By Peggy Dulany
November 1992
Alexis de Tocqueville, who wrote Democracy in America well over one hundred years ago, considered the most striking aspect of American society to be the plentitude and diversity of voluntary associations. This peculiar phenomenon, he postulated, kept democracy strong in America, for it was through these associations that people participated in civic life and had a voice in government.
The importance of a strong civil society in helping new democracies to emerge or gain strength is increasingly being recognized. Strong, centralized governments are not only being criticized as stifling people's participation but, in a large number of countries, are loosening their grip, voluntarily or otherwise. At the same time, after the demise of communism, which left the way open for a virtually unimpeded trend toward market economies, groups in many societies are recognizing that the market alone, left unmonitored by other strong forces, is not going to solve the problems of poverty and environmental degradation that constitute perhaps the strongest threat to local, regional and global security.
A third force, it is being postulated, -- that of the civil society, or the independent sector, as it is known in some countries -- is needed to balance both the government and market forces. In countries of the South, civil society has largely been represented by non-governmental organizations (NGOs) and, in some countries, labor unions, church groups and other associations (such as lawyers, journalists or business groups).
There is obviously great variation in the nature and strength of civil society across different countries, based on many factors, including cultural tradition and the degree of freedom which groups have to operate and speak out. But what is common to most is the lack of sources of policy support and financing for these groups from an intermediary level of civil society organizations, known in the North as foundations. It is not that foundations do not exist in many countries of the South. But most of those that do, usually created by a wealthy individual donor, as in the North, have missions that are either charitable or cultural in nature. They do not necessarily support the strengthening of other organizations within the civil society.
To the extent that organizations of the civil society in these countries have received financial support from groups other than their own members, it has usually been from government (which incurs the risk of compromising the independence of the organization) or from international organizations (governments or NGOs), who have their own guidelines for funding decisions. Meeting these guidelines often skews the programs of local groups, disempowering them by taking out of their hands the decision making about priorities.
Recognition of this problem has led a growing number of groups in Southern Hemisphere countries and in Central and Eastern Europe to explore how they can create their own version of endowed foundations; the explicit mission of these groups is to support the emergence and strengthening of local organizations and communities which, together, could constitute a stronger civil society.
Some Differences Between Traditional Foundations and the Emerging Foundations in the South
Although the name, foundation, is the same as that used for traditional grant-making institutions in the North, the nature of these emerging foundations in the South is considerably different. Perhaps this stems in part from the fact that there is a perceived need for more than just financing sources to strengthen civil societies in the South. These foundations can act as a voice for the people, as new social actors in the society. They can examine issues of policy, such as tax policies that provide incentives for people to contribute to the foundation or other non-profit groups. And they must advocate for changes in domestic or international policies to better meet the needs of local communities. They also strive to build the capacity not only of local communities to plan for themselves, but of indigenous NGOs to support them in this.
The difference between these Southern foundations and their Northern counterparts may also stem from the fact that they do not normally receive their endowment in large quantities and all at once from one donor, as is often the case with Northern foundations (except for community foundations, which build their endowment over time from multiple donors). Since they usually begin operation with limited financial capital, they must count on other assets to become effective social actors. Their greatest asset is their human capital.
The foundations of this nature so far in existence in the South have all grown out of initial nuclear groups that have worked together over time and whose commitment to local community development is deeply embedded in their values. As they begin to explore what type of institution would meet the needs in their society, there are usually no sources of start-up funds, so they must count on this commitment to engage volunteers in the planning and consulting process necessary to organize the foundation and enlist the participation of different groups. These founding groups have usually had a long history of working with local communities and organizations, and hence have the connections and the credibility to mobilize grassroots support for the foundation initiative. And often, their work is later recognized by either government or outside donors, so they have the credibility necessary to raise the requisite start-up funds once the concept is formulated.
The New Foundations as Vehicles for Collaboration
Creating such institutions virtually necessitates the participation of very different sectors of society, working together and trusting each other in circumstances where bridges often have not existed:
- in order to truly strengthen local organizations, there must be a mechanism for representatives of those local groups to ensure that the structure meets their needs and responds to their priorities;
- in order to succeed in mobilizing funds within the society, those sectors which have money -- usually business -must be included early on so that they buy into the idea
- in order to attract funding from sources outside the country (which, in very poor countries and those where there is not a well-accepted ethos of philanthropy, will be essential to amassing meaningful amounts of capital), the local groups taking the lead in these initiatives must develop relationships with international donor groups
- in order to gain credibility and not be seen as a threat to or in competition for funding with established NGOs in the society, they must include those NGOs in the planning process
- in order to gain approval for their legal structure and to gain agreement to utilize mechanisms such as debt buyback or blocked fund donations to expand their endowments, they must have good working relationships with present and future governments. This implies the involvement not only of people close to the present government, but also of people of different political persuasions who will be able to work with opposition governments.
It is one thing to mobilize each sector separately to participate. But for the structure to have coherence -- managerially and philosophically -- all (with the exception of the international groups, who should be consulted but not actually participate, if this is to be a truly indigenous undertaking) must engage in working together to build and oversee the foundation.
