ExpertEASE: Q&A on Pooled Funds

In this latest installment of "ExpertEASE," Merrill Sovner, Barry Gaberman, and William Moody answer questions about pooled funds and their implications for international giving.

What is a "pooled fund"?

There are many types of donor collaboratives in which funders come together to make grants on a given topic, goal, or region. A pooled fund is one of the most integrated approaches. According to GrantCraft, a pooled fund is one in which funders contribute to a single "pot" of money and then disburse grants (or program-related investments) from that pot, without distinguishing the original donors.

How are pooled funds managed?

Pooled funds may aim to serve as mediating institutions between funders and grantee organizations with in-country knowledge and professionalism to make small grants. The donors may serve on steering committees, set strategy, and make decisions. Meanwhile, the pooled fund staff or consultants may analyze issues or fields, identify effective grantmaking strategies, select grantees, undertake due diligence, and disburse funds.

What is the benefit of using pooled funds in international philanthropy?

Donor agencies and foundations may see the following benefits from participating in a pooled fund rather than making grants on their own:

  • It can leverage their own funding and impact by working closely with other funders.
  • It also allows them to support a field of organizations without having to research and issue many small grants.
  • It may ameliorate risk for donors. Although foundations can absorb the consequences of risk more than other institutions, they often become quite risk averse. Pooling resources with other funders can ease foundations' discomfort with risk.
  • It creates harmonization and a shared vision among donors over time. An intensive process of donors working together to launch a pooled fund, while time-consuming, can result in a stronger institution.

There are a number of benefits for grantee organizations in working with pooled funds as well:

  • The pooled fund may build trust as professional and transparent players in creating and supporting civil society, and other large donors may choose to work with the pooled funds themselves or their largest grantees as chosen vehicles for country-led regranting.
  • A pooled fund can minimize the donor requirements for a grantee organization. The pooled fund can insist on a common reporting platform that dramatically reduces the administrative burden on the fund and its grantees.
  • The reporting requirements of public sector funders may be more stringent, more concerned about process, and less flexible. However, when public sector funds are part of a pooled fund, the more onerous requirements are often reduced for grantees.

What are common obstacles faced by pooled funds and their grantees?

One obstacle is balancing the benefits of involvement by international funders with the legitimacy needed to make grants within a local context. Local legitimacy might be conferred by creating a domestic legal entity, oversight by a local board, or staffing by in-country personnel. When a pooled fund aims to enhance regional integration, then international involvement and linkages with international actors may be more important. For this reason, a pooled fund's structure should reflect its context, mission, and priorities to enhance its impact.

Not all grantee organizations may find pooled funds helpful. More professionalized organizations might prefer to work directly with a donor. The harmonization of a shared vision between donors might mean that certain activities or organizations fall outside that vision, and some organizations may find it hard to access funding. In a climate of closing civil society space, another worry is that a government could more easily cut off a single channel of funding.

Where can I go to learn more about pooled funds?

Cynthia Gibson and Anne Mackinnon, Funder Collaboratives: Why and How Funders Work TogetherGrant Craft, January 2010

About the Authors

Barry Gaberman, Merrill Sovner, and William Moody have worked in international philanthropy for a combined 90 years. Their research report, Sustaining Civil Society: Lessons from Five Pooled Funds in Eastern Europe, was written under the auspices of the Center on Philanthropy and Civil Society at the Graduate Center, CUNY. The report examined five international pooled funds that were established between 1991 and 2007 with different funders, structures, and geographic mandates, but with the same broad aim to support civil society after democratic transitions in Central and Eastern Europe. The resulting report offers a history of these five funds, the results and impacts of this funding, and lessons about how pooled funding can best sustain civil society over the long term.

The views stated in this article are those of its author only and not necessarily of NGOsource.