To be or not to be … on the spot

Caroline Hartnell and Andrew Milner

All grantmaking foundations that operate overseas face a choice: do they open local field offices in the countries or regions where they operate, or do they work at a remove, making grants and overseeing programmes from their headquarters? Alliance spoke to a number of foundations about the choice they had made and the pros and cons of working that way. We found there was no right or wrong answer and that each solution can serve many different purposes.

We found a roughly even split among those we talked to, with a variety of different arrangements on both sides of this general divide. Among those who chose the centralized model, there are varying combinations of programme officers who travel extensively, consultants or other local representatives who operate on an occasional or part-time basis, and carefully defined agreements with grantees. The Packard Foundation establishes a Technical Support Team (TST) of one or two consultants in each country where they work, whom Sarah Clark describes as ‘our eyes and ears on the ground’. Stephen Heintz of Rockefeller Brothers Fund (RBF) mentions ‘an informal network of folks’ that they keep in touch with. The Atlantic Philanthropies and RBF both clearly benefit from pooling knowledge with other foundations working in the area. RBF takes a lead role in convening regional foundation roundtables and is thus able, as Heintz puts it, ‘to take advantage in a collegial and polite kind of way’ of the local knowledge acquired by foundations that do have a permanent presence on the ground.

Among those who opted to open field offices, some recruit local staff while others do not. Some give the field offices a substantial degree of autonomy in grantmaking while others maintain a central control over the making of grants.

Nor is it always simply a matter of the centralized model furnishing the solution to one set of questions while the field office alternative answers others. In a number of cases, foundations see the same purpose best served by contrary methods. The King Baudouin Foundation (KBF), for instance, feels that administering projects centrally and keeping its distance is the best way to build the capacity of local organizations in the countries in which it operates, while the Kellogg Foundation, by contrast, feels that building local capacity is best achieved through a devolved model.

Advantages of the centralized model …

Lower costs
So what were the main considerations for those who chose the centralized model? Perhaps the most obvious one is cost. It’s expensive to run an overseas office, which means there is that much less money to spend on grantmaking. This consideration is all the sharper in view of the fall in value of foundation endowments in recent years.

Not only are there the obvious visible costs, such as staff salaries, premises, equipment and so on – what Tim Stiles, a KPMG consultant who works with a number of the foundations we spoke to, calls ‘green’ costs – but there are also what he terms ‘blue’ costs, which are the less apparent, indirect costs incurred by the home office: the cost of employing the people who oversee the relationship with the field office.

Given the different sizes and circumstances of the foundations involved, any comparison of the amount they spend on overheads[1] is difficult and probably meaningless – it’s impossible to compare like with like. As John Healy of Atlantic puts it, ‘You can cut this cake in an enormous number of different ways.’ The split between grantmaking and overhead costs of the Bernard van Leer Foundation (BvLF), which does not have field offices, is roughly 80:20, while that of the Ford Foundation, which does have local offices, is about the same. But, as BvLF Director Peter Laugharn points out, 20 per cent of Ford’s budget funds a lot of things that 20 per cent of BvLF’s will not. ‘It isn’t a coincidence,’ he says, ‘that most organizations that have field offices are the very large foundations.’ The Gates Foundation is an exception here: Joe Cerrell describes their overhead cost as ‘minuscule’.

Some foundations feel that the modest scale of their operation in a particular country do not warrant their opening field offices. As Stephen Heintz of RBF puts it, ‘The kind of work we do in these locales doesn’t require a full-time presence.’ Similarly, Akira Iriyama of the Sasakawa Peace Foundation feels that the extent of a foundation’s presence is the key factor: if the expense of running an office in a region is 20 per cent or less of the money to be spent there, there is some merit in opening a local office.

Other benefits
Money is a compelling motive for running the operation from a central headquarters – for Joe Cerrell at Gates ‘none other comes to mind’ – but it is by no means the only one. BvLF makes 95 per cent of its grants outside the Netherlands but chooses to work through local partners because, explains Peter Laugharn, it allows those partners to develop approaches ‘which are rooted in the local context’. It also provides an overall strategic view, he feels. If you have programme staff who are in the field all the time, there is a divorce between them and central staff at headquarters – a state of affairs which often works to the detriment of a foundation. Cerrell mentions that having HQ-based staff brings the Gates Foundation ‘a sense of consistency’.

