Current Trends in Philanthropy: International Giving by U.S. Foundations

International giving by large U.S. foundations reached an all-time high of $9.3 billion in 2015, up some 306 percent, from $2.1 billion, in 2002, when Foundation Center first started tracking it on an annual basis. During the same period, international giving also increased as a percent of total giving, from 13.9 percent in 2002 to 28.4 percent in 2015.

While the number of grants to international organizations and causes has stayed relatively stable, up some 31 percent (from 10,600 to 13,900) since 2002, average grant size has increased more than three-fold, from $200,900 in 2002 to $604,500 in 2015.

Much of that growth can be attributed to the Bill & Melinda Gates Foundation, which accounted for more than half (51 percent) of all international giving from 2011 to 2015. When Gates Foundation grantmaking is excluded, we see that international giving grew at a somewhat slower rate (21 percent) during the five-year period, reaching a high of nearly $4 billion in 2015.

Like foundation giving in general, international giving by U.S. foundations is largely project-focused: despite continued calls from nonprofit leaders for foundations to provide more general operating support, 65 percent of international giving by U.S. foundations from 2011 to 2015 was for specific projects or programs. (General support refers broadly to unrestricted funding and core support for day-to-day operating costs. Project support or program development refers to support for specific projects or programs as opposed to the general purpose of an organization. For more information, see https://taxonomy.foundationcenter.org/support-strategies.)

Data also show that U.S. foundations continue to fund international work primarily through intermediaries. From 2011 to 2015, 28 percent of international giving was channeled through U.S.-based intermediaries, 30 percent went through non-U.S. intermediaries, and just 12 percent went directly to organizations based in the country where programs were implemented. What’s more, just 1 percent of international giving was awarded in the form of general support grants directly to local organizations, and those grants were substantially smaller in size, averaging just under $242,000, while grants to intermediaries averaged just over $554,000.

It's important to note that these intermediaries vary in type and structure, and include:

• International nongovernmental organizations (INGOs) operating programs in a different country than the country where they are headquartered.
• U.S. public charities re-granting funds directly to local organizations.
• Organizations indigenous to their geographic region but working across countries (i.e., not just in the country where they are headquartered).
• Multilateral institutions working globally (e.g., the World Health Organization, Global Fund to Fight AIDS, Tuberculosis and Malaria).
• Research institutions conducting public health research or vaccination programs targeted at specific countries that are not the country where they are headquartered.

Unsurprisingly, health was the top-funded subject area supported by U.S. foundations in the 2011 to 2015 period, with grants totaling $18.6 billion accounting for 53 percent of international grantmaking.

Community foundations also have participated in the growth of international giving by U.S. foundations in recent years, with international giving by community foundations more than tripling, from $103 million in 2011 to $315 million in 2015, and community foundations' share of overall international giving by U.S. foundations more than doubling, from 1.4 percent in 2011 to 3.4 percent in 2015.

That growth was largely driven by the Silicon Valley Community Foundation (SVCF), whose international grantmaking accounted for 63 percent of all international giving by U.S. community foundations in 2015. Even when excluding SVCF, however, international giving by U.S. community foundations increased 71 percent from 2011 to 2015, strongly suggesting a shift in the community foundation field toward a more global understanding of community. (For more about this trend, see Local Communities with Global Reach: International Giving by U.S. Community Foundations.)

The majority (53 percent) of international giving was for programs that address global issues in general, rather than in a specific region or country. The top-funded region was sub-Saharan Africa, which received $9 billion from 2011 to 2015 and accounted for 25 percent of international giving, with the Gates Foundation accounting for 72 percent of all grant dollars benefiting sub-Saharan Africa during the five-year period. Asia & the Pacific was the second-most funded region, receiving $6.6 billion and accounting for 19 percent of international giving, followed by Latin America & Mexico, which benefited from $2.7 billion and accounted for 8 percent of international giving overall.

The Closing of Civil Society Space – Is It Affecting Grantmaking?

Globally, governments continue to propose and pass legislation that impacts how civil society operates. In many countries, these restrictions have complicated direct grantmaking by U.S. foundations to local organizations.

Between 2012 and 2015, the International Center for Not-for-Profit Law identified ninety-eight laws designed to constrain the freedoms of association or assembly that had been proposed or enacted across more than fifty-five countries; 36 percent of those laws limited international funding of local civil society groups. (Rutzen, Douglas, "Aid Barriers and the Rise of Philanthropic Protectionism," International Journal of Not-for-Profit Law / vol. 17, no. 1, March 2015, https://www.icnl.org/research/journal/vol17ss1/Rutzen.pdf.)

How are governments restricting civil society organizations' access to international funding? In some countries, national governments now require pre-approval before a grant can be made and/or grantees must secure permission in advance before they can receive foreign funds. Some governments also mandate that all foreign funding must be routed through a government entity, while other countries have chosen to stigmatize local organizations receiving foreign support through "foreign agent" laws, and still others have enacted foreign funding caps for local nonprofits and/or levied taxes on funding provided by foreign sources. Governments also have used counterterrorism and anti-money laundering as justifications for instituting complicated, often-onerous reporting and registration requirements for grantmakers and grantees.

