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Encouraging philanthropic engagement that is transparent and accountable

Philanthropy is increasingly seen as a pivotal actor and partner in planning and implementation of the SDGs. The Addis Ababa Agenda goes beyond setting commitments targeting growth of philanthropic giving, and emphasizes elements of collaborative action: transparency, alignment with national development planning and priorities. Collecting data on philanthropy is challenging as systems for monitoring philanthropic investments are rudimentary in many places in the world. 

Private grants

OECD statistics show that total net private grants from Development Assistance Committee (DAC) countries to developing countries since the 2000s have followed a strong and regular upward trend to reach more than $30 billion per year after 2010. The increasing trend is visible in all countries, but explained mainly by the volume of private giving in the United States. The OECD includes grants extended for development purposes by a wide range of private institutions, such as national and international non-governmental organisations as well as private philanthropic foundations. 

Transparency in philanthropy

There are no global, comparable and comprehensive sources for data collection and monitoring of philanthropic giving. The challenges pertaining to an enabling environment for philanthropy are manifold. For a start, in most countries, foundations are not registered at the central level and often have limited obligations for financial disclosure. Therefore, in most countries, neither governments nor private organisations collect and/or make available important data on philanthropic giving. Definitions, legal status and regulations on philanthropic giving also vary dramatically from country to country and a great deal of diversity exists amongst foundations themselves: they can be private, public, family-run, corporate or community-based. This hampers the ability to compare or aggregate data of the philanthropic sector accurately. 

In 2017, the OECD carried out an unprecendented large-scale Survey on Philanthropy for Development and was able to gather project-level data from 143 foundations worldwide. The data suggested that these foundations provided around $8 billion per year for development during 2013-15, mainly for health-related causes in developing countries, with a specific focus on Sub-Sahara Africa and South Asia. Moreover, comparing the survey results with ODA, foundations appear to be key funders of health, population and reproductive health activities in developing countries. Building on the encouraging results of the Suvey, the OECD Development Co-operation Directorate has been working on data-sharing partnerships with the largest foundations active in development. While the Bill and Melinda Gates Foundation has been reporting its grantmaking activities as well as  programme-related investment on a regular basis since 2010, by end 2018 the number of foundations which engaged in regular reporting to the OECD has reached 26, representing a total commitment of $7.1 billion in 2017 (such figures remains limited compared to the $178 billion ODA flows in 2017).  

Another knowledge source is the SDG Philanthropy Platform, led by the United Nations Development Programme (UNDP) and Rockefeller Philanthropy Advisors (RPA), which is an online collaboration platform that provides access to information on what partners are doing, real-time data on relevant SDGs, and events and solutions that funders and others are supporting.

Philanthropic foundations are also involved in the discussions of the Development Cooperation Forum and the Global Partnership for Effective Development Cooperation.

Philanthropy and impact investment: Most foundations invest their funds to optimize financial returns, and then use the earnings to fund its programs. If foundations were to invest their endowments using impact investment – with the goal of maximizing social, economic and governance impacts, along with financial returns – they could magnify their impact. Data is limited regarding the volume of philanthropic capital invested in impact investing. Impact Investing is defined as the pursuit of positive financial returns as well as positive social/environmental returns. In some countries, regulators have taken steps to incorporate impact investment into the regulatory and/or tax frameworks for private foundations. In the United States, for instance, the tax authority, the IRS, gave a boost to impact investing with an announcement that private foundations could use their endowments to make impact investments that made less than market-rate returns. While it has long been established that foundations may lose their favourable tax status if they profit from their grants and other charitable, endeavours known as program-related investments, the IRS had never ruled whether foundations could profit from impact investments, made with endowment funds, and still retain favourable tax treatment. However, the regulation in this regard around the world is in its nascent stage.