Interestingly, in similar vein, the Mott Foundation, which does have field offices, feels that the biggest challenge in running them is not cost but how to keep home office and field office staff ‘connected’. But Vice President Maureen Smyth feels that a combination of modern technology and visits between headquarters staff and field offices solves this problem and enables the field offices to help build the Foundation’s internal knowledge and capacity. Information technology is also one of the factors that allows the Packard Foundation to feel it can manage without field offices.

KBF, which runs its Balkans operations from Brussels through local partners, feels that its choice has several important consequences, apart from the obvious financial ones: local organizations know the field better and can speak the language. Most importantly, says Managing Director Luc Tayart de Borms, working through them helps build their capacity. (Interestingly, we shall later find all these virtues enumerated by proponents of the field office system.) It is clear that for some foundations using local partners can provide some of the same advantages as a locally staffed field office, at a much lower price.

Another advantage is flexibility. According to Sarah Clark, the Packard trustees were concerned that opening regional or country offices ‘would imply long-term commitments to programmes and therefore constrain the flexibility of the foundation to be responsive to the changing situation’. Following Packard’s catastrophic fall in assets, this has given them the flexibility ‘to cut back and shut down in areas more easily’ and has undoubtedly made it easier to deal with the budget contingencies. Clark admits this might ‘play a different way with the grantees’ – and indeed with the national government, which might see supplementary social assistance that had been coming in at a good level being cut back.

… and the disadvantages

Of course there is a reverse side to the coin. The need to compensate for the lack of a permanent local presence places a big strain on programme officers, many of whom travel extensively, sometimes for as much as three or four months a year. Programme officers like these, if they remain in post a long time, become invaluable resources, knowing virtually everything and everyone on their ‘beat’. In most cases, the foundations that choose this means of operating feel that frequent visits and the use of consultants as and when necessary can make up for the lack of a local office. But there are reservations. Peter Laugharn admits that BvLF ‘pays a price for the perspective and space we give partners in not being as aware of conditions on the ground’.

Identifying local organizations to work with is clearly a challenge for foundations without local offices. Some foundations that adopt this model do not accept unsolicited approaches but instead seek out suitable partners or grantees and then draw up detailed agreements outlining exactly what is expected of each party.

Another possible downside of the hands-off approach is that you may be less flexible: if you make grants from headquarters, you simply don’t have the up-to-date information to take advantage of the opportunities that arise. Mitchel Wallerstein of the MacArthur Foundation feels that they would not have been able to play the role they did in encouraging transnational companies operating in the Niger river delta to begin to invest in universities there without people on the ground who understood the situation.

Another disadvantage, says Luc Tayart of KBF, though it’s not one that bothers him much, is that ‘you’re invisible to the external world’. What KBF does is ‘hidden away among a lot of different partners’. This limits the foundation’s scope for advocacy in the region, something KBF wants to correct in the future. Peter Laugharn also mentions that if BvLF supports advocacy in the countries where it works, it has to be through partners because BvLF itself is not ‘of the place’.

Benefits of being in situ

Some of these will already be apparent. They are the positive face of the ‘negatives’ outlined above. First-hand and fresh knowledge emerges clearly as the chief advantage of a local office. As Mitchell Wallerstein of MacArthur puts it: ‘If you have someone flying in, they just get a snapshot of what’s going on. In time, the snapshot begins to fade because the circumstances may change.’ Many also see knowledge of languages and nuts-and-bolts local know-how as prime advantages of the local office model (contrast this with the view of Luc Tayart expressed above).

David Bonbright of the Aga Khan Foundation (AKF) sees three main benefits of maintaining local offices: work is ‘genuinely embedded in the national context’; rather than being seen as just another international agency, you are accepted as ‘insiders’; and, especially if you are there on a long-term basis (‘Twenty years or more in a place or wrestling with a problem is more the norm than the exception’), and you stay when the going gets harder and other international agencies pack up, this is ‘noticed and appreciated’.

