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Some organizations invest in people and ideas, instead of funding programs or particular organizations. One example is Ashoka, which through its Fellows program has led a trend toward supporting social entrepreneurs. Ashoka’s approach may be difficult to model in the USG, where different standards of objectivity, transparency, and accountability prevail. Furthermore, Ashoka does not seek to partner with USG or any government. These constraints and preferences, however, do not rule out USG looking at some Ashoka techniques or other types of purposeful interaction, such as complementary or coordinated action in specific geographic regions or fields of interest. Given the influence of Ashoka’s approach in the “citizen sector,” such learning and interaction may be worth developing.[1]
The Ashoka Fellows program identifies and invests in social entrepreneurs worldwide. Fellows are identified through established networks in the relevant countries and public nominations. Ashoka provides Fellows with an initial stipend for an average of three years to allow them to focus full-time on their initiatives. Fellows are also provided with lifetime access to professional services (legal, management) and connected with a global network of social and business entrepreneurs both to learn from them and to disseminate the Fellows’ innovations globally (Drayton 2006).
Bill Drayton founded Ashoka and the Fellows program in 1980.[2] He believed that while good ideas are essential, they can be leveraged by especially effective people. The Ashoka Fellows approach, adopted by enough organizations now that it is no longer considered novel, is to fund and support individual social entrepreneurs and their ideas rather than particular social needs, programs, or organizations. The Fellows process identifies promising social entrepreneurs, nurtures them so they can pursue their ideas, and fosters global collaboration among entrepreneurs to maximize impact and sustainability of those ideas.
Ashoka chooses Fellows using a five-step process:
Consistent with Ashoka’s philosophy, the reviewers and panels evaluate applicants on five criteria, which focus on the entrepreneur and the idea. The candidates must exhibit:
Ashoka has supported more than 2,000 Fellows in over 60 countries. Ashoka classifies its support as personal or institutional. The most critical personal support is the stipend, start-up capital that allows Fellows to concentrate full-time on institutionalizing their innovative ideas and advancing their mission. Other personal support includes training, personal security, and mentoring. Similar to the venture capital model, Ashoka also provides institutional services. These services, available indefinitely to each Fellow, include collaboration with and advice from the Global Fellowship of more than 2,000 social entrepreneurs; management and strategic advice from a professional management company; communications advice from a communications firm; and legal advice from a law firm. Both the limited initial stipend and the lifetime services provided to Fellows are intended to promote sustainability.
Ashoka is in the early stages of implementing a program to track Fellows’ progress. Twice a year, Fellows submit reports that track their progress against benchmarks mutually agreed upon at the start of the fellowship. These reports address a set of questions that are open-ended and self-defined, allowing Fellows the flexibility to adapt as needed. Benchmarks vary, given the diverse areas in which Fellows work, making it difficult to estimate any aggregate impacts. Recently, Ashoka has been trying to make the process more interactive, with both Ashoka and the Fellows evaluating whether the other is adequately delivering on their responsibilities.
Ashoka also evaluates its Fellows and their innovations by examining their ability to create “systemic change over time.” Ashoka developed its Measuring Effectiveness (ME) program in 1997 to strengthen understanding of the long-term progress its social entrepreneurs are making toward systemic social change. The ME program includes two components: (1) annual self-report surveys of Fellows at the fifth and tenth anniversaries of their selection; and (2) a series of case studies of some Fellow survey respondents to obtain more in-depth information. These components track Fellows’ progress toward systemic change and allow some assessment of Ashoka’s ability to identify effective social entrepreneurs (Leviner et al. 2007 and Ashoka 2006). The ME attempts to measure outcomes (such as in an educational system) rather than outputs (such as the number of students educated), asking Fellows four questions. The responses are meant to serve as “proxy indicators” for evaluating systematic change over time:
A weakness of the ME approach is that it may yield overly positive estimates of outcomes. First, some Fellows become inactive or lose contact with Ashoka (up to 30 percent ten years post-selection); and of the Fellows still in contact, a substantial fraction does not respond to the survey (up to 32 percent ten years post-selection). The responding Fellows are likely a biased sample of the initial fellowship class. Second, since Fellows rate the replication and impact of their own initiatives, there could be exaggeration of progress. Finally, since the Ashoka staff conducts the ME process, and the success of the Fellows program reflects on Ashoka, staff themselves may have some incentive to paint a positive picture of the program. As many funders have suggested external evaluations, Ashoka is strongly considering this for the future.
These issues suggest a cautious reading of the generally positive results Ashoka has found. Of the Fellows who responded to Ashoka’s ten-year, follow-up survey (roughly half of the initial class), 83 percent said they were still working toward achieving their initial vision. There is some evidence that the persistence rate has been increasing over time, possibly suggesting that Ashoka selection and support of Fellows is improving. Ashoka has also found that 82 percent of respondents believe that another individual or group has replicated their work, and 71 percent of respondents said that they had contributed to a country’s policy change on a national level.
Often, Ashoka Fellows seek to influence public policy to effect systemic
change. Consequently, most Fellows interact regularly with their respective
governments, including USG. Recognizing this advocacy role, Ashoka provides
Fellows with training and connects Fellows with both public and private
individuals who can help prepare and support Fellows in their advocacy and
other interactions with government. However, Ashoka purposefully limits its
own interactions with governments to communication and does not accept any
funding from USG or other governments. Ashoka believes the constraints associated
with receipt of government funding could hinder Fellows in their work. Whether
these constraints would be perceived or actual, Ashoka believes that a formal
relationship with USG or any government will compromise Fellows’ freedom
and consequently limit their
effectiveness.
As measured by assets or total giving, the Bill & Melinda Gates Foundation (Gates Foundation) is by far the largest U.S. foundation. As of October 1, 2008, the Gates Foundation had an asset trust endowment of $35.1 billion, and distributed more than $3 billion per year. The structure, approach, and agenda of the Foundation are heavily influenced by its founders, and there is no doubt that the direction of philanthropy in the international health arena has been, in turn, heavily influenced by the magnitude of the Foundation’s giving. One example of the degree of their influence is the field of malaria treatment and prevention. Global efforts to reduce and eradicate malaria have been catalyzed by and coalesced around the organizations and approaches developed or funded by the Foundation.
The Gates Foundation’s stated mission is to help all people lead healthy, productive lives. The Gates Foundation was officially established in January 2000, building on previous philanthropic work undertaken through the Microsoft Corporation, which sought to expand access to Internet technology within the United States. With the creation of the Gates Foundation, these philanthropic efforts expanded substantially, focusing primarily on three key program areas—global health, global development, and domestic education. Two of the program areas, global health and global development, account for about 80 percent of the Foundation’s grant-making activities.
Since 2004, the Global Health Program has funded more than a thousand grants in an effort to:
While the Gates Foundation is involved with a range of activities, this case study focuses mainly on the malaria program created as part of the Global Health Program. Malaria is the focus of one of 11 Global Health Program primary areas. Others include diarrhea; HIV/AIDS; nutrition; maternal, newborn, and child health; neglected diseases; pneumonia; tobacco; tuberculosis; polio; and vaccine-preventable diseases.
Within the Global Health Program, five key divisions—Policy and Advocacy, Global Health Discovery, Infectious Disease Development, Integrated Health Solutions Development, and Global Health Delivery—administer and carry out initiatives within the 11 focal areas. For each area, including the malaria program, a strategic planning team comprised of staff from each of the divisions develops an overall strategy and monitors implementation and outcomes. These teams are also instrumental in determining how to invest resources to obtain the greatest impact. This structure provides an opportunity for staff to interact and plan by focal area and by type of strategy or intervention. The teams meet at least monthly to develop priorities and monitor progress.
In each program area, the Gates Foundation conceptualizes their grant-making as a series of activities that use inquiry and feedback to select and guide investments with the best chances of advancing Foundation goals. The four key stages, or steps, of the Foundation’s grant-making process are: (1) develop strategy (formulation and planning), (2) make grants (implementation), (3) measure progress (evaluation), and (4) adjust strategy (impact). These map well to the conceptual model of philanthropic approaches described in the literature review for this project.
