countries overseas. MacArthur's niche has been to address the training needs of the field, to bring new people and fresh perspectives into the international security policy agenda, mostly at the advanced degree and professional levels.
In another example, mental health research funding in the early days of MacArthur was based on a recognition that the National Institutes of Mental Health, while a major funder of academic research, was limited in its capacity for innovation. In particular, it was less able to fund interdisciplinary research than a private donor, so MacArthur entered the mental health field to begin to fill that need and developed a niche through the invention and development of its research networks. A division of labor developed between public and private resources rather than a duplication of existing efforts.
Purposes and benefits of affinity groups:
- Preserve division of labor and development of specialization/expertise in aspects of a grantmaking/policy field
- Retain autonomy and distinctiveness of grantmaking
- Spread the risk among various strategies that promise to effect social and policy change
- Reduce risk of a field being dominated by one funder's perspective, approach or ideology; increase pluralism
- Attract new donors to a field of grantmaking
Costs and benefits of collaboration
While there may be benefits to collaborating with other donors, there will also be costs. Deciding when to partner, with whom, and in what mode can sometimes be difficult; such a decision should be made after discussing the possible benefits, as set against the costs of the partnership. The purposes and benefits have already been set out. Costs might include:
- Staff time spent in communicating with other donors, in formal meetings as well as through other means. Especially where joint governance is the object, discussing differences and coming to consensus where the donors playa leading role can involve substantial interaction.
- Money for travel and meetings, for information sharing, for a secretariat or coordinating staff, if required. Again, these are more substantial the more engaged the donors are in joint decision-making.
- Relative loss of autonomy in decision-making. Partnerships usually require a level of commitment of funds over time. Should a donor change guidelines or leadership, it may incur costs if it decides to stay in the partnerships despite changes in overall direction of the foundation (opportunity costs to make investments in other and new areas), or if it decides to leave the partnership (may lose reputation for being cooperative, may find less reciprocity with other donors in the future).
- Loss of distinctiveness of grantmaking. The identification of a project with a single donor may be lost. The cost becomes more evident where a donor may be smaller than others, or where private donors may be engaged with government or multilateral donors (such as the World Bank).
Because the costs of participating in each kind of partnership vary — with the costs of a consortium being greater than that of a federation, and the federation greater than an affinity group, which are in tum greater than choosing not to partner at all-the decision about whether and what kind of partnership MacArthur might pursue should include at the outset a deliberate assessment of the purposes and outcomes to be achieved.
Criteria for forming collaboration
Among the factors to consider in deciding whether to create or join a consortium to pool resources and governance are:
- Problem or geographic region is large
- Foundation's resources alone are much too small for the strategy envisioned
- Potential for leveraging greater resources and institutional partners (especially government or other public donors) is great
- Prospective partners are compatible in decision-making style and grantmaking culture
- Grantmaking strategy is straightforward
- Foundation expects to make long-term commitment
- Staff available to participate in joint decision-making
- Public announcement of partnership can draw attention to neglected issues or region
Considerations that would lead MacArthur to create or join a federated collaboration would include:
- Need for comparative information about issues and institutions; potential for evaluation across grant recipients
- Desire to increase visibility of issues and/or region-shape policy
- Donors already have substantial knowledge about grantmaking area
- Existing specialization and division of labor among donors
- Distinctive grantmaking styles and/or timetables that may be difficult to synchronize
Factors that would lead to establishing or joining an affinity group:
- Influence other and perhaps smaller donors
- Share information about issue area
- Need to learn from others' past experiences and/or build on existing expertise as MacArthur enters a new grantmaking field
- Attract new donors to a field
- Desire to maintain plurality of strategies and approaches in a field because little consensus exists about best practice or best grantmaking strategies
- Innovation is judged to be an especially high priority; other forms of partnership — and sometimes even affinity groups-may create impression of a cartel of donors and discourage experimentation by those in a field.
It is difficult to suggest a formula that would weight the potential benefits against the costs in a way that would apply equally well to all situations. In addition to these considerations, there are intangibles of leadership and personalities that, in some instances, may even outweigh the cost and benefit factors outlined here.
Each of the partnership modes has a different life-span. In the consortium, explicit time commitments are usually stated as donors enter the partnership. For example, the Energy Foundation was set up as a ten-year commitment. Likewise, federation partnerships usually specify some nominal time horizon usually pegged to each donors intention going into the grantmaking initiative. NCDr began with a ten-year commitment that was then extended; the Africa partnership has also been announced as a ten-year grantmaking initiative.
Affinity groups tend not to have explicit or even implicit time commitments built into them. Since they are less project-oriented, and looser in their coordination structures, of course, the exit or entrance of foundations from affinity groups have fewer consequences. Foundations tend to leave affinity groups when they leave a field of grantmaking altogether. So while the exit of a donor from the affinity group is usually of some concern, the larger impact is the loss of the donor's financial resources to the field as a whole. For example, the exit of W. Alton Jones from the international peace and security field, was a source of consternation-but less for the affinity group than for grantee organizations who looked to Jones for support. Yet, affinity groups tend to maintain their membership-even when that membership shifts-over substantial periods of time.
Even when donors are clear at the outset about the length and depth of their commitments to partnerships, there is often resentment when foundations attempt to leave, even at the appointed time. This may be the case especially where there is some sense that a partnership has enjoyed success.
How to manage exits from partnerships may pose problems similar to phasing out support for grant recipients. It is certainly wise to signal, as early as possible, the foundation's intent to withdraw from a partnership, and to continue to announce these intentions on a regular basis. It may also be useful to phase out payments in a declining manner, to make concrete the donor's pending actions.
Collaborations can be extremely useful, providing large pools of financial resources that can begin to match the ambition of the donors, and of the institutions seeking funding. They can also serve to mitigate risk as donors enter into a new policy or geographic area. The publicity that comes with announcements of donor collaborations can also, in itself, draw attention to neglected issues or geographic regions or organizations, and even contribute to shaping policy agendas. The trade-offs are real, however. The transaction costs of collaboration, the loss of donor distinctiveness, the constraints on grantmaking flexibility, and the potential loss of innovation in a field need to be weighed against the potential benefits.