The so-called ‘new’ philanthropy typified by the emergence of the philanthrocapitalist is increasingly seen as a significant player in international development. Resources mobilized by foundations for international aid projects are increasing while some pundits are arguing that foundations bring a fresh and innovative approach to development.

A recent study by the Global Public Policy Institute (GPPi), an independent think-tank based in Berlin and Geneva, paints a more cautious picture. While financial resources disbursed have increased significantly in recent years (mostly driven by the largest players), the total number of foundations active in development seems to be stagnating.

The new breed of philanthrocapitalist aspires to bring a ‘business approach’ to philanthropy focusing on efficiency, effectiveness, performance goals, and (social) returns on investments, while critics argue that the business approach simply creates growing bureaucracies and turns its exponents into ‘planners’ rather than ‘searchers’.

Be that as it may, early analysis suggests the new philanthropists are confronted by three major challenges. First, foundations have a preference for investing in technology development rather than local delivery mechanisms for known development solutions. Second, with few exceptions, foundations lack the local presence that is essential for managing complex, large-scale programmes. Third, foundations’ strong preference for vertical programming is further complicating the ‘aid architecture’ in developing countries, adding bureaucracy and increasing transaction costs for government officials and others who engage with these new private donors.

One key impediment to further clarifying these and other questions is the lack of systematic and comparable data on foundation engagement in international development. Gathering and analysing such data is not merely of academic interest, but also a key means of learning to create better outcomes for the key players engaged in international development.

For more information
To download Transforming Development: The role of philanthropic foundations in international development cooperation, co-authored by Robert Marten and Jan Martin Witte, go to http://www.gppi.net/publications