The Gates Foundation engages in an intensive and collaborative process to formulate strategies for areas in which they plan to invest. When strategies are being developed, the Foundation co-chairs, Bill and Melinda Gates, work closely with the leadership teams to develop a long-range plan. The Foundation gathers data from as many sources as possible and engages experts and potential beneficiaries. Once the area has been established, the strategic planning team takes responsibility for ongoing planning, bringing in the co-chairs and leadership team when needed.
The Gates Foundation often involves a variety of partners, practitioners, and leaders in the strategy development process. Teams define the problem of interest as clearly as possible, then conduct research to understand what is being done to address the problem and by whom, and to identify any potential barriers to change. They routinely seek outside input through “listening sessions” with experts and those affected by the issue and consider short- and long-term solutions. In developing their role, the Foundation aims to identify where they can have the most impact. For malaria, they have allocated resources to expand the use of chemically treated mosquito nets (a short-term solution) and also provided substantial funding to develop a vaccine for malaria (a long-term solution). Once Foundation leadership agrees on overall strategy and tactics, focus area leaders recommend how much money should be allocated to an initiative. Strategies usually are put into place for three to five years.
In the case of malaria, the Gates Foundation’s short-term goal is to significantly reduce malaria deaths by 2015. Its long-term goal is to eradicate the disease. To achieve these goals, the Foundation has chosen to focus its efforts on:
Once a strategy has been selected, responsibility for execution rests with the Foundation’s program leaders, known as presidents. They have the authority to find the partners, programs, and activities that will allow them to achieve desired results. Program staff may work with an organization to put a new initiative into place or contribute funds to expand work already underway. To maximize the financial resources that can be devoted to the issue, the Foundation works to leverage additional funding from a variety of outside partners, which it did in the case of malaria.
The Gates Foundation often targets projects designed to have a “breakthrough impact.” Much of the Foundation’s health funding is therefore directed toward prevention research, such as developing vaccines. In cases where they provide funding for low-tech solutions, such as treated bed nets, they do so in countries where the anti-malaria initiative promises to serve as a model for other countries to follow.
Once a grant has been awarded, an assigned program officer works with the grantee to ensure that the work performed is in sync with the vision and goals of the Foundation. Program officers are typically seasoned experts who not only oversee grant activities, but also provide technical advice to help shape the project. Program officers and grantees operate as formal partners with regular dialogue to develop approaches to the project. When needed, program officers may include other substantive experts at the Foundation to provide guidance and support. However, the assigned program officers maintain primary decision-making authority.
The Gates Foundation has a formal internal process for evaluating grant initiatives. It requires grantees to report on their work and the strategic team to evaluate the overall progress toward outcome goals. As part of this process, the strategic planning team conducts a periodic “refresh” to evaluate milestones achieved and redefine priorities for the program Refreshes occur every six months to three years, depending on the initiative.
An external advisory committee oversees each main program area—global health, global development, and U.S. domestic programs. These advisors review the Foundation’s strategies and efforts to implement them. Advisory committees are intended to ensure that Foundation efforts are examined from a holistic perspective and to help make midcourse corrections.
In addition to internal evaluation, the Foundation relies on formal research to identify needs and impacts. A recent grant to the University of Washington for more than $100 million helped create the Institute for Health Metrics and Evaluation (IHME) to obtain more consistent and accurate data, improve data analysis, and identify needs for specific interventions. Evaluations conducted by IHME also document the effectiveness of targeted health interventions and disseminate evaluation findings to inform policymakers.
The Gates Foundation reports that over the past five years its malaria initiative has had a significant effect on efforts to address the disease, by raising awareness and recruiting resources and global commitment to the initiative. According to the president of policy and advocacy at the Gates Foundation, the malaria advocacy community has expanded from a few members to an active, worldwide community, largely in response to the Foundation’s leadership and funding. An editorial in the New York Times (December 14, 2008) gave the Foundation credit for a long-awaited breakthrough in developing a malaria vaccine.
The Gates Foundation has played a leading and substantial role in convening and building a dedicated community around the cause of eliminating malaria. The Foundation attributes this achievement to partnerships with public and private entities. The Foundation focuses on partnerships in three primary areas: (1) funding, (2) advocacy and education, and (3) implementation of programs and initiatives. The Foundation also describes itself as acting as a catalyst for challenging governments, including the U.S. government, to take action. Motivated by this philosophy, the Gates Foundation has striven to be a complementary partner with a variety of public and private agencies. Its partnerships include:
A respondent from the Gates Foundation offered four suggestions to foster collaborative public-private partnerships:
The GAVI Alliance, initially named the Global Alliance for Vaccines and Immunizations, was created in 2000. GAVI’s stated mission is to save children’s lives and protect people’s health by increasing access to immunization in poor countries. The founding members of the alliance include the World Health Organization (WHO), UNICEF, the Bill & Melinda Gates Foundation, and the World Bank Group. The partnership includes many other players: developed and developing country governments, research and technical institutes, the vaccine industry in both the developed and developing world, and civil society organizations.
Since its creation, GAVI estimates that it has prevented 3.4 million deaths, protected 50.9 million children with basic vaccines against diphtheria, tetanus, and pertussis (DTP-3), and protected 213 million children with new vaccines and through expanding the use of underused vaccines. It has currently approved $3.7 billion in funding for 75 countries, including future commitments through 2015.
The GAVI Alliance is a complex entity consisting of several components:
GAVI’s development and use of innovative mechanisms to fund immunization, along with the evolution of this partnership from informal to more formal status, are aspects of GAVI’s functioning most relevant to the current study.
GAVI is not the first major immunization partnership. Prior to its formation, many of the same entities, including WHO, UNICEF, and the World Bank, participated in the Children’s Vaccine Initiative (CVI). The Initiative struggled with inadequate funding and disagreements among its partner organizations. In 1999, WHO decided to disband the Initiative. Even as the partners disbanded, however, there were already plans to form a new alliance.
The new GAVI partnership formed very quickly, aided by two important forces (Muraskin 2005). The first was access to new funding from the Gates Foundation. Through the Children’s Vaccine Program at PATH, [4] the Gates Foundation provided $750 million in new funding to immunization efforts including GAVI. By providing such a high level of resources to GAVI, the Gates Foundation substantially increased the resources available for immunization work and reduced the perception that GAVI was competing with existing organizations for funding. The second factor aiding the new partnership was the strong commitment of immunization program staff at the partner organizations. A group of staff members who had participated in the CVI formed the GAVI Working Group. This group of mid-level technical staff played a crucial role in the early stages of the Alliance.
GAVI was not formed to implement any programs. Rather, the partners believed that joining forces would add value to the efforts of the individual partners through coordination and consensus building, funding support, innovative programming, and enhanced communication and advocacy. The initial, relatively loose structure of the alliance and its small professional staff were deliberate strategies “intended to ensure that GAVI did not become an implementing entity on its own, but would rely on its partner organizations to undertake all activities except for internal management” (Abt Associates 2008).
GAVI works to establish country-level immunization programs. Countries with gross national income per capita of less than $1,000 in 2003 are eligible for GAVI support. Currently, 72 countries are eligible. Funds are allocated based on a country’s needs, with countries with lower existing immunization rates receiving greater funding. Countries can use GAVI funding to purchase vaccines or vaccine safety equipment. The funding can also be used to strengthen health systems to deliver the immunizations.
GAVI has developed several mechanisms for funding the alliance and supporting its goals. One of its primary goals was to ensure long-term, predictable financing. GAVI also recognized that there can be advantages to frontloading aid, particularly health aid—an area with important economies of scale. To facilitate predictable aid that could be optimally allocated across time, the U.K. proposed establishing the IFFIm to support GAVI. The IFFIm, established in 2006, asked donor countries to make 10- to 20-year, legally binding aid commitments. Currently, France, Italy, Norway, South Africa, Spain, Sweden, and the U.K. have made commitments to the IFFIm. On the basis of these commitments, the IFFIm issues AAA bonds in the international capital markets. The inaugural bond issue, in 2006, raised $1 billion.