Some foundations feel that, notwithstanding the view of KBF given above, capacity-building is only possible if you work in situ. The Kellogg Foundation is known for its community-based work and this, they believe, requires local knowledge and credibility, for both of which a local office is indispensable. Kellogg also places a high premium on developing the capacity of organizations it works with, and as Vice President Anne Petersen remarks, ‘We don’t believe that much capacity gets built when we do everything from Battle Creek’ (the foundation HQ).

Many feel that, where programme officers are nationals (and this is by no means always the case – see below) and long-serving, they are invaluable repositories of knowledge and provide continuity in the relationship with grantees. Interestingly, the Ford Foundation has a policy of employing people only for a three-year term, renewable once. On the face of it, this would seem to be squandering the advantages that long service might afford. Barry Gaberman explains: ‘We believe that it is important that every so often we have a new pair of eyes to come in and take a look at a body of work.’

In addition to the common reasons for opening local offices, there are sometimes special circumstances that mean that a permanent field presence is crucial. Take the Asia Foundation. All its grants are negotiated as part of a continuing dialogue with Asian universities, research centres and NGOs, so they work more like an operating than a grantmaking foundation. In some countries, such as Japan, Korea and Thailand, their grantmaking work is declining, and in this case the Foundation sees much of its value in being able to build upon the credibility of its 50-year in-country presence to convene policy dialogues which might be too sensitive for local research centres or NGOs to organize alone.

Breathing down the grantee’s neck?

One obvious drawback of being always on the spot could be that you cut down the grantee’s room for maneouvre and undermine their independence. All the foundations that commented on this deny that that is the case or even that it is an issue (the grantees, of course, might tell a different story). Anne Petersen of Kellogg says that they work hard to educate staff to support rather than dictate. Even when they are more ‘directive’, this takes the form of ‘indicating our interest in a particular perspective through initiative announcements’. David Bonbright describes AKF as ‘unashamedly a hands-on grantmaker’. For him, independence is less of an issue than mutual respect and clarity of understanding. He adds that AKF is ‘committed to working through the inevitable tensions and conflicts’. Barnett Baron notes that many Asia Foundation grants are made not to NGOs but to bodies such as ministries, universities and professional associations where the ‘threat’ to their independence simply does not arise.

Maureen Smyth of Mott admits that there is a challenge involved in monitoring grantee performance adequately while not looking over their shoulder, but adds that the problem is not unique to foundations with field offices. John Healy of Atlantic feels that if foundations do look over their grantees’ shoulders too much, it’s because ‘that’s part of the culture of the organization and the way that they do business’ and not because they have a local office.

But all power does not always lie with the funder. Luc Tayart tells how KBF suggested to their local partner that the work they do with street children in the Balkans could be integrated with work on HIV/AIDS. But because AIDS is not seen as a problem in the Balkans, the partner was lukewarm. Rather than jeopardize the relationship by imposing his view, the programme officer gave in. ‘I as the managing director of course felt a bit differently.’

Autonomy and staffing of field offices

Once the decision is made to open field offices, other questions arise. How much latitude do you give them? Can they authorize the making of grants? Do you employ local people and, if so, do you pay them at local rates? If you don’t, what effect does the payment of higher-than-normal salaries have on the local labour market?

The majority of those we spoke to retain final control over grantmaking at headquarters. Only the Asia Foundation and the Ford Foundation (individual grants up to $100,000 are approved at country level) are exceptions. Generally, foundations look to local offices to search out prospective grantees and make recommendations on the basis of their researches. Though these recommendations naturally carry a good deal of weight, it is headquarters that gives final approval.

As to whether citizens of the country are employed or not, ‘Local people, always’ in the words of John Healy of The Atlantic Philanthropies is true of all of them. The only exceptions are the Ford Foundation, which recruits what it describes as ‘programme professionals’ on an international basis, and the Asia Foundation, which has expatriate representatives but almost entirely local programme staff. Many of these have been with the Foundation for a decade or more, providing, as Barnett Baron observes, ‘continuity and deep roots in local communities’.

What about the problem of offering US or European pay scales in much poorer countries, which could pit local agencies in unfair competition with international agencies, thus making it difficult for them to recruit? Of the foundations that commented on this, most did so only with some reticence. Mitchell Wallerstein believes that MacArthur programme officers are ‘paid competitively for the position in their country’, adding that that is ‘somewhere between US and local rates’. Barry Gaberman admits it is something Ford has ‘wrestled with’ (see interview on p35).

