No strings attached? Making sense of flexible financing in philanthropy

Increasingly, philanthropic donors are moving from supporting specific projects to providing untied general support to their grantees. In response to the shift, this report sheds light on flexible financing – the practice of providing grantees unearmarked funding. It examines “trust-based philanthropy” to better understand both advocacy for, and scepticism towards, this approach. In so doing, it highlights the need for an empirical understanding of financing practices in philanthropy. The report focuses on one form of flexible financing: core budget support. It assesses the advantages and disadvantages of this approach for both philanthropic funders and grantees. To that end, it explores both the dynamics of grant-making as a contract and the implications of flexible funding on different types of grantees. Research is based on evidence from the OECD database on Private Philanthropy for Development. It looks at flexible funding from more than 180 private philanthropic donors from 32 countries, and historical yearly giving from 20 large foundations. Based on these data, it analyses the factors that influence philanthropic financing, using Bayesian statistics.