GAVI has also implemented a creative financing mechanism to provide market incentives for vaccine development. Developing a vaccine requires substantial research and development investments. There is a concern that the private sector under-invests in research and development of vaccines for developing countries because the potential for profit is unknown. Through Advance Market Commitments (AMC), donors commit money to guarantee the price and market for future vaccines. In the early years after a vaccine’s development, GAVI promises to pay an inflated AMC price for the vaccines to compensate companies for their initial investment. As part of the AMC, vaccine manufacturers make binding commitments to supply the vaccine at sustainable prices after the initial AMC period ends. An independent advisory group decides which diseases to target and how to structure the financial incentives. The AMC program is currently being piloted for the introduction of pneumococcal vaccine. Canada, Italy, Norway, Russia, and the Bill & Melinda Gates Foundation pledged $1.5 billion to fund this initial AMC.
In addition to generating additional funding, GAVI seeks to ensure the sustainability of its immunization efforts by requiring recipient countries to co-fund the efforts. Starting in 2007, GAVI asked recipient countries to start co-financing when they introduce a new vaccine and to co-finance existing vaccines after the first five years of GAVI funding. The co-financing requirements are determined by the income of the recipient countries, but the concept of co-financing ensures that there is the country-level support of the vaccination program that is necessary for long-term sustainability.
GAVI has also developed an innovative outcome-based funding system for their immunization support grants. Countries initially receive a three-year investment based on a specific vaccine target. While countries have flexibility in allocating the immunization support funds, all progress is measured by the country’s DTP-3 immunization rate. By choosing one benchmark, GAVI has simplified its accountability system. Since DTP-3 is a basic immunization that all children should receive, GAVI uses the DTP-3 immunization rate as a measure of a country’s immunization infrastructure. Countries receiving funding must reliably report increased DTP-3 coverage rates to renew funding after the initial three-year investment. GAVI has also developed a Data Quality Audit process to ensure accountability. Outside auditors examine health records to verify the level of basic immunizations.
GAVI has evolved from a loosely structured alliance to a more formal international partnership. The initial GAVI Alliance was informal and had no legal status; it relied on its partners and various entities to provide implementation and governance.
As GAVI developed their new funding mechanisms and allocated increasingly larger amounts of funding, its work became more complex. GAVI received income from four different sources: 1) direct contributions of individuals, foundations, and donor governments to the U.S. nonprofit, 2) direct contributions from donor governments to a GAVI trust account at UNICEF, 3) direct contributions from donor governments to other GAVI trust accounts, including a trust at the World Bank, and 4) proceeds of bond sales from IFFIm. In its initial structure, GAVI had multiple boards, secretariats, working groups, and standing committees. These groups had overlapping roles and the lines of accountability were not always clear.
This lack of clarity may have been an advantage early on. In their evaluation of the first phase of GAVI (2000-2005), Abt Associates (2008) reported that “a certain amount of ambiguity was at times useful to maintain commitment by all the partners—it enabled partners to interpret GAVI’s mandate and their own roles and responsibilities in ways acceptable to the institutions they represented. With respect to governance and management as well as strategic decision-making, ambiguity was sometimes used to facilitate agreement among partners.”
With a larger, more complex organization, however, this ambiguity became more problematic. For instance, it led to unnecessary duplication of efforts. In 2005, the alliance chose to undergo a process of convergence, merging the management structures of the Alliance and the Fund under one Secretariat. In 2007, GAVI chose to further modify its structure. An external governance evaluation found that while GAVI had succeeded, the evolution of the organization from a start-up venture to an established force in global public health required re-examination of its structures and processes (CEPA Governance Discussion Paper 2007).
GAVI thus chose to merge the Vaccine Fund and the Alliance into a foundation to be based in Switzerland. This governance evolution becomes official in 2009. For the first time, the GAVI Alliance will be a formal institution (previously only the Fund was a legal entity). This change represents a shift from an informal partnership towards a “partnership institution in its own right” (CEPA Governance Discussion Paper 2007).
The U.S. government was one of GAVI’s six original donor countries. Initially contributing $48 million in 2001, the U.S. has increased its annual contribution to GAVI resulting in a total of $422 million over seven years. Although the U.S. government has been a consistent provider of direct funding to the Alliance, it has not contributed resources to either the IFFIm or the initial AMC.
One challenge for USG of participating in a large international partnership
effort is that the decisions of the partnership do not necessarily reflect
the preferences of the U.S. government. The Board of the GAVI Alliance includes
permanent seats for the Gates Foundation, WHO, UNICEF, and the World Bank.
Other seats rotate among members of key stakeholder groups. The United States
is not guaranteed a seat at the table. The current board structure includes
five seats for OECD countries. Since 2006, Dr. Kent Hill, the Assistant
Administrator for the Bureau of Global Health at USAID has held one of the
rotating OECD seats, but this seat will rotate in July 2009.
The Millennium Challenge Corporation (MCC) is one of several U.S. government entities and programs that represent innovative approaches to public philanthropy in health, development, and other fields. MCC provides aid through a transparent mechanism with a strict focus on accountability and results, working only with countries with demonstrated high potential for sustainable economic growth. Although MCC staff perceive that other donors could increase the impact of their own efforts and funds by dovetailing with its work, in practice MCC has formed relatively few partnerships with foundations to date, because their focus on supporting economic growth has led them to focus primarily on the private, for-profit sector.
Founded in January 2004, MCC is a corporation established by act of Congress and owned by the U.S. government. Its stated goals are to “reduce global poverty through the promotion of sustainable economic growth” (MCC, 2008). MCC disburses an overall fund that Congress appropriates to countries selected by MCC for large-scale infrastructure, economic, and social development programs through in-country Millennium Challenge Accounts (MCA), and provides oversight and management support for each country. The congressional charter allows MCC to commit money upfront for multiyear programs, contract with non-U.S. firms, and work closely with recipient governments to design programs and monitoring and evaluation plans (Congressional Research Service, 2008).
MCC’s approach to funding was envisioned as a transparent mechanism with a strict focus on accountability and results. The emphasis on transparency was intended to limit the influence on aid disbursement of shifting geopolitical agendas. To support this approach, MCC funds are “untied aid,” that is, free of country- or sector-specific earmarks determined by Congress. Given that geopolitical as well as humanitarian interests do have a role to play in U.S. foreign aid, the MCC approach is not intended for application to all foreign aid. Rather, it was designed to maximize the efficiency of aid efforts in a select group of “high performing” countries with demonstrated capacity to use resources effectively.
At the heart of MCC’s focus on transparency and accountability, the corporation relies on a series of 17 key policy indicators to structure its process for selecting countries that will receive funding. These indicators were developed by independent third parties (for example, the World Bank and Freedom House), and fall into three broad categories, which are aligned with the Department of State’s “Foreign Assistance Framework” (U.S. Department of State 2007): (1) ruling justly, (2) investing in people, and (3) encouraging economic freedom. While the application of such indicators is a hallmark of MCC’s approach and has been viewed as a “good start” by some (Radelet 2003, p. 166), critics have suggested that the indicators are less transparent than they might seem, pointing to methodological problems, questionable predictive and substantive value, and subjectivity (Chassy 2005).
Countries that demonstrate a minimum level of performance on the indicators are eligible for “compact assistance;” those that show improvement in the indicators but do not fully qualify for compact level assistance can be considered for “threshold programs.” MCC currently has compact or threshold programs in 38 countries. Compacts are typically funded for a five-year period, but if a country fails to maintain eligibility or meet benchmarks, MCC can withhold compact funds. Even with these requirements, the relatively long-term commitment of funds by MCC is cited as an advantage over more typical USG aid, which is typically subject to yearly congressional approval, potentially impeding the ability of recipient countries to develop and adhere to long-range plans. MCC threshold countries receive a lower level of assistance than compact countries, and for a shorter time period. Threshold assistance takes the form of small grants aimed at improving performance on the specific eligibility criteria that are not being met.
As with other U.S. foreign aid programs and approaches, country ownership is a core emphasis of MCC’s approach. This emphasis is operationalized in MCC through the compact development process, which occurs in four phases: (1) proposal development, (2) due diligence review, (3) compact negotiation, and (4) entry into force (implementation). Proposal development is typically the most complex of these phases, comprising the bulk of MCC’s formulation and planning activity. Twenty-six countries have been deemed eligible for compact assistance and of these, 16 have signed compacts; 10 countries are still negotiating the compact development process.