Arrivals and departures

Some of those we spoke to were in the process of either closing or opening offices. Ford is closing its Philippines office. This is basically for financial reasons (see interview on p35). In the case of MacArthur and Atlantic, it is more a question of refocusing grantmaking activity at a critical point in their operations. The MacArthur Foundation is closing its Brazil office because conditions have changed. The office was opened because Brazil was selected, on the basis of fertility rates, as a model country for MacArthur’s new population programme. Fertility rates have since almost halved, and the socio-economic data suggest marked improvements (though, concedes Mitchell Wallerstein, there is still extreme poverty in certain parts of the country). Relevant Brazilian NGOs are stronger and, by means of a package of exit grants, MacArthur feels it can withdraw and reassign resources.

By contrast, The Atlantic Philanthropies are in the process of opening a new office in Hanoi. They already have a significant presence as a donor in Vietnam, managed by a consultant with field trips by US staff. Now Atlantic feels that the future management and development of their Vietnamese grants requires a local office. In Central and Eastern Europe, too, John Healy felt that if they were to progress they would have to make a much bigger commitment to the region, including establishing an office there. In this case the decision went the other way and they have pulled out of the region.[2]

Working through independent local partners

Two of the foundations we spoke to, the International Youth Foundation (IYF) and Open Society Institute (OSI), fall right outside the centralized/field office divide and work through a network of independent organizations. Where they differ is that IYF’s partners were mostly existing entities whereas OSI itself set up its partner foundations.

IYF in fact began by trying to open independent offices from scratch, but chose its present course of selecting existing entities as partners because this way it was able to have a much more immediate impact. ‘One of our advisers offered the analogy of fibre optic cables,’ says Don Mohanlal. ‘You can lay your cable, yard by yard, metre by metre, or you can find an existing cable and start programming.’ The first seven years saw the establishment of just nine partner organizations, whereas in the following four years the number rose to 39. In order to select partners, IYF ‘undertakes a mapping exercise in the country to see who the players in the field are and draw up a shortlist’. These partners are linked to IYF in an informal network with a common mission and a common strategy that shares information and know-how.

In the case of OSI, it was decided to operate through a network of locally registered, autonomous foundations set up by OSI itself. It was only in countries where the legal and fiscal requirements made such a step difficult that they initially opened representative offices. In these cases the foundations were re-registered locally as soon as circumstances allowed.[3]

IYF is not endowed and in effect operates as a sort of broker, matching corporate or other donors with programme areas. It may, for example, make an agreement that a company will support IYF’s work in ten countries. It will act as recipient-in-chief of funds from this donor and then effectively act as the donor itself, making grants to its partners in the countries in which the programme is to be implemented on the basis of proposals submitted by them. IYF’s programme officers and regional directors visit its partners and provide support.

There is clearly a potential tension between partnership, which implies equality, and a donor-grantee relationship, which does not. Because IYF is in a pivotal position between its network and the corporate sponsor and so takes on the role of donor, it sometimes has to be a harsh critics of its partners’ proposals, which can be resented, says Mohanlal.

With OSI, too, the 29 national foundations are its major grantees. ‘Like grantees anywhere,’ explains Deborah Harding, ‘the foundations submit their annual strategies, programme plans and budgets to George Soros, who together with OSI boards and OSI staff review them for annual funding.’ They also form the core of the Soros foundations network, which pays particular attention to issues of governance, board rotation, conflict of interest, accountability, transparency, clientelism, financial management and sharing best practice across the network.

Harding sees ‘almost no disadvantages to OSI’s way of operating – though she admits that problem can arise for OSI if the initial selection of board and staff was not well done. However, the value of having a number of local foundations more than compensates for this. It helps build capacity in a country to do things in a spirit of openness and flexibility, both of which were notably absent in societies which were closed prior to the fall of the Berlin Wall.