Even as governments continue to enact restrictions on cross-border funding, Foundation Center data (from 2015) does not yet show any correlation between the amount of funding flowing from U.S. foundations to a given country and that country’s score on the Index of Philanthropic Freedom (an indicator of the health of the enabling environment for cross-border flows for the period 2014–15). Of the twenty countries that received the most direct funding from U.S. foundation in 2015, five scored lower than the global average of 3.4, indicating a challenging legal environment for cross-border giving. India is a notable example, ranking fourth by direct giving but receiving a score of just 2.1.

These findings challenge our assumptions about the impact of the legal environment on funding flows and suggest a more complex relationship than one might expect. It's clear U.S. foundations remain committed to channeling funds to countries where the legal environment is growing increasingly unfriendly. But because the index is relatively new and represents the first attempt to crosswalk philanthropic funding data with data on the enabling environment, it's too early to assess how accurately it has captured shifts in funding.

Still, any exploration of the relationship between the legal environment for cross-border giving and funding flows raises important questions: Why does a significant amount of funding reach certain difficult environments and not others? Are any of the strategies and mechanisms for channeling funds to countries with difficult legal environments transferable across individual country contexts? And how have other funding flows, including individual donations and bilateral aid, been affected by the imposition of legal restrictions?

U.S. Foundation Grantmaking in the Context of the Sustainable Development Goals

With the United Nation's adoption of the global Sustainable Development Goals (SDGs) in September 2015, U.S. foundations gained a new and powerful framework through which to reflect upon their international giving. Moreover, since the SDGs are globally applicable, they provide a useful lens through which to think about domestic giving as well.

The SDGs are a set of seventeen interconnected global goals that together represent an urgent call for action by all countries — developed and developing — to end poverty, improve health and education, reduce inequality, spur economic growth, tackle climate change, and preserve the planet's oceans and forests. To ensure the goals are achieved, each individual goal has a set of targets and indicators associated with it so that progress toward success can be measured.

Developed through a multiyear, multi-stakeholder process that included representatives from the philanthropic sector, the SDG framework was implemented on January 1, 2016. It's important to note that the SDGs are not just an initiative created and led by the United Nations but one that all development actors, including foundations, can use and apply in their own work, whether they work internationally or not. Because the goals are universal, the work of any foundation, so long as it seeks to improve the human condition, is considered part of the larger global development effort.

Although challenging to assess at this early stage, philanthropy's support of the SDG framework is being tracked through an online platform, SDGfunders.org, that also serves as a knowledge hub for foundation executives looking to better understand what the SDGs are and to demonstrate to funders how their work may already align with the SDG framework. To that end, the site aggregates data on how the work of U.S. (and some global) foundations maps to the framework and, with the help of a simple tool called the SDG Indicator Wizard, enables funders to understand which SDGs and their associated targets and indicators are relevant to their own work.

So what does the data tell us? In the two-plus years since the launch of the framework, philanthropy has made a substantial contribution toward achieving the goals. Since January 2016, U.S. foundations have provided more than $72 billion in support of SDG-relevant work. And projections based on analyses of foundation funding trends since 2010 suggest that foundations' total contribution to the SDGs between 2016 and 2030 are likely to exceed $360 billion and could total as much as $500 billion. Three factors may push the amount even higher: the continued growth of philanthropy around the world; greater access to philanthropic data as the sector modernizes; and increasing awareness of the SDGs among foundations as the framework is embraced by governments, NGOs, and the private sector.

Given the historical funding preferences of U.S. foundations (see my previous post), it's not surprising that Goal 4 (Ensure inclusive and equitable quality education for all) and Goal 3 (Ensure healthy lives) have received the lion's share of the funding to date ($24 billion and $22 billion, respectively). Education has long been a priority for many U.S. funders and continues to attract significant funding. And foundations also have contributed significant sums in response to various health emergencies in recent years, in addition to their usual health-related giving.

We would also note that the SDGs are a useful mechanism for coordinating philanthropy’s efforts as it works alongside the UN, governments, the private sector, and nonprofits to achieve its broad development goals and objectives. The Addis Ababa Action Agenda of the Third International Conference on Financing for Development speaks directly to the crucial role of philanthropy in achieving the SDGs:

We welcome the rapid growth of philanthropic giving and the significant financial and non-financial contribution philanthropists have made towards achieving our common goals. We recognize philanthropic donors’ flexibility and capacity for innovation and taking risks and their ability to leverage additional funds through multi-stakeholder partnerships. …We welcome efforts to increase cooperation between philanthropic actors, Governments and other development stakeholders. …We encourage philanthropic donors to give due consideration to local circumstances and align with national policies and priorities. We also encourage philanthropic donors to consider managing their endowments through impact investment, which considers both profit and non-financial impacts in its investment criteria....

The SDGs represent an important step toward the realization of a cleaner, healthier, more sustainable global future, and we look forward to continuing to track progress made in achieving them.

In my next post, I'll look at U.S. foundation funding for one of the most important issues of our time: democracy. Until then, feel free to share your feedback in the comments section below.

Larry McGill is vice president of knowledge services at Foundation Center. The center would like to thank the King Baudouin Foundation for support that helped make this series possible.