To begin the proposal development process, each eligible country must conduct a constraints analysis to identify any “bottlenecks to growth” in the local economy. The analysis compels countries to examine their development goals specifically with respect to their potential for stimulating economic growth. Ultimately, it helps a country to sort through “two competing agendas”—national development strategies and market-oriented reform strategies—“to find the appropriate intersection of core priorities that hold the potential to accelerate growth” (Wiebe 2008).
Once the constraints analysis is complete, countries begin the project design step of proposal development, moving beyond identification of problem sectors to developing possible solutions and defining investments for MCC to consider. This step actively involves additional stakeholders (for example, NGOs and private companies) and focuses on developing a well-defined logic model intended to demonstrate a chain of results from project inputs, to activities, outputs, outcomes, and long-term impacts.
As part of this process, countries must conduct cost-benefit analyses to develop alternative investment proposals and models. These analyses provide a rationale for each proposed investment strategy and demonstrate how investments will support economic growth and boost household incomes. The cost-benefit analysis is an important factor in the MCC selection process and is utilized both by the candidate country and MCC during review and decision-making. It is also made available to the public in the interests of transparency.
During the due diligence review, MCC’s in-house or contracted experts evaluate the proposals. In addition, MCC consults with other donors, NGOs, and private business during the assessment process. The use of the consultative process and the cost-benefit analyses in decision-making points to what is often considered the most innovative aspect about MCC’s approach: “The systematic application of analytical techniques to virtually every element of every program and the transparency provided by the use of these techniques and MCC’s public dissemination of their outputs” (Wiebe 2008, p. 2). After due diligence, a compact is negotiated and signed and work begins.
After the culmination of the compact process, MCC hands over implementation authority to the country’s own Millennium Challenge Account (MCA). This is an entity created by the compact country to administer MCC funds and implement the approved programs. The local MCA solicits, awards, and administers procurements for goods and services based on the programs designated in the signed compact. Payments to MCA-contracted vendors to deliver these goods or services are made through a common payment system for each compact country into which MCC directly disburses funds. The MCA submits periodic procurement plans and at least semi-annual updates to MCC for approval.
MCC’s approach to assessing progress and measuring results has three phases: (1) pre-investment analyses, (2) monitoring and assessment during implementation, and (3) post-implementation evaluation. As part of each phase, quantitative data are collected and analyzed so that in-country and MCC staff can identify problems, assess alternatives, track progress, and measure results. MCC requires countries to identify baselines, as well as outcome and impact indicators, from the beginning of a proposed project, starting from the pre-investment phase. These become part of the performance indicators that MCC uses to track progress on a given project.
MCC creates incentives for countries to respond to these data requirements by providing funds for monitoring and evaluation. MCC works closely with MCAs and the institutions responsible for implementing the program to develop a Monitoring and Evaluation (M&E) plan. MCC requires that every compact include a formal M&E plan, making this management tool a core part of the bilateral agreement. MCC also does not release subsequent disbursements until adequate documentation is provided that previous funds have been spent and relevant milestones have been met, as delineated in the M&E plan.
The cost-benefit models developed earlier in the compact development process are also used to inform M&E plans. These models include an accounting of costs for each activity during the length of the compact, provide implementation timelines, and define the important milestones and deliverables. This connection between cost-benefit analyses and the M&E plan is crucial in the performance measurement framework, since both MCC and the compact country have accepted the cost-benefit models prior to funding and have agreed to implementation and measurement according to the assumptions in the model.
MCC has highlighted the importance of rigorous impact evaluation in quantifying performance gains and determining which partner country investments are most effectively helping to reduce poverty through growth. Given the difficulty and expense of rigorous impact evaluations, however, MCC carefully examines the use of funds for conducting such studies. In doing this, MCC considers three factors: (1) the need for information, (2) the learning potential from the evaluation, and (3) the cost and feasibility of conducting the impact evaluation. MCC works extensively with national statistics agencies, research institutions, and other domestic data collection agencies, such as universities, to collect and refine indicator data for use in its performance assessments and results-based management framework. Although MCC has begun impact evaluations in several compact countries, none has yet been completed.
MCC’s organizational structure includes a unit dedicated to multilateral and donor relations, which seeks to engage NGOs, foundations, and other private sector entities. Dovetailing with MCC work can, in the view of its staff, allow other donors to increase the impact of their own efforts and funds, and participate in a systematic development initiative. When funding infrastructure projects, for example, MCC may encourage MCAs to look for business or philanthropic opportunities to leverage the improved infrastructure to accelerate economic growth or well-being. Occasionally funds from other donors allow MCC to increase outputs (for example, the number of individuals served by a compact project), or to finish a project that otherwise would have run out of money (typically due to fluctuating value of currencies). One MCC respondent noted that while foundations typically have more limited resources than MCC, they have more flexibility and can take risks that the MCC (because of statutory requirements) and other bilateral and multilateral donors cannot.
Despite the potential advantages of working with foundations, MCC’s partnership efforts have focused more on the private, for-profit sector, rather than foundations. A respondent involved in partnership development identified a few key barriers to partnerships, such as differences in organizations’ timelines, rules and regulations, and funding structures, which could apply to foundations as well as to businesses and other governments. For instance, the U.K. Department for International Development (DFID) wanted to fund teachers in schools MCC had constructed, but because DFID grants are given as overall budget support—rather than tied specifically to an item such as teacher salaries—the organization could not compel the recipient government to use its support to fund teachers’ salaries. Another perceived barrier to partnerships is that MCC and other donors are hesitant to fund projects jointly because each organization wants to be able to document the outcome of its own investment. Some donors have overcome this barrier by agreeing to fund clearly delineated parts of the same project.
Compact countries also work with external organizations as part of their compact development process. For example, in-country MCAs often enter into agreements with other philanthropic groups, such as the humanitarian organization CARE. Many of these agreements simply minimize redundant or conflicting efforts between programs, but others foster active collaboration. Once MCC’s investment is made, private-sector organizations and some nonprofits may become actively engaged in the procurement process as bidders on contracts to provide materials and/or services. Procurement is implemented and administered by the MCA within the compact country.
MCC also engages with the for-profit sector. It encourages investment not only from corporate foundations (or their social responsibility arms), it also tries to make the case that its selection criteria identify countries ripe with opportunities for private investment. MCC has developed a toolkit to encourage private sector investment. In late 2007, MCC signed a memorandum of understanding (MOU) with Microsoft and U.S. government agencies to “promote international development in areas such as economic growth, health, governance, and education” (MCC 2007). MCC has also worked with entities such as the Business Council for International Understanding, the Corporate Council on Africa, and the Business Council for Capacity Building to hold investment and procurement forums.
Perhaps MCC’s most significant formal partnership with a foundation is through the Alliance for a Green Revolution in Africa (AGRA), an initiative with significant funding from the Bill & Melinda Gates Foundation. MCC originally reached out to the Gates Foundation as it was becoming involved in agricultural initiatives. MCC and AGRA signed an MOU, agreeing to engage in policy dialogue and coordinated implementation planning in four African countries. As they develop compacts, the recipient country and MCC draw on AGRA’s on-the-ground technical expertise in the region to identify problems and solutions that best align with MCC’s growth-oriented approach.
In recent years, public and private philanthropic efforts have coalesced around the goal of reducing deaths in developing countries from preventable and/or treatable diseases, of which malaria is a prime example. The President’s Malaria Initiative (PMI) takes advantage of existing U.S. government infrastructure and proven prevention and treatment strategies, rather than establishing new entities or seeking dramatic breakthroughs. It engages in interactions of several types with many different entities, including corporate and foundation partnerships.
PMI, launched in 2005, is a five-year expansion of federal resources to fight malaria in the regions most affected by the disease. PMI is an interagency initiative led by U.S. Agency for International Development (USAID) and implemented together with the U.S. Centers for Disease Control and Prevention (CDC). The U.S. Malaria Coordinator oversees this with an interagency steering group made up of representatives of USAID, CDC/HHS, the Department of State, the Department of Defense, the National Security Council, and the Office of Management and Budget.
