Funder collaborations – approach with caution


Funder collaborations – approach with caution


5th July 2024

Funder collaborations – approach with caution

By Reana Rossouw, founder of Next Generation

Collaboration is vital – and complex

WHETHER WE CHOOSE to label the state of the world as a global polycrisis (focusing on multiple crises) or a permacrisis (focusing on the long-lasting impact of crises) is to some extent a matter of semantics. The reality is that we are dealing with a complex network of diverse yet interlinked challenges that all require sustainable solutions. But solutions require resources, and with philanthropic funding running dry across the globe, there’s a widespread acceptance of and willingness to collaborate in order to pool resources. What’s more, the complexity of the crises means single foundations or philanthropists can often no longer deal effectively with certain issues.

The trouble is that effective collaboration requires a lot more than a shared notion of goodwill and a handshake to seal the deal. If we want to build collaborations that have an amplified impact, we have to approach it with the right mindset and a healthy dose of caution.

Let’s start at the very beginning: learning from existing collaborations

Philanthropic collaborations are not new. There are more than 400 existing collaborations across the globe between philanthropic roleplayers in various formats, built on different models of cooperation and focusing on different issues. A few examples include the Co-Impact Gender Fund in support of gender equality efforts and women-led organisations (supported by Melinda French Gates), the Ending Neglected Diseases (END) Fund that aims to end the five most common neglected tropical diseases that affect 1,5 billion of the poorest people, the Democracy Frontlines Fund, which focuses on racial justice issues (founded in 2020 following the death of George Floyd), and the Global Greengrants Fund that focuses on environmental and social justice.

There are many success stories, proving that it can be done. There are also many failures. While there are different reasons for failed collaborations, I believe it boils down to one thing: a poor understanding of the respective parties and of the rules and dynamics of a collaboration. Collaboration involves several layers of challenges – ignoring or oversimplifying these challenges and complexities prevents the establishment of more successful philanthropic partnerships.

Understanding what each party brings to the table

As with any relationship, the parties to a collaboration bring their own baggage or context. Here I am focusing on private funders (high-net-worth individuals and families) and corporate/CSI funders. (Any generalisations about these groups are for the sake of the high-level argument. I appreciate that there are different nuances but the purpose here is not to cater to every type of funder.)

Long before these parties can agree on collaboration terms, they must understand clearly what each party brings to the table – who they are, what their expectations are and what they represent.

This includes the following:

  1. Basic modus operandi

Private funders are not bound by rules and regulations in terms of how much they give and to whom or what. The founder or family has complete control over these decisions, considering factors such as tax efficiency. Corporate funders’ giving strategy, on the other hand, are dictated by external regulations as well as internal factors such as the company brand and reputation.

  1. Focus and intent

Partially due to the lack of restrictions for private funders, they often tend to support several, smaller charities. The guiding principle is often the cause itself. Corporate funders tend to focus on scale, i.e. longevity and depth of impact.

  1. Inherent advantages and disadvantages

Whereas most private foundations involve family members and the family philanthropy office or private banker making and implementing funding decisions, corporate funding is much more structured, with access to non-financial resources. These include infrastructure, human resources, processes and systems (e.g. to manage governance and compliance) and technology. Whereas private funders have more freedom, the structures of corporate funders can be inhibiting, such as requiring transparency in being accountable to shareholders and investors. However, it also provides the ability to be more effective (because of multiple assets and potentially shared services that can contribute to resource efficiency) and have a greater impact.

These points illustrate that even something as seemingly simple as agreeing on a priority to support is in fact far from straightforward and will require negotiation.

On a more philosophical level, these funders still essentially consist of individuals – humans who represent a certain generation, race and class. Each has their own background, narrative and experiences that – directly or indirectly – influence how they think about, see and do things. While individuals employed at corporate funds may not be able to act from their worldview if it is not aligned to the company strategy, private funders may have more leeway to consider their personal motivations and preferences. Aligned with point 3 above, this inherent humanity can either be a hurdle (inhibiting or preventing collaboration if there’s a disagreement of principles or a lack of trust) or a benefit (broadening mindsets and impact as well as triggering new ideas and innovations). It all depends on the parties involved.

Agreeing on the rules of engagement requires negotiation and compromise

Even when potential collaborative partners have taken the time to understand one another, there are still many complexities to unravel. Agreeing on a North Star upfront is vital, but that is only the start of the negotiation process. To set in place rules of engagement that will support a successful outcome will require ironing out each party’s motivation, expectations, view of opportunities, challenges and risks – all in context of the collaboration.

This will determine the various practicalities, for example:

  • What will the structure of the collaboration be, such as who contributes what and to what extent is independence retained?
  • How will decisions be made? Would any party need to cede their decision rights?
  • What is the time horizon for the collaboration?
  • Who will get credit for what and how?
  • How will shared and collective impact be monitored and measured?
  • Will there be scope to bring new partners on board? What will be the process for this?

Each philanthropic portfolio is unique, which means the formations, exits and re-establishments of collaborations also have to be unique – there is no copy and paste strategy. Add to this the continuous backdrop of the polycrisis and the need to be flexible, and the necessity of a carefully considered, custom approach becomes even more evident.

Agreeing on the funding focus requires additional parties and insights

In addition to understanding what it will take to support and enable private and corporate funding collaboration, attention should also be paid to the specific focus of such collaborative efforts, as well as who would be responsible for executing the collaborative vision. While time is spent on organising collaboratives, third parties joining the exercise also need to be seen as active participants.

The questions to be addressed here should focus on:

  • Driving collective and systemic change at scale, focusing on who the suitable partners would be that can work with collaborative funders in complex partnership arrangements.
  • Collaborations of private and corporate funding partners yield even greater power – in this regard the question should be whether this collective power is transferred to partners and communities and how their respective voices, needs and priorities will be represented.
  • While it is recognised that collaborations may bring about greater efficiency (reduced reporting to multiple parties) and potentially allow for less restrictive funding (as there will be more trust-based approaches), agreeing on implementation and achieving expected outcomes also needs to be considered. As an example, what will the recourse be if the anticipated impact objectives are not achieved by the collective?

SA culture may give us an advantage, but it’s going to take a lot of work

With a history and culture seeped in diversity and complexity, effective negotiation is largely entrenched in South Africa’s DNA. This should give us an advantage in establishing collaborations where we listen, learn and cooperate. But that is no guarantee that it will be plain sailing.

If we fall victim to the assumption that collaboration is easy, especially between private and corporate funders, we are setting ourselves up for failure. In the context of expanding crises, this will not only be failure of the sector itself, but will ultimately fail the millions whose lives would have been improved if funders managed to pool their resources and know-how effectively to bring about increased capacity and impact.

This article was originally published in the IPASA Newsletter June 2024.

Related Articles


Managing and Measuring Impact

How to go about managing and measuring your impact is a question we get asked a lot. Our philosophy is that impact is intentional and needs to be designed. In this presentation we provide guidance on the aspects and consideration for...

Strategic Review Processes

Social and impact investors have an obligation to share their impact results. But, most investors focus only on the reach aspect - that is the number of people impacted. Yet, qualitative data provide so much more depth, nuance and insigh...

STAKEHOLDER MANAGEMENT

Stakeholder engagement is—and will remain—a core element of the sustainability toolkit. It is a fundamental component of materiality assessments, which are then used to inform sustainability strategy, reporting, and disclosure. Corpo...

Woman smiling in front of blue wall

Where is the good news? I need it today!

Working in the field of community development with both funders and their implementing partners I am constantly looking for innovative and creative ways to solve social issues. Because of the amount of research and benchmarking that I co...