A version of this article was originally printed in the April 2013 edition of ACF's Trust and Foundation News.
The philanthropic sector has been a major contributor to – and beneficiary of – the recent democratisation of aid. We are becoming more and more visible in a group of multiplying actors that continues to transform the development system.
In the last decade, philanthropic giving is estimated to have grown more than 120 percent. This type of aid accounted for US$56 billion of global financial flows to developing countries in 2010 alone – nearly half of official Overseas Development Assistance (ODA) (US$128.5 billion) that same year.
But philanthropy's influence is not simply wielded by our collective cheque book. Across the sector, philanthropic organisations and foundations are harnessing data and sharing their institutional knowledge to better understand impact and provide insights that are of real benefit to the global development agenda.
It has been heartening to witness the growing confidence of the sector to engage in formal research and large-scale public dialogues, expressed so coherently in the Bellagio Initiative. And as a foundation with a different approach to development funding and an NGO constituency numbering in the tens of thousands, we began to consider formal research efforts as a way to contribute our voice, and the voices of those constituents, to the contemporary discourse.
First, though, we had to figure out what we should say.
Here at Stars, we have spent the last six years identifying and supporting some of the world’s most outstanding NGOs. In that time, we have worked closely with our NGO partners to cultivate funding relationships based on genuine collaboration and institutional trust.
Previously, our research efforts had been somewhat inward-looking; more akin to self-testing exercises in order to evaluate the impact of our unrestricted giving. We wanted this first phase of formal research to progress the conversation to something more sophisticated, articulating what we had learned about effective philanthropy, but hadn't yet been able to qualify and quantify.
In the summer of 2012, we designed an organisational research strategy with the help of London's New Philanthropy Capital (NPC). In it, we established a central research principle – the empowerment of NGOs – that we want to unpack and that would guide any research activities to follow. It was crucial that Stars' research outputs prioritise the perspectives of southern NGOs, seeking to collect, transmit and amplify their voices and opinions on how to improve the international development system, and the often unequal financial architecture that underpins it.
The initial scoping exercise identified a particularly salient issue area where Stars could add real value, something our NGO partners had been hinting at for years: while the relationship between grantee and grant-giver is critical to effective philanthropy, uneven power dynamics that dominate the field, relegating NGOs to the role of development sub-contractors.
We were keen to distil these sentiments through our research and to eventually help us discover whether more trusting relationships really do enable NGO empowerment, and whether NGO empowerment really does achieve better development objectives.
We decided to approach the ever-growing pool of local NGOs who have applied to the Stars Impact Awards, seeking their honest views on what works and what doesn’t in their relationships with northern donors and how those relationships support or impede development effectiveness.
The aim was to broaden our current analysis of the field to include more than just the economic quotient present in these types of relationships (i.e. 'unrestricted' versus 'prescriptive') and uncover the additional components that might contribute to better impact (later understood as trust, risk and collaboration).
We involved an independent team with experience in third sector social research and community engagement to conduct a survey of just under 400 former unsuccessful applicants to the Stars Impact Awards. The questionnaire was also made available to online readers of The Guardian, later using this group as a comparative set to test our assumptions about the influence geography has on funding relationships.
The survey took just three weeks to complete, with the research team analysing the raw data and creating the first draft of the report before it returned in-house.
Unsurprisingly, the majority of respondents (82%) agreed ‘there is a need for change in the way that organisations are funded’, with 91% further agreeing that organisations 'should be enabled to act with greater freedom and flexibility in finding solutions to help the communities they serve'.
What was not anticipated, however, was the overwhelming 94% of respondents who agreed that 'funders trust [their] organisation'. We had expected responses to reflect the weariness we pick up from the NGOs with donors who are often inflexible and risk-averse in their approaches. The research instead suggested it is in fact easy for funders to 'trust' (or, more accurately, 'feel secure') in relationships through which funding is restricted to projects.
Where that leaves empowerment, and thusly sustainable impact and development effectiveness, is another matter entirely.
Our initial research seems to show there is a working compact of trust between funders and local NGOs, but that it is only fit for purpose to serve the status quo. If local development actors are to grow stronger and more independent, then the parameters of their funding relationships need to move, and the rules of the game need to change.
The results highlighted a number of areas worthy of further interrogation, particularly in defining and locating sources of 'trust' on either end of the funding pipeline and exploring how trust could be fast-tracked. We took these elements for further study and labeled them 'key considerations' in the final report, published in December to coincide with our annual Impact Awards ceremony.
We do not presume these early insights point to a blueprint for best practice, but we are convinced that further research and dialogue involving our peers will be vital in creating 'better practice' for all philanthropic actors.
To truly maximise the growing influence of philanthropy, we must continue to add our voice – and those of our stakeholders and constituents – to the expanding body of research seeking to improve international development.
Because development will not be truly democratic until local civil societies are able to exercise more control of the processes that affect them so greatly. That process necessarily includes research that fosters greater participation and collaboration, and for that reason, we will continue our own.