PMI was established to assist the National Malaria Control Programs (NMCPs) in up to 15 target countries to strive toward cutting their malaria-related deaths by 50 percent. It does not provide funding to target country governments or government agencies, though it coordinates efforts with them. Instead, PMI directly funds four key intervention strategies to prevent and treat malaria: (1) spraying with insecticides (indoor residual spraying or IRS), (2) insecticide-treated mosquito nets (ITNs), (3) lifesaving drugs, and (4) treatment for pregnant women (intermittent preventive treatment or IPT). To help deliver these interventions PMI provides commodities including drugs, ITNs, and appropriate insecticides for residual spraying. It also aims to strengthen countries’ logistics, management, communication, and training infrastructure to distribute commodities and implement the four strategies. PMI promotes private sector involvement including corporations, community-based and faith-based organizations, and others in funding and delivering interventions. As a guideline, PMI has a target of using 40 to 50 percent of its funding in the provision of commodities. The remainder of the budget is spent on training, logistics, delivering commodities to patients, and monitoring and evaluation.
PMI target countries are Angola, Tanzania, and Uganda (beginning in 2006); Malawi, Mozambique, Rwanda, and Senegal (2007); and Benin, Ethiopia (Oromia Region), Ghana, Kenya, Liberia, Madagascar, Mali, and Zambia (2008).
PMI was announced in 2005, with $1.2 billion in funding planned over a five-year period. A January 2007 article in the Seattle Times suggested that the Gates Foundation’s experience in reducing malaria through simple, inexpensive interventions may have prompted the US government to fund such an initiative.[5]
PMI builds on a long record of involvement by the U.S. government in anti-malaria efforts. USAID and the CDC have been involved with anti-malaria research and programs since the 1950s. PMI consolidates and expands USAID malaria-related funding and activities under a single umbrella, and builds on USAID’s recent work addressing production capacity of malaria treatments and bed nets, as well as developing policies for effective treatment adoption. Since 2001 the U.S. has also contributed to the Global Fund to Fight AIDS, Tuberculosis, and Malaria, along with making contributions to and participating in other international and multilateral organizations that help lead and coordinate the fight against malaria.
The administration and decision-making structure of PMI were established at its inception, and constitute one of its unique features. Even though PMI is a collaborative effort, a PMI coordinator has ultimate decision-making and budgetary authority. The coordinator reports to the USAID administrator, and the coordinator’s authority, role, and responsibilities extend to all USAID malaria policies, planning, budgeting, communication, and outreach strategies. The coordinator’s responsibilities include:
With a goal of geographic balance and maximum impact on malaria morbidity and mortality in countries across Africa, PMI specified criteria for selecting the 15 countries to target over the life of the initiative. Selected countries have:
PMI places U.S. government staff members on the ground to support the work of local health ministries and national malaria control programs. The staff usually includes USAID and CDC representatives. It then contracts with private sector, nonprofit, faith-based or other entities to provide anti-malaria commodities, and services such as pharmaceutical logistics and management, policy development assistance, monitoring, evaluation, and reporting. PMI places its budgets and expenditure reports, along with the contracts executed for commodities and services, on the PMI website for public access as a way to enhance accountability of PMI funds.
PMI has well-defined goals and a set of indicators for monitoring and evaluation. Nationwide coverage of programs is monitored by collecting information through established large-scale, population-based household surveys, such as the Demographic and Health Survey (DHS), Multiple Indicator Cluster Survey (MICS), or the stand-alone Malaria Indicator Survey (MIS) which is based on the malaria module of the DHS and MICS survey instruments. These surveys enable PMI to collect information from participating countries and local regions on the proportion of:
In addition, PMI evaluates three major aspects of malaria control operations within funded countries: (1) coverage rates for the four key interventions; (2) malaria mortality; and (3) associated factors that may affect the interpretation of these data (such as contextual information that could also influence coverage rates or mortality). PMI reports evidence from at least four of its focus countries that shows reductions in malaria transmission.
PMI aims to achieve high and sustained national coverage rates for malaria prevention and treatment efforts. Toward this end, PMI attempts to promote increased funding by host governments of their own national malaria control programs. PMI engages these programs throughout the assessment, planning, and implementation phases of the in-country malaria control strategy in order to promote host country investment. Active involvement of community, NGO, and private sector organizations in malaria control at all levels is also sought and funded through PMI.
Another planned sustainability strategy is increased diversification and long-term funding by donors and partners. In this regard, legislation reauthorizing the President's Emergency Plan for AIDS Relief (PEPFAR) also helps to continue the activities of PMI. On July 30, The Tom Lantos and Henry J. Hyde United States Global Leadership Against HIV/AIDS, Tuberculosis, and Malaria Reauthorization Act of 2008 went into effect. Among other provisions, the law authorizes $48 billion to combat global HIV/AIDS, malaria and tuberculosis over the next five fiscal years and substantially increases U.S. assistance to prevent and treat malaria through insecticide treated bed nets, indoor residual spraying, access to anti-malarial drugs and other tools.
Interaction is a strong component of PMI. The initiative interacts with five different groups. First, it is structured as a collaborative partnership between USAID and the CDC, with input from steering group partners. Second, it coordinates with the governments of target countries in Africa and with local public agencies including specific health ministries. For instance, it supports the improvement of local pharmaceutical management systems to improve the distribution of essential medicines.
Third, PMI supports nongovernment and community- and faith-based organizations in their local anti-malaria efforts through a separate grant program. The Malaria Communities Program, managed by PMI with $30 million of funding over five years, provides grants to these types of grassroots organizations to expand prevention and control activities to the communities where they are needed most.
Fourth, PMI has invited partnerships with the private sector and has engaged several corporations or their foundations as well as PEPFAR to fund PMI-related activities or events. For example, in Angola, the Exxon-Mobil Foundation donated $1 million to support PMI objectives. In Zambia, PMI partnered with PEPFAR and the Global Business Coalition to distribute more than 500,000 ITNs to persons living with HIV. With the support of PMI, Malawi expanded its IRS program through a successful partnership with a private sector company. Private sector partners also help implement integrated mosquito net distribution campaigns in which individuals receive vouchers for nets, then purchase them from local businesses or organizations for a small, subsidized payment.
Fifth, PMI communicates and coordinates with other international anti-malaria efforts. Under the umbrella of the Roll Back Malaria Partnership, PMI coordinates with the Global Fund to fight AIDS, Tuberculosis and Malaria, the World Bank, the Bill & Melinda Gates Foundation, and other donors and often co-funds activities. For example, the PMI coordinator attended the October 2007 Gates Foundation Malaria Forum. In addition, the Global Fund procured more than 8.7 million doses of an oral treatment for malignant malaria in Uganda, and PMI resources were used to support their distribution to local health facilities and community drug distributors. PMI has also partnered with donors in mass campaigns to procure and distribute ITNs. In some cases, PMI procured nets for these campaigns, filling gaps not covered by other partners, or provided resources for logistics or follow-up surveys.
A unifying theme in the Rockefeller Foundation’s programming is helping poor and vulnerable populations benefit from globalization. One component of globalization has been a technology-facilitated expansion of inter-organizational collaboration and communication. After observing the success of these techniques to solve problems in the developed world and private sector, the Rockefeller Foundation created the Accelerating Innovation for Development (AID) program to adapt these tools to solve problems in international development.
AID has two goals: (1) identify and demonstrate that open and user-driven innovation models are effective and efficient processes for addressing the needs of the poor, and (2) significantly increase the application of these models to generating solutions in development. Specifically, AID promotes and supports four innovation models:
Periodically, the Rockefeller Foundation engages in an examination of concepts that cut across all grantees, such as efficiency, effectiveness, and organizational capacity. AID was developed after a periodic review identified innovation as a central theme. The Foundation then conducted a survey of the innovation literature and concluded that the private sector had used open and user-generated innovation with positive results. These innovation models were also consistent with general trends Rockefeller had observed in their grant-making: increasing globalization and interconnectedness, technology that enables inexpensive communication, and partnerships involving the public, private and nonprofit sectors. While some nonprofit organizations have adopted these models, usage was relatively uncommon, and Rockefeller decided to test and scale up these models in the development sector. The Foundation looks for opportunities to apply innovation models that were developed to address business or technology needs to social and development problems, where the models have not yet been proven.