Governance as a Collaborative Venture
Probably the most fundamental task of partnership is the establishment of a board of directors. The names on this list will be what people inside and outside the country look to decide whether the organization is legitimate, in terms of integrity, commitment to local communities, representativeness of different sectors and geographic regions of the country (assuming the foundation aspires to be national in scope) and effectiveness.
The group generating the idea for the foundation is likely to be much narrower in composition than the board they put together. They have their own values which they care desperately to see expressed in the foundation. It will probably, therefore, seem like a grave risk to include, in a governance capacity, a significant number of people whose philosophies differ from their own. The initial tendency may be to not do so. But, as the structure evolves and different needs become apparent (for financing from different sources for government approvals, or for knowledgeability about different issues or regions of the country, for example), the motivation to reach out and include people with different backgrounds and views will most likely grow.
Leadership with a Collaborative Orientation
The need for a pluralistic board suggests the importance of unusual leadership for the launching of the foundation from one or more persons who can relate to these different sectors of society and not be seen as a fundamental threat to any one -- or, if they are, to have the wisdom to offset their negative image in the eyes of some by the inclusion of others, through whose participation that sense of threat will be diminished. The absence of such leadership renders the successful launching of the foundation initiative practically impossible.
Collaboration in the Grantmaking Process
Apart from the board and staff leadership, the operation of the foundation in its grant making assumes partnership relationships in several different ways:
- the size of the endowments of these foundations during their initial years will probably not allow for full funding of many community initiatives. This necessitates finding other funding partners which, while perhaps unwilling to fund the foundation itself, agree to co-fund certain projects
- in order to ensure that the projects being funded truly represent the priorities of the communities they will benefit, those communities must engage in an internal consultation process; at least one of the existing foundations (in Mozambique) requires that communities commit half the total cost of the project in in-kind labor costs, local materials or cash, to further ascertain that the project proposed is one to which they are committed
- in societies where there is not always extensive organization at the community level, the foundation personnel may work with and through local NGOs that have a track record working with individual communities and have developed their trust; those NGOs can help communities assess their own priorities and build the capacity to implement their projects
- similarly, in societies where there is no history of indigenous NGOs, the foundation may, in some cases, wish to work with international NGOs or private companies to assist communities to implement their projects.
Fundación Grupo Esquel Ecuador
Grupo Esquel is a network of Latin American organizations dedicated to working with low-income sectors in six countries in Latin America. Three years ago, perceiving the lack of second- or third-level institutions inside these countries that could support community organizations, they took the decision as a network to convert themselves into foundations.
Grupo Esquel Ecuador was the first to complete the transition. With the support of two Northern foundations, the completion of a debt buyback with the government and a local fundraising campaign, they have a trajectory of nearly $8 million for the first three years, of which $2 million will be in endowment.
More impressive than the figures, however, is the way the group has been able to involve different -- and often conflicting -- segments of the society to work together. Their board comprises representatives of diverse sectors, a fact that has already stood them in good stead when a center-left government was replaced by one that was center-right, without the foundation losing acceptability (in fact, one of its board members was named minister in the new government).
Because the program staff comprises individuals who have worked with communities and NGOs all of their professional lives, it was not difficult for them to engage in a process of consultation countrywide as the foundation was being set up. This avoided feelings of jealousy and competition, as other groups were able to see that the foundation not only would not take away support, but would be capable of supporting them.
In its first year of operations, the foundation has made 43 grants countrywide in a variety of areas, emphasizing children's issues, environment and support for productive activities at the community level, with a strong emphasis on women. Every grant has a counterpart funding source, mostly of the same size or larger, and often from the community itself. And every one is geared to the short- or long-term self-sufficiency of the population served.
Because there has been no tradition of philanthropy in any sense other than charity in Ecuador, it has been difficult to engage Ecuadorean individuals or businesses in making contributions to the foundation. Nevertheless, a start has been made, and a massive communications campaign is underway, thanks to donated space in all the major newspapers and considerable coverage of foundation activities on popular TV news programs. Their strategy is to create awareness first and seek more involvement afterwards.
Emerging New Foundations in Mozambique, Zimbabwe, West Africa and the Philippines
Shortly after Grupo Esquel Ecuador began reshaping itself into a foundation, a group of people in Mozambique, led by former First Lady Graça Machel, began working to build a similar initiative. The challenges faced by Mozambique were even greater than in Ecuador. The country was in a full-scale internal war, facing drought, with one-third of its population displaced. Although 150 foreign NGOs were working in the country, legislation did not permit the formation of indigenous NGOs until two years ago. With communities broken and scattered, there was almost no local human infrastructure through which to work. Nevertheless, some traditions had survived, and the will to rebuild the country, even before the recent cease-fire accord, was strong.
With support for the planning stage from one Northern foundation and some program start-up from several bi-lateral donors, the group put together by Graca Machel (which included the Finance Minister and Governor of the Central Bank, as well as individuals who had been involved in community development, mostly through the government, and religious, university and business leaders) engaged in a countrywide consultation process to assess the needs for such a foundation. This consultation serves two purposes: it assesses the need, but it also gains the buy-in of those consulted.