Clearly, there is no simple answer for foundations operating overseas. Each of the foundations we spoke to has come up with its own solution, appropriate to the nature and scale of its operations. Most are as aware of the drawbacks to their chosen solution as they are satisfied with it. Most are also aware that it is not written in stone and that changing circumstances might cause them to vary it, even to the extent of adopting an altogether different model. As Barry Gaberman puts it, ‘one choice isn’t necessarily better than the other, but each brings its own consequences’.

1 This includes the core costs of running the organization plus the costs of making grants (including programme staff salaries).

2 A grant to the Trust for Civil Society in Central and Eastern Europe is part of their exit strategy for the region.

3 The OSI foundation in Russia was closed in response to charges of serious mismanagement. When a new foundation was reopened there several years later, it was set up as a representative office to assure appropriate control. Today, plans are afoot to set up an all-Russian institution with local partners.

Andrew Milner is a freelance writer and editor who specializes in civil society issues. He can be contacted at andrewmilner@andrewmilner.free-online.co.uk
Caroline Hartnell is editor of Alliance. She can be contacted at crhartnell@aol.com

Guest editor for the overseas staffing feature

Liesbeth Zwitser is Senior Adviser to the Bernard van Leer Foundation. She can be contacted at liesbeth.zwitser@bvleerf.nl
Who Alliance talked to

Foundations run on a centralized model

Bernard van Leer Foundation (BvLF) – Peter Laugharn, Executive Director
Programme specialists based at HQ play the major role in identifying and supporting projects, with consultants playing a role in developing a country strategy and sometimes in evaluation.
See http://www.bernardvanleer.org

Bill and Melinda Gates Foundation – Joe Cerrell, Public Affairs Director
Works through a combination of HQ-based programme officers and consultants.  Generally seeks out its grantees, and operates a system of rigorous checks to ensure they are equal to the task.
See http://www.gatesfoundation.org

King Baudouin Foundation (KBF) – Luc Tayart de Borms, Managing Director
Works with local implementing partners, visited by programme officers, plus occasional use of local consultants to offer advice and technical assistance.
See http://www.kbs-frb.be

David and Lucile Packard Foundation – Sarah Clark, Director, Population Programme
Works through a combination of a Technical Support Team of consultants in each country and HQ-based programme officers. TST consultants may be contracted either full or part-time, on the basis of need.
See http://www.packfound.org

Rockefeller Brothers Fund –  Stephen Heintz, President
Uses travelling programme officers plus an informal network of people to help them keep in touch with local events. Occasionally convenes meetings with other foundations working in the area.
See http://www.rbf.org

Sasakawa Peace Foundation – Akira Iriyama, President
Combines HQ-based programme officers who make frequent field visits, consultants and in-country liaison officers who monitor existing projects and identify new ones. SPF has one office in the US.
See http://www.spf.org

Foundations with field offices

Aga Khan Foundation – David Bonbright, Director, NGO Enhancement
14 offices, 4 in OECD countries and 10 in developing countries, plus a central office in Geneva.
See http://www.akdn.ch

Asia Foundation – Barnett Baron, Executive Vice President
16 representative offices plus one separate, locally incorporated entity that is affiliated with the Foundation.
See http://www.asiafoundation.org

The Atlantic Philanthropies – John Healy, President
8 offices, including 3 in the USA, and on the point of opening one in Hanoi, Vietnam.
See http://www.atlanticphilanthropies.org

Ford Foundation – Barry Gaberman, Senior Vice President
13 offices; the Philippines office is closing shortly.
See http://www.fordfound.org

W K Kellogg Foundation – Anne Petersen, Vice President for Programmes
6 local offices in two regions.
See http://www.wkkf.org

John D and Catherine T MacArthur Foundation – Mitchell Wallerstein, Vice President for Programmes
5 offices; the Brazil office will be closing shortly.
See http://www.macfound.org

Charles Stewart Mott Foundation ¬– Maureen Smyth, Vice President
2 regional offices.
See http://www.mott.org

Foundations with a network of autonomous local partners

International Youth Foundation (IYF) – Don Mohanlal, Executive Vice President
39 autonomous local partners in xx countries. These are both the grantees of the ‘parent’ office and equal partners in an informal network.
See http://www.iyfnet.org

Open Society Institute (OSI) – Deborah Harding, Vice President
29 national foundations and two regional foundations which make grants in 27 countries in southern and west Africa.
See http://www.soros.org


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