Each of the four open and user-generated innovation models has been implemented by Rockefeller, although some AID projects have only begun recently. Consistent with an open and user-generated innovation approach, AID staff members encourage community participation by having nonprofits identify development problems. Rockefeller then supports the application of open and user innovation models to find solutions. To ensure that the process is not just a theoretical exercise without definite plans for execution, Rockefeller structures incentives to encourage solutions to be implemented on the ground. For example, when a nonprofit organization’s problem is solved by an InnoCentive contractor, AID pays only half of the award amount and the nonprofit pays the remainder. However, Rockefeller fully reimburses the nonprofit once the solution has been implemented.
After the first year and a half, not many nonprofits have posted problems at InnoCentive. Rockefeller attributes this outcome, in part, to initial difficulties in adapting the model to serve a different, novice client base. Other AID projects are in the early part of their grant lifecycle and have not been formally evaluated. However, Rockefeller has been evaluating interim progress and has observed positive momentum in nonprofit usage of the innovation models and changes in behavior by the providers of the models. The Foundation believes that changes in supply (providers), as well as sufficient demand, are necessary to build sustainable markets that will function once AID has ceased funding in an area.
Ultimately, formal evaluations will examine outcomes among three groups of organizations AID aims to affect:
The Rockefeller Foundation has not yet approached USG regarding AID. However,
future interaction may occur given that AID seeks to increase funder support
and adoption of open and user-generated models. Some USG agencies like the
Defense Advanced Research Project Agency (DARPA) have already successfully
used open competitions to identify solutions to difficult problems in their
areas.
The Robert Wood Johnson Foundation (RWJF) is one of the largest foundations focused on domestic health. In 2007, RWJF awarded 820 health-related grants totaling more than $488 million. In addition to its stature among U.S. foundations, RWJF serves as a useful case study because the diversity of its interactions with the federal government reveals how context can shape US government-foundation interactions and partnerships.
Endowed as a national foundation in 1971, RWJF pursues a mission of improving the health and health care of all Americans. RWJF currently focuses its funding on seven program areas: (1) building human capital for health professionals, (2) vulnerable populations, (3) pioneers (innovators in health or health care), (4) childhood obesity, (5) health coverage, (6) public health, and (7) quality and equality. In earlier years, RWJF focused on other program areas such as long-term care, chronic care, cost containment, substance abuse, and end-of-life care.
RWJF’s mission and programmatic history set the Foundation’s long-term direction. Changes in direction typically take place when an incoming RWJF president proposes new priorities. Key stakeholders such as government health policy experts, former foundation officials, and current senior officers are then consulted during a formative stage, leading to a strategic plan that is brought before the Foundation’s board of directors for their input and approval (Hughes 2000).
Decisions to move into new areas take into consideration many factors. Most important are the current environment (critical population needs), feasibility of programs, the ability to build on existing work, opportunity to be a resource and neutral convener for policy-makers and communities, and whether the Foundation’s limited resources are sufficient to effect change in the area (Lavizzo-Mourey 2003). RWJF generally aims to exit a program area when the field has advanced sufficiently to sustain itself (RWJF 2004).
In recent years, the Foundation has begun to direct a greater proportion of its resources to multi-year, mission-focused grants—a reflection of its emphasis on a long-term strategy for affecting American’s health and health care. The multi-year commitments reflect the scale and complexity of problems being addressed. More interaction with other foundations, state and local governments, and especially the federal government is perceived by RWJF leadership to be necessary to address such issues. As the RWJF president has noted: “Our resources may seem vast, and we may have great expertise among our staff and our grantees, but compared with even the shrinking resources of government—local, state and federal—individual foundations and nonprofits are hard-pressed to create change” (Lavizzo-Mourey 2005).
To manage their many grants without a large internal bureaucracy, RWJF has created intermediaries to administer clusters of projects. These national program offices enable the Foundation to award substantial funds to multiple organizations while maintaining appropriate oversight and the flexibility to change priority program areas. This approach also allows RWJF to gain rapid proficiency in specific program areas without hiring specialized staff. National program offices have been used to support partnerships with the U.S. government. For example, the Assistant Secretary for Planning and Evaluation (ASPE) within DHHS worked with RWJF to develop a national program office for the Cash & Counseling program to provide program oversight and to coordinate communication and decision-making between the two organizations (Knickman and Stone 2007).
RWJF emphasizes evaluation. It currently uses a four-stage approach that examines both short- and long-term outcomes, at the program, foundation, and even societal levels (Knickman and Hunt 2007):
An analysis of the Cash & Counseling program found that “the ASPE/RWJF collaboration allowed the federal government to invest in the development of a strong evidence base and the Foundation to support and expand a policy-oriented demonstration project that may ultimately become a pivotal strategy in most states’ efforts to build stronger home and community-based service systems” (Knickman and Stone 2007). The authors attributed this success, among other factors, to ASPE and RWJF’s similar cultures for rigorous evaluation and experiences working on large-scale, analytical projects (Knickman and Stone 2007). This partnership with a government agency also enabled RWJF to obtain the necessary waivers under Medicaid law to conduct the demonstration project.
During the initial strategic planning process for specific programs, RWJF staff conduct a survey of existing programs and players in the area, including government and other foundations. During this process, RWJF also commonly learns of innovations by specific programs, other foundations, and federal agencies. Staff then evaluate whether program goals may benefit from the involvement of other stakeholders. At the most basic level, there must be common ground on the approach, priorities, and goals to justify interaction.
The approach RWJF takes depends on a staff evaluation of the costs and benefits of interaction. Staff weigh the merits of a variety of possibilities. Strategies range from funding advocacy efforts to affect federal policy, to supporting communication to improve programming and avoid duplication, or even developing deliberate, complementary programs to enable each organization to focus on their comparative advantage.
The benefits to interaction can be substantial: knowledge sharing, minimized duplication, and even leveraging of additional funding. While deeper interaction can amplify these benefits, RWJF often decides that less formal or no involvement is the most efficient path. Previous RWJF efforts have revealed that initial enthusiasm over obvious benefits of interaction can obscure the high costs of deeper relationships. One respondent stated: “The more formal the nature of the relationship, the harder it is, the longer it takes, and the more complicated it is. There is a continuum of how formal relationships are, and building relationships requires very careful development and understanding of rules and roles, either through memoranda or contracts, which is challenging. For us, it is not worth the time to develop formal relationships unless it is long-term and involves significant resources. Transaction costs are huge.”
Given the costs of interaction, previous successful relationships have sought to simplify processes and address administrative hurdles. For example, RWJF sometimes responds to extensive federal financing rules and regulations by funding a specific project component, like a demonstration program or conference, with other funders sponsoring other components. Over time, RWJF’s experience with federal agencies has allowed it to develop patterns or recognized routines of interacting, leading to less costly interactions. Even when both sectors have a common logistical framework, RWJF considers the marginal costs of further interaction for each project, since collaboration can lengthen the planning process and constrain project and institutional innovation.
In addition to considering the logistical difficulties with any interaction, RWJF takes care to avoid impairing what staff members believe are the Foundation’s own structural advantages compared to government. RWJF has the freedom to fund innovative and risky projects that are insulated from political pressures that might make it difficult or impossible for a government agency to conduct certain kinds of policy research, such as an examination of sexual practices or tobacco policy. In addition, foundations often have more flexibility with their resources than the federal government, although this may be changing as RWJF makes more multi-year, mission-focused grants.
Given their overlapping programmatic interests, RWJF has interacted with the U.S. government in a number of ways. Some recent initiatives include:
Funding by the U.S. government for international HIV/AIDS prevention, treatment, and care increased dramatically from $840 million in 2001 to more than $4.5 billion in 2007 as the result of the President’s Emergency Plan for AIDS Relief (PEPFAR), launched in 2003.[7] PEPFAR is a multi-pronged effort to comprehensively address the spread and impacts of HIV/AIDS and to better coordinate the U.S. government’s global HIV/AIDS agenda, as well as its interactions with other such efforts.
