May 15, 2014

The Road to Scale Runs Through Improved Donor Strategies

The fragmented nature of the current “donor marketplace” makes it difficult to provide the duration, magnitude, and types of investments required for change at a transformative scale, says Charles MacCormack, executive in residence at Middlebury College and former CEO of Save the Children and World Learning/SIT. For this to change, he says, donors must come together, pool their investments, and work toward common goals aimed at long-term solutions.

By: Charles MacCormack

After working a collective 35 years as CEO of two global nonprofit organizations, World Learning and Save the Children, I have come to believe that the fragmentation and unrealistic expectations in the donor marketplace account for much of the failure to scale in the social sector. The marketplace includes small donors, mega-philanthropists, foundations, corporations, and government agencies. Very different goals and motivations drive different types of donors, and few understand the duration, magnitude, and types of investments that real impact at transformative scale requires. That makes aggregating donors' varying expectations into a coherent, large-scale strategy all but impossible.

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The exception that proves the rule in my experience is the Saving Newborn Lives initiative led by the Bill & Melinda Gates Foundation and Save the Children. Both organizations saw that newborn mortality accounted for more than 40 percent of all deaths for children under age five in developing nations. To address this issue, the Gates Foundation made a large, multiyear, multicountry commitment to reduce newborn mortality. Since 2000, the foundation has allocated nearly $150 million to fund the upstream elements needed to improve newborn health at scale, specifically: international and national networks and conferences, ministerial and health system capacity-building, policy and legislative reform, operations research and evidence gathering, global health community engagement, and catalyzing government and donor investment at the field level.

This kind of philanthropic work might seem like common sense. It provides long-term commitments for chronic problems; synthesizes global, national, and local investments; coordinates activities of numerous stakeholders; commits funding to essential capacity- and field-building activities; and invests in the establishment of global and national movements that can sustain transformative change at scale. And yet, after more than three decades in the sector, Saving Newborn Lives is the only example I've seen first-hand. Every other attempt to achieve impact at scale has required that organizations painstakingly stitch together hundreds or thousands of grants of varying size, each with its own objectives, restrictions, and durations. No coherent whole can emerge from the sum of such disparate parts.

Why is this the case? Most donors focus on short-term, programmatic results. This is unfortunate, because such commitments don't address the messiness inherent in personal or societal change, or the time and money required to make a serious difference. Furthermore, to many donors, capacity- and field-building sounds like "boring" and/or "wasteful" overhead.

Nonprofit organizations also contribute to donors' misconceptions. When competing for funds on often-unrealistic marketplace terms, many nonprofits reinforce the illusion that there are simple, quick fixes to complicated problems and that organizations don't require funding for robust organizational systems. Consequently, nonprofits often end up with short-term, smaller-scale grants that fundamentally inhibit strategic solutions. Moreover, the intense competition for funding in this fragmented market incentivizes a "winner-takes-all" mentality, when the reality is that only deep collaboration will address large-scale problems.

It doesn't have to be this way. And it's not just the Gates Foundation that can do things differently. Smaller donors can come together to form leadership groups that drive long-term solutions at scale. As a coherent team, they can pool investments and make aligned, long-term commitments to capacity building, policy change, and evidence gathering. Larger frameworks, such as the Millennium Development Goals , can help with this, providing global, national, and local stakeholders with a common work plan and timetable. Universities and think tanks can help set such agendas by organizing their research and recommendations around more concrete, multi-stakeholder initiatives.

The first and most important step is for major international donors in various sectors to congregate more regularly and commit to pool funding around shared large-scale strategies that use many organizations to implement. The process undoubtedly will be painful, but given the scale of today's global problems and opportunities, the pay-off will be enormous.

Charles MacCormack is executive in residence at Middlebury College, executive chair of the Millennium Development Goals Health Alliance, and a board member of Save the Children International. He previously served as CEO of Save the Children and World Learning/SIT, as well as director of SIT's Master's Degree Program in Development Management and assistant to the dean of Columbia University's International Fellows Program.

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