Funding Collaboratives: What makes it a Success?

Funding Collaboratives: What makes it a Success?

By Lam Sze Ching

Collaboration is one of the founding pillars of how APC members conduct their philanthropy. A 2019 study of 25 funding collaboratives conducted by The Bridgespan Group and the William and Flora Hewlett Foundation found that 10 were successful and 15 met with challenges. The report highlighted the benefits and disadvantages faced by funders and the hope is that the study will inspire funding collaborations to adopt an investment thesis, the common factor amongst all 10 successful collaborations. Through this insight, we hope to further our philanthropy reach by applying it in our projects.

The Study

Since 2002, collaborative philanthropy has been constantly evolving and an increase of almost 70% in pooled funds has emerged in philanthropy trends. The study revealed a gap in information on the value of funding collaborations, which prompted an analysis of international collaborations.

Through interviews with funders of different collaborations, the study concluded on an overall assessment of funding collaboratives: while benefits outweigh the costs, there can still be challenges to reach an agreement with multiple funders, causing grantees to be easily overwhelmed. Hence, the study finds a collaborative structure ultimately an effective form of philanthropy and proceeds to explain how successful collaborations can be achieved.

Key to a successful Funding Collaboration?

The study proposes a clear investment thesis as a possible success factor for collaborations. Based on the 10 successful collaborations analyzed, the article concludes with three thesis types. 

Thesis 1: Organisation Funder

Organisation funders typically aim to help a grantee realise its maximum impact and operate similarly to grantmakers. For funders, the value in an organisation funder is finding investment opportunities to build grantee capacity, and ease in conducting due diligence through grantee performance monitoring. Blue Meridian Partners, a collaborative started in 2016, has already approved US$350 million for its first nine recipients. Their funding supports scaling plans that grow grantees organizationally, also act as a means of measuring progress.

The significant impact created by organization funders affords grantees access to long-term funder relationships, and unrestricted capital. Mark Edwards, the co-CEO of Upstream USA (a Blue Meridian grantee), claims the extensive financial support provides an opportunity for them to be creative and ambitious in their work. However, impact is at times limited because of the generalist expertise of funders. While grantees may be more knowledgeable than funders, funders may still have the final say on decisions and at times make less informed decisions.

Thesis 2: Field Builder

Field builders seek to define the environments and practices necessary for successful philanthropic work, and does so by focusing on building grantee capacity. Being a field builder also allows funders to incrementally create impact across different issues areas. For example, the Funders Collaborative on Youth Organising champions building youth leadership, which then empowers youth leaders to act on other causes.

Grantees cite capacity building, grantee collaboration and long-term grant support as advantages of working with field builders. Some examples of capacity building include employing experts and adopting operational roles (e.g. sharing best practice, researching, etc.). Still, these capacity measures risk increasing the scarcity of resources, negatively affecting the ability of grantees who are better positioned to carry out the work that collaboratives are also attempting. This can also be seen in some grantees’ frustration in collaborating with field builders; one of the surveyed grantees expressed they would prefer to receive grants instead of operational assistance from funders.

Thesis 3: Goal Aligner

Goal aligners collaborate to gain assistance in achieving their individual philanthropic goals, and tend to share their individual strategies, which means they are unlikely to operate their own programs. The value for funders lies in leveraging on the complementary strengths of other funders and this alignment encourages the participation of new funders. An example of a successful goal aligner is the Water Funder Initiative. The collaborative consists of existing water funders who decided to share the respective barriers they face with others and since, they have collated $175 million for their priority strategies and simultaneously gained $40 million in new funding.

Since their grantees are often unaware that they are funded by a collaborative, little has been reported on the impact of goal aligners for grantees. Impact from goal aligners are also often limited because this thesis is relatively the most difficult to successfully carry out.

How can APC learn from such collaboratives?

Finding the right investment thesis is a matter of agreement on the expectations of collaboration, willing amounts of investment and each funder’s value contribution. The investment thesis is essentially common ground for funders to think about collaboration.

Regardless of whether a collaborative is in its initial stages or is undergoing evaluation, it is always a good time to ensure all funders are in sync and certain about the intentionality of their work. While the thesis is meant to be a constant guiding force for collaboratives, it is natural for theses to adapt as collaboratives grow over time.

APC, acting as a catalyst to our members’ philanthropy work, has the potential to prompt important and relevant conversations around the future of our members’ philanthropy. APC members are involved in a number of collaborative projects, such as our Myanmar Community Development Fund and the 1000 Days Fund Indonesia, and having a clear investment thesis is a helpful way for our members to provide clarity and guidance to their work.