When PEPFAR was introduced in 2003, it represented the largest health initiative by any nation focused on one disease (PEPFAR 2006). The original $15 billion commitment proposed $5 billion for existing bilateral programs throughout the world, $1 billion for the Global Fund to Fight AIDS, Tuberculosis, and Malaria ($200 million per year), and $9 billion for new programs in target countries in Africa and the Caribbean. It was adopted by Congress with three provisions. An amendment required that at least a third of all prevention funds be spent to promote sexual abstinence. A second amendment allowed faith-based groups to reject strategies they considered objectionable, such as condom distribution. Third, the law authorized, but did not require, up to $1 billion per year for the Global Fund, five times the amount requested.
PEPFAR funds are authorized by Congress and are provided to participating agencies that implement HIV/AIDS programs in 15 focus countries that together represent approximately 50 percent of HIV infections worldwide. Twelve of the countries—Botswana, Côte d’Ivoire, Ethiopia, Kenya, Mozambique, Namibia, Nigeria, Rwanda, South Africa, Tanzania, Uganda, and Zambia—are in Africa. The remaining three are Guyana, Haiti, and Vietnam. Full implementation of PEPFAR began in June 2004 and includes support for HIV/AIDS programs and services in approximately 100 other countries (IOM 2007, PEPFAR website n.d.).
The U.S. Global AIDS Coordinator reports directly to the Secretary of State and is mandated to provide coordination and oversight for the work of U.S. government agencies implementing HIV/AIDS programs in the focus countries. These implementing agencies are USAID, the Peace Corps, and the U.S. Departments of State, Health and Human Services, Commerce, Defense, and Labor.
Prior to the implementation of PEPFAR, the U.S. government was spending significant sums of money on combating HIV/AIDS outside of the U.S. but through numerous government agencies that did not necessarily coordinate their activities. The rationale behind this new U.S. strategy derived from the widespread belief that more effective coordination, greater resources, and a more focused and concerted effort were required to combat the HIV/AIDS pandemic (OGAC 2004). PEPFAR officials acknowledge the role and importance of existing multilateral and bilateral programs in a number of countries, such as the Global Fund to Fight AIDS, Tuberculosis, and Malaria (the Global Fund) and USAID, but there was no overarching system in place to “connect the development dots,” to ensure programs were based on evidence and a consistent and uniform framework of principles, or that they achieved results (OGAC 2004, 2008).
PEPFAR focuses on country ownership. Although the Office of the U.S. Global AIDS Coordinator (OGAC) has some central funding it uses for regional initiatives in target countries, such as public-private partnerships, the majority of funding is dedicated to the target countries. Efforts in each of the focus countries are coordinated by OGAC, but led by country teams. Each country team, in turn, is led by the U.S. ambassador and includes the host-country government, U.S. government agencies, nongovernmental organizations, multilateral institutions, and other in-country stakeholders. The country teams conduct joint project planning and are charged with development of both a five-year strategic country plan and an annual operational plan (IOM 2007). After the U.S. Global AIDS Coordinator reviews and approves the country operational plans, countries begin to receive funds.
A key feature of PEPFAR is its creation of the Office of the U.S. Global AIDS Coordinator, a central coordinating mechanism to synchronize efforts of multiple U.S. government agencies implementing HIV/AIDS activities around the world. Similar to the role of the U.S. Malaria Coordinator established by the President’s Malaria Initiative (PMI), OGAC was given responsibility for the oversight and coordination of all U.S. government resources and activities to fight HIV/AIDS globally, and has authority for allocation of all PEPFAR funds to U.S. government agencies. Unlike PMI, however, PEPFAR established OGAC as an independent entity housed within the State Department with the AIDS Coordinator as an ambassador-level position appointed by the President.
The establishment of OGAC was deliberately distinct from other government models, such as the Millennium Challenge Corporation, which was created as a new government agency, and PMI, where one existing agency (USAID) retains authority. The placement of OGAC within the Department of State reflects its central purpose—to coordinate and not manage programs—and, according to one OGAC respondent, the then prevailing view that foreign assistance is central to foreign policy.
The OGAC has a relatively small staff of approximately 75 people. The bulk of resources and staff are allocated toward conducting multilateral diplomacy and supporting program services. Other important initiatives within OGAC include strategic information gathering for dissemination, public-private partnerships, and new partner outreach. PEPFAR is centrally coordinated by OGAC, but is implemented by the teams—described above—in the focus countries (IOM 2007).
Taking a comprehensive approach to address HIV/AIDS, PEPFAR supports three types of interventions in focal countries:
PEPFAR also undertakes efforts to build capacity within focus countries to sustain its interventions.
PEPFAR’s enabling legislation and strategy included defined, measurable performance targets. Staff members in focus countries report semi-annually to OGAC on program-, outcome-, and impact-level indicators for each program. Outcome measures include behavior change, health infrastructure capacity and quality, care and support, and impact of care and treatment, including morbidity and mortality. This reporting mechanism is critical to PEPFAR’s operation and has enabled the initiative to show progress in a quantifiable way, although critics have sometimes taken issue with the true value of the indicators. Still, OGAC staff and decision-makers pay attention to these indicators. Country operational plans are reviewed annually, and OGAC requires justification when countries do not reach agreed-upon targets.
PEPFAR staff has begun discussions of how to measure impacts effectively but data are not yet available to determine the impact of its services. However, according to an evaluation of PEPFAR implementation conducted by the National Research Council at the Institute of Medicine (IOM) and released in 2007, PEPFAR has demonstrated that HIV/AIDS services, particularly treatment, can be scaled up rapidly in challenging environments, such as those existing in the focus countries.
By the time PEPFAR was reauthorized in 2008, OGAC staff reported that its treatment goals had been nearly reached, with PEPFAR supporting treatment for more than 1.7 million people worldwide, compared to a goal of 2 million. PEPFAR also reported supporting care for more than 6.6 million people, somewhat shy of the initial 5-year goal of 10 million (PEPFAR 2008b).
PEPFAR’s approach to public-private partnerships emphasizes the importance of local partners in focus countries as a means to create and implement more sustainable and effective programs. This approach is also intended to facilitate large-scale interventions on the ground and engage further resources to maximize impact. Public-private partnerships are encouraged insofar as they are aligned with a country’s programmatic and strategic goals, and the decision to move forward with a public-private partnership rests with the country team.
According to OGAC staff, the role of the Public-Private Partnership office within OGAC is to connect private sector companies, foundations, and even philanthropic individuals to a country’s team leader. The office helps implementing agencies in the field recognize the value of public-private partnerships, and trains people in ways to approach the private sector. OGAC staff view public-private partnerships to be more effective when they can match initiatives to existing programs, rather than creating new ones. According to PEPFAR’s annual report (OGAC 2008), the initiative helped facilitate numerous in-country public-private partnerships and seven large-scale, multi-country, public-private partnerships in 2007.
Operationally, a public-private partnership is structured through a one-to-one funding match between the private sector and government, but multiple private sector partners can join together to meet the matching requirement. Ideally, as public-private partnerships grow, private sector funds will exceed U.S. government resources. Most public-private partnerships are financed through funds allocated in the country operational plans. In addition to in-country partnerships, OGAC staff also broker larger, regional partnerships, such as one with a large multinational medical technology company to strengthen laboratory practices and provide training to laboratory staff in multiple countries.
The effort to foster public-private partnerships brings with it a number of challenges for implementation and expansion. For instance, according to interview respondents, OGAC staff members often face resistance from U.S. field staff who may feel distrust toward the motives of the private sector. Another challenge is the funding mechanism. Establishing public-private partnerships can be a cumbersome and time-consuming process. Moving money and developing contracts for each specific public-private partnership within a government bureaucracy can take much longer than it would at a large corporation. This can cause frustration among private sector partners.
The planning process for public-private partnerships currently uses a more passive rather than a proactive approach, according to OGAC staff. The U.S. government and focus countries respond to opportunities brought to OGAC by businesses or foundations interested in partnerships, rather than systematically looking at a country’s needs and finding private sector solutions to meet them. However, OGAC is working on shifting the emphasis to the latter approach and private sector partners have been flexible and open to these changes. According to OGAC staff, implementing agency staff may find public-private partnerships more appealing if they can see how they could fill a specific gap for their country.
