Foundations are increasingly important players in the aid scene, spending the interest and/or capital from monster endowments set up by philanthropists. Some of the best known (Ford, Rockefeller) have been around for a long time, and as their names suggest, have an American feel – the big Daddy is the Gates Foundation, which spends some $4bn a year (by comparison, DFID spends £8bn ($13.5bn)). But earlier this week I spent a pleasant Chatham House rules evening chewing the fat with a little known, but large (fund of roughly $4bn and rising) British-based outfit, the Children’s Investment Fund Foundation (CIFF).

I decided to build on Owen Barder’s excellent talk to CIFF’s board a couple of months back. Owen stressed that Foundations have lots of freedoms that conventional aid organizations lack – in particular they can take risks and think long term. But in practice, they are often very cautious, and behave more like the rest of the aid biz (logframes, insistence on illusory levels of certainty on impact etc etc). It’s a curious phenomenon: in government aid ministries, politicians who in their political lives know all about taking risks, seizing the moment after shocks etc, suddenly turn into logframe-obsessed bean counters on arriving at the Ministry. In Foundation land, freewheeling, risk taking entrepreneurs suddenly come over all conservative when it comes to giving away their cash.

Which is a particular shame, because the aid business is in crying need of some risk taking and long term thinking right now. Two examples: systems thinking; and how Foundations could develop new approaches for the rest of the aid sector.

Systems Thinking: aka What do you do when you don’t know what will work?

Real life, societies, politics etc are complex – with so many connections and feedback loops that knowing what will happen when you intervene with a large chunk of money is largely unknowable, and when something does happen, attributing it to your particular project may well be a fool’s errand. Aid needs to rethink its linear, cake-baking approach for such systems, and who better placed than the Foundations to:

• Manage aid like a venture capitalist – fund multiple start-ups, knowing that a large percentage will fail (indeed, if you have too low a failure rate, you probably aren’t taking enough risks). What matters is getting better at identifying failure early, and then shifting resources to more successful experiments.
• Fund work that responds to shocks and windows of opportunity. Aid thinks (and funds) in terms of continuous change (implement the programme over 3 years; grind out the workshops or the vaccines; measure impact). But change often happens in spikes, linked to disasters, scandals and meltdowns (economic, political, environmental). Foundations could show the rest of us the way by demonstrating how to deliberately fund agility and responsiveness, for example in advocacy around climate change.
• Positive Deviance: In large n systems, when you don’t know what will work, an alternative approach is to stop, look around and identify the positive outliers. Then go and research why they are doing so well, tell everyone your findings and maybe see if they could be the basis for some useful programming.
• Enabling Environment: you may not know precisely what works, but you can create an environment that encourages good stuff: healthy, educated people are more likely to do well than sick, uneducated ones; legal systems that respond to poor people; access to credit; respect for rights. These may not be as easy to sell to the public as bednets, vaccinations or water points with your logo on them, but Foundations don’t have to worry about that – they’ve got enough money already.

Go on, take some risks….

Role of Outsiders

The aid business is in serious need of new thinking in a range of areas where Foundations could be ideally placed to help

• Counting What Counts: Measuring impact, thinking through causation and attribution etc are essential to learning and getting better. But we need to ‘count what counts’ – if you are interested in women’s empowerment, better to try and develop ways to measure that directly, even if they are time consuming and expensive. Foundations could invest in developing those methodologies.
• Long term funding: lots of change processes take decades, but aid funders typically have short time horizons of 3 years or less. That reduces the space for experimentation, learning from failure and getting it right and pushes aid organizations towards the safe (if unoriginal) bet. Some of the most interesting programmes I’ve seen in Oxfam have come from organizations like the Swiss Agency for Development and Cooperation taking 10 year time horizons. Could Foundations develop the business models for long term funding?
• Picking high risk, unpopular issues: Foundations don’t need to court popularity, or to worry about bad headlines. So they could tackle the politically difficult stuff (safe abortions, migration). They could do the boring-but-important (building statistical capacity). Or they could tackle those Cinderella issues I go on about at regular intervals (road traffic accidents, tobacco, obesity, alcohol).

Will Foundations step up on any of this? Hard to tell, but one thing is certain: in the end it will all come down to the political economy of the donor, as it always does. But in this case that is easier to pin down – it’s the attitudes and incentives of a handful of people on the Foundation’s board and senior management. Get the theory of change write to influence them, and it’s game on.