The foundation has recently received the counterpart funds from a World Bank-led buyback of the commercial debt of Mozambique to complement over $1 million in local currency donations from businesses and individuals for the start-up of their endowment.
In a country where the needs are so enormous, the newly-formed Foundation for Community Development has decided to begin operation in two of the eleven provinces most affected by the war and, as resources permit, expand to other parts of the country.
There is no question that the convening power of the former First Lady has been an asset in mobilizing support for the foundation. On the other hand, she has had to face questions and doubts about whether this was really grounded in the grassroots and whether the foundation might be her base for further political involvement. With regard to the former, the staff has taken great pains to ensure and demonstrate community involvement in every project; and with respect to the latter, the pluralistic composition of the board takes on even greater importance in this context, for there is no way that this group could be viewed as partisan. It is clearly an effort of Mozambicans of various perspectives working together to rebuild their country.
An emerging foundation in Zimbabwe has started from the other direction from that in Mozambique. A group of largely grassroots, Church and NGO leaders decided to consult with people all over the country before including business or government, in order to ensure that the people had a strong say in the shaping of the foundation. This has had pluses and minuses in the process, although the final result is not yet known. On the one hand, the design process has included broader participation of the grassroots than in other instances; on the other, the group has not yet mobilized resources with which to proceed, and consequently, has been hampered in its planning. It is too early yet to draw conclusions from this.
There are a number of other interesting examples of emerging foundations in the South. Among them are The Rural Foundation for West Africa, whose board is West African, and which has been working closely with peasant organizations and NGOs in the region in the conceptualization of the structure. Another is the Green Forum Foundation in the Philippines, funded by a debt swap for which USAID put up the money, and geared to support local sustainable development priorities. Each one constitutes a somewhat different model, but all place great priority on responding to the needs of local communities and on promoting collaboration in funding and programming across sectors.
The start-up of each of these foundations is a tremendously time-intensive effort. Some groups have already benefited from the experience of others who started six months or a year earlier. Some have had the opportunity to visit other similar efforts in the North and South, and to glean from them useful features relating to by-laws, board membership, programming, etc. Because it appears that there will be many more such foundations starting up over the next few years, a new international non-profit organization, The South-North Development Initiative, whose board members are majority Southern, has been set up specifically to provide technical assistance to these groups and to facilitate contacts among them. One of its first efforts was to survey the field, sending out a questionnaire to 151 foundations in the South and in Central Europe. The information gathered will provide the basis for case studies and further exchange of experience.
The Viability of Foundations for Strengthening Civil Society
Under what circumstances are such collaborative ventures as these foundations viable? Not enough are yet in existence to be able to answer that question definitively, but several factors seem to be clear prerequisites:
- the national government is sufficiently democratically-oriented and secure to permit the existence of a strong independent force within the society, and the national laws permit the existence of foundations
- either the country is not so divided among its different interests so that the possibility exists for collaboration among groups, or else the risks of not participating collaboratively are perceived to outweigh those of participating, even if there is not general harmony or trust among groups
- there are leaders who have trust or credibility with different groups and can act as a bridge across them
- there are available sources of financing inside and outside the country to meet the needs for start-up funding as well as initial operating capital and, eventually, endowment
- the leadership of the foundation has links to these sources of financing and credibility with them.
The history of community development foundations in the South is too short to be definitive on the viability and efficacy of these new social actors in strengthening civil society. From the early evidence of the existing examples, however, one could hypothesize that they can be effective vehicles for doing so in the following ways:
- they represent a force for bringing together groups which previously did not cooperate to work jointly to solve social and economic problems in the society
- they offer a mechanism for including those most often left out (local community organizations) in decision making and access to resources
- they constitute a strong enough force to act and mobilize others to join in as a counterbalance to government and the market forces
- through their funding, as well as through their other policy-oriented or training activities, they represent a means for building indigenous capacity to solve problems;
- they constitute a vehicle for attracting financial resources to be administered from within the country and by people from that country
- as such, they represent a new hope for the civil societies of these countries to be able to solve their own problems.
Given the terrible failure of most aid programs and many governmental and multi-lateral policies to solve problems of poverty and environmental degradation in the world, these new organizations offer a potentially viable path for mobilizing and channeling resources and a hope for effective local problem solving.
Bibliography
Wolfe, Alan. "The Paths to Development: Market, State and Civil Society." Presented at the first International Meeting of NGOs and System Agencies, Development, International Cooperation and the NGOs, March 6-9, 1991, Rio de Janeiro, Brazil.
Schearer, S. Bruce. "The Emerging Role of Civil Society in National Development Efforts." IMPACT, Spring 1992.
Walzer, Michael. "A Better Vision: The Idea of Civil Society." Dissent, Spring 1991.
Biemann, B., Cannon, L. and Klainberg, D. A Survey of Endowed Grantmaking Development Foundations in Africa, Asia, Eastern Europe, Latin America and the Caribbean. South-North Development Initiative, August, 1992.