The William and Flora Hewlett Foundation, one of the nation’s largest family foundations, awarded almost $500 million in grants in 2007. The Foundation makes grants in education, the environment, global development, performing arts, and population. The Foundation also has special programs to advance the field of philanthropy and support disadvantaged communities in the San Francisco Bay Area.
A key tool in the Foundation’s decision-making processes is the “expected return” metric, a quantitative measure used for comparing potential investments. While the United States government could potentially adopt a similar metric to aid decision-making, respondents from Hewlett expressed concern that the constraints faced by many government agencies might impede such adoption.
The Hewlett Foundation has a strong commitment to strategic grant-making, attempting to allocate its funding to maximize impact. The Foundation has worked with external consultants to clarify its goals, identify outcomes it hopes to affect, and evaluate the effectiveness of different grant-making strategies. To evaluate potential initiatives, Hewlett developed an “expected return” (ER) metric that measured the potential benefits of a particular grant, its likelihood of success, and its costs. Starting in 2007, Hewlett piloted the use of the ER metric in its global development and population programs as a component of the Foundation’s efforts to make optimal choices in allocating scarce resources. Hewlett refers to this strategic effort as an outcome-driven grant-making (ODG) process.
The Hewlett Foundation has a long history of rigorous grant-making. In the 2004 president’s statement, the idea of an ER calculation was evident, years before the actual metric was developed. The president noted that the relatively limited resources of foundations, even very large ones like Hewlett, was an impetus to identify “ways in which we can set in motion forces that will have greater and longer-lasting impact than any of our particular grants” (Brest 2004). With limited resources, foundations need to optimally allocate their grants to produce the greatest social return. In 2004, the Foundation did not advocate quantifying social returns but believed that “the investment metaphor embodies an attitude that presses the staff to use the Foundation’s resources as effectively as possible” (Brest 2004, emphasis in the original).
In 2007, the Hewlett Foundation chose to make this investment attitude more explicit. The Foundation started working collaboratively with Redstone Strategy Consulting Group to increase the rigor of its grant-making by developing an overall ODG strategy and ER metric. The basis of an ODG process is a strategic plan that sets measurable goals and outcomes, defines the program’s scope and establishes logic models that link programs with outcomes. It also determines how to allocate resources to achieve the target outcomes. ER analysis informs ODG by introducing a consistent, quantitative metric to evaluate potential investments. Both the global development program, a new Hewlett Foundation program still engaged in exploratory grant-making, and the Foundation’s population program, an established program with an existing grant-making strategy, piloted the use of the newly developed procedures to evaluate their grant-making strategies.
Both ER analysis and an ODG process require a clear definition of goals in terms of explicit outcomes that can be measured and used to evaluate all potential programs. Global development chose two metrics to quantify their impact: the number of individuals living on $2/day whose incomes at least doubled as a result of Hewlett’s programs, and the value of a multidimensional metric global development index that included measures of literacy and health. Population took a different approach, specifying two desired outcomes: stabilization of global populations at levels that promote social and economic well-being, and sustaining the environment and enhancing and protecting reproductive health and associated rights. To conduct the ER analysis, the population program also needed outcomes that could be clearly measured and chose to use different metrics for different clusters of grants. For instance, the ER analysis for one cluster was measured in terms of “expected unwanted births averted through 2050.”
With a common yardstick to measure the success of each potential program investment, Hewlett attempted to calculate ER for each cluster of potential investments. The ER calculation depends on four measures: benefits in the perfect world, likelihood of success, philanthropy’s contribution, and the costs of a particular strategy. In effect a benefit-cost ratio, the calculation adjusts the benefits to reflect the reality of risk and the role of other funders. The formula for the calculation is:
Expected Return = (Benefit in the Perfect World * Likelihood of Success * Philanthropy’s Contribution) / Cost
The “benefit in the perfect world” is the Foundation’s best estimate of the effect of the investment on the outcome metric. The benefit component of the ER analysis is informed by the professional judgment of Foundation staff and existing academic research. The likelihood of success component reflects the presence of risk, which takes many different forms—the link between the investment and the outcome may not be correct, the grantee may not have the ability to successfully implement the program, or the success of the program may be affected by external political or economic considerations. Again, the Foundation’s estimate of risk is based on existing evidence, professional knowledge, and field interviews, but it is fundamentally a subjective assessment. The philanthropy’s contribution seeks to measure the importance of its involvement in driving the outcome relative to other actors’ roles. While the contribution might be measured by the share of the total funding provided by Hewlett, foundations can also play roles as conveners or leaders where their significance to a project may exceed their financial contribution. The cost includes the program cost to implement the strategy and the overhead cost to administer the grant. Dividing by the cost creates a benefit-cost ratio.
The Foundation does not use ER calculations to determine whether to fund one organization over another, rather they are used to determine the most effective strategies for achieving particular goals. For example, the global development program considered a wide range of strategies including supporting impact evaluations of public services, scaling up literacy interventions, and reforming trade regulations in emerging economies. Using ER calculations, Hewlett determined that the first two strategies had higher expected returns than the third. At this point, Hewlett has not used ER calculations to determine which organizations to fund because the information on the potential benefits and risks is not accurate enough to allow for the comparison.
The Hewlett Foundation’s pilot of ER analysis and ODG highlight some of the benefits and challenges in pursuing a more rigorous approach to grant-making. While ODG is seemingly straightforward, the Hewlett programs that used it encountered practical challenges at each step in the process. The actual process of calculating ER is very time consuming and the population program found that “the margin of error on most estimates was too large to allow for confident comparisons of returns” (Redstone Strategy 2008). Introducing the ER metric did not eliminate the importance of the professional judgments of the Hewlett program officers. Many of the components of the ER calculations, particularly the benefits and the likelihood of success, were subjective assessments.
Although the pilot users of ER analysis reported some significant limitations, the ODG process had important benefits. The ER calculation is not a fixed objective metric that answers all funding allocation questions but it did force program staff to be explicit about their goals and assumptions. The process also forced Foundation staff to develop a common language. With explicit goals and outcome measures, the tradeoffs between different grant-making strategies became more evident, and provided the staff with the necessary structure to discuss them. Similarly, while the ER calculations were too imprecise to serve as the sole factor to determine funding allocations, they did provide a structure for thinking about potential benefits and investment risk.
With respect to ER’s potential usefulness to the U.S. government, staff at Hewlett expressed concern that in a government context, the more formal ER metric could be used in ways or for purposes that it was not intended. These individuals emphasized that the ER metric is not precise and that it still requires the subjective judgment of program officers. For example, they noted that a program with an ER of 8.7 is not necessarily that different from one with an ER of 8.65, but they worried that U.S. government officials would not have the necessary discretion or flexibility to use their own judgment to decide between two such programs. For Hewlett, flexibility was an important part of the entire ODG process and respondents stressed the importance of having the freedom to use the metric as just one part of the decision–making process.
The Hewlett Foundation acknowledges that while it is one of the country’s largest private foundations, its funding accounts for a small share of global philanthropic spending, particularly if government expenditures are included. The Foundation’s president recognizes that Hewlett “operates in a social and economic space with many other actors.” Noting the different types of interaction that may be possible, he adds: “Merely being aware of their presence creates opportunities to coordinate resources to achieve common ends. And in some circumstances, actual collaboration can significantly increase the participants’ impact in addressing social problems” (Brest 2006).
In addition to numerous collaborations with other private foundations, Hewlett also interacts with U.S. government efforts. Although the financial resources of the government far exceed the Foundation’s, Hewlett “can help governments undertake projects that they might find difficult to tackle alone” (Brest 2006). The framework of strategic grant-making forces the Foundation to consider where its funds can have the greatest impact. With relatively limited resources, it looks to invest in areas where the Foundation can leverage other resources or alter the activity of larger players, potentially governments.
The actual nature of the interaction with the U.S. government can take many different forms—all with potentially high expected returns. In the past, Hewlett has co-funded programs with the government. For example, Hewlett and the National Institute for Child Health and Development recently co-funded a program on population and the environment. The Foundation also provides funding for new, unproven endeavors that could be adopted by the U.S. government once proof of concept is demonstrated. In other cases, Hewlett complements existing activity by funding related programs not eligible to receive government funding. For example, the population program has supplemented PEPFAR by providing funding for family planning.
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