As I read the four-page handwritten request that arrived by mail, my heart went out to the rural women’s group in Uganda who sent it. They were thoughtful in their approach, made a convincing case for their need for information technology and requested just $4,000, enough to purchase three computers to collect and disseminate agricultural information.

This application of technology for local economic development was precisely the kind of work our foundation was committed to support – and yet, as I reviewed their request, I knew that we probably could not support them.

What did we learn over two years at Global Catalyst Foundation to change our strong initial commitment to direct international grantmaking?

Our initial approach

Global Catalyst Foundation was founded in July 2000 by the partners of a Silicon Valley venture capital firm. Our mission is to improve people’s lives at the grassroots level in developing countries, using information and communication technologies. Drawing our operating principles from the venture firm that spawned us, we sought leverage and accountability in our work. We committed ourselves to an engaged model of philanthropy. Selecting the best grantees to achieve our mission and vision was only the start of our work. We would help our grantees fundraise, support them in building their capacity, and, we hoped, strengthen the field by learning what was working and sharing that knowledge. Our organization was staffed accordingly; four of us worked on distributing just under US$1 million in our first year. Porter and Kramer’s article, Strategic Philanthropy,[1] was a significant influence on our direction.

When we started making grants, we talked explicitly about risk. We were willing to take the risk that our work might fail to do good, but we would do as much as reasonably possible to ensure that it would not do harm. We also decided that we absolutely could not tolerate corruption, and that we would be careful to minimize the risk of adverse public relations or legal action against the foundation that might jeopardize our future. Finally, while we acknowledged that risk prevention has a cost in terms of the time required to collect and evaluate information, it was important to us to maintain an entrepreneurial bias towards action.

Shaped by these ideas and values, we established a due diligence process that combined the collection of hard data with the difficult human judgements about people and organizations. Our board committed to a quarterly decision-making schedule and to meeting virtually to make urgent decisions when necessary. And we made a commitment to direct international grantmaking as well as managing our own international operating projects.

First grants

Even as we started making grants, we became directly involved in the work, managing a project to bring power, computers and Internet access to a Burundi refugee camp in Tanzania and the host community. Our board chair visited the site to establish the merits of the project and two of us made a second trip to ensure its feasibility, develop an implementation plan and hire a consultant to work locally. This was a powerful learning experience, teaching us patience, persistence and the challenges that grantees faced in the field. Two years later, we’ve seen how this technology has empowered refugees with a voice – as well as with tools for health, education and income generation. Along the way, we’ve also become more aware of the real costs in time and money to make a project like this happen. The logistics of funds transfers, shipping and government permits were often much more complex than we had anticipated.

Many of the early requests to our foundation came from regranting organizations and other intermediaries. We were quick to analyse their overhead. We scoffed at 20 per cent; even 8-10 per cent seemed high merely to pass funds to a group overseas. We were also concerned that granting funds to intermediaries would distance us from the work, limiting our ability to understand the local context and learn what was working.

Then we made our first two direct international grants. We supported a programme to provide computers and tutoring support for Bedouin students starting college, and another for a group of Arab Israelis to start an Internet centre in their village. For one grant, we required the services of an attorney and spent nearly 5 per cent of the amount we were granting on legal services. While the staff time consumed on paperwork for both these projects was interminable, it did not contribute any value either to our own learning or to the grantee.

In one case, however, there were benefits for the organization we supported beyond the direct value of the grants we made. In Afghanistan, we found that the due diligence we carried out helped the organization earn the confidence of other funders. One of our programme officers with the requisite linguistic skills travelled to Afghanistan to investigate relief efforts there. She decided that we should support the work of Relief International, a US group with local staff on the ground. Her detailed site-based due diligence helped them find additional foundation funding for their relief efforts as well as later for reconstruction.

Seeing the value in intermediary organizations

Meanwhile, we started to learn more about intermediaries. We decided to make a grant to IDEX (International Development Exchange), which has long-term relationships with 14 groups working on social justice issues around the globe. Our support for them helped their grantees with access to information, and also helped them network among themselves. IDEX’s value as a hub in the US became clear; we were able to see and understand the value of the work we funded across several organizations. Our ability to work closely with this US-based intermediary and learn from their experience proved invaluable.

In another example, we had learned of the work that CDI, the Center for the Democratization of Information, was doing in Brazil, but we had no opportunity to meet with them personally without a trip. Then the Global Fund for Children approached us to fund a CDI project supporting the establishment of two schools for disadvantaged children in Rio de Janeiro, Brazil. We quickly saw how knowledgeable this group was, and found that they were able to give us as much detailed information about the work as we needed.

A commitment to intermediaries

As we planned our annual budget for 2003, we questioned whether it still made sense for us to make direct international grants. As a California-based foundation, we had developed strong relationships with some of the US NGOs in our geographic area who were working internationally, as well as our relationships with regranting intermediaries and peer funders. We therefore found ready sources of information to inform our international work along with the vehicles to simplify our grantmaking. Working this way not only saved money but also allowed us to focus on the work that truly supported our grantees such as technical assistance and support with fund development. In the end, we made the decision to stop making direct international grants.

So how do we respond to a request like the one from the Ugandan women’s group? Our annual Small Tech Grant programme lets grassroots international NGOs partner with a US-based organization to apply to Global Catalyst Foundation for support. We encourage groups outside the US who contact us to apply. We’ve accepted that we can’t effectively address the needs of overseas grassroots NGOs directly. However, in working with intermediaries, we’ve found a means to best leverage our resources – as well as the skills and talents of the growing number of intermediary organizations that are funding international work – in ways that ultimately do reach these groups.

1 Harvard Business Review, Nov/Dec 1999.

Michael Chertok served as Managing Director of Global Catalyst Foundation from its inception in 2000 until early 2003. He is now an independent consultant and can be reached at michael@chertok.net

For more information
See http://www.global-catalyst.org