Foundations make a huge contribution to development going far beyond money, and it’s a contribution that the UK government’s Department of International Development (DFID) could help to enhance. So says a newly released report on foundations produced by the UK’s International Development Committee (IDC).

Foundations have increasing influence on international development policy and, as funders using private money, they can innovate and take risks that other donors can’t. The report recommends, among other steps, that DFID include foundations as fully as possible in future development events and processes such as the High Level Forum on Aid Effectiveness in order to coordinate their work with other donors.

‘The world’s largest aid giving foundation – the Bill & Melinda Gates Foundation – has shown that risk-taking and innovation can produce outstanding results,’ says Malcolm Bruce MP, Chair of the Committee. However, while foundations’ contribution was ‘widely welcomed’ by the report, some concerns were expressed. Although foundations are in a position to take risks, they often don’t. Participants at last year’s Bellagio Forum, for example, expressed frustration about the lack of innovation often shown by foundations, and it was claimed they sometimes play it safe because they want to appear in the best possible light.

Mention of the Gates Foundation raises another set of questions. While praising its contribution to international development, the report stressed that entities of that size should not ‘create parallel structures or skew the priorities’ of other donors or recipient governments. This was a spectre that IDC apparently raised simply to dismiss – temporarily, at least – for the report appeared satisfied that at present, in the case of Gates, this wasn’t happening, but remarked it was a situation that ‘needs watching’.

There are also concerns about accountability. The downside of freedom to take risk is that foundations are often accountable only to a board of a few individuals. Compared to traditional government donors, foundation reporting is weak, especially in Europe, points out the report, noting that in the US foundations are required to list the grants they make and pay out 5 per cent of the value of their endowment each year. Improved transparency among foundations would help pre-empt the need to move to this kind of mandatory regulation in the UK, says the report. It recommends that foundations sign up to International Aid Transparency Initiative guidelines.

While the Gates Foundation apparently has an identified contact at DFID and has weekly ‘interactions’, smaller foundations have no such privileged position. DFID has apparently responded to IDC’s concerns on this score with the offer of hosting an annual meeting of a group of smaller foundations. The committee recommends, in addition, that DFID officials host more frequent gatherings with foundations ‘at least bi-annually or even quarterly’, and identify a named contact point with whom all foundations, large or small, can engage on a regular basis.