Financing the Sustainable Development Goals to achieve all the SDG targets is an international endeavor of huge scale. Some estimate that scale to be $6 trillion annually in order to reach those lofty goals. Unfortunately, there appears to be a large funding gap to achieve the SDGs by the year 2030.
According to the Addis Ababa Action Agenda, that gap is $3 to $5 trillion in annual investment needs.
It’s clear that there is a need to better mobilize capital, whether that’s through blended finance initiatives, a bigger influx of impact investing financing, activating the power of foundations, or simply more overall financial collaboration across the world.
Before diving into how foundations can contribute to solving this issue, let’s examine the funding problem at a deeper level.
Achieving the SDG Targets Isn’t Just About Capital
Innovative solutions, programs, and other interventions need to be scaled up massively to shift the unjust systems of poverty, infrastructure, etc. which the SDGs attempt to address.
Like a plant needs water, innovative solutions (almost always) need an infusion of capital to be able to grow exponentially. But what happens when there is too much water and not enough plants? That’s the issue facing the sector of SDGs development.
It’s easy to think that the aforementioned gap is inherently about lack of available funds for the SDGs. This really isn’t the case. The capital exists. It’s just slow to move. Why?
It’s a balancing issue of supply and demand. High-impact projects lack visibility and there simply aren’t enough of them. So while we have the demand for projects to invest in, there simply aren’t enough high impact projects out there ready for that capital investment.
In this evolving market the public and private sector have roles to play. Non-profits and foundations must do their part as well. Thinking about this latter group, it’s worth asking, How might foundations play a bigger role in reducing this gap?
Financing the Sustainable Development Goals Through Foundations
Foundations already play a significant financial role in the effort to achieve the SDGs and some conservatively estimate their contribution will reach nearly $400 billion by the year 2030.
One well-known foundation leading the way is the Bill & Melinda Gates Foundation, which has contributed nearly $9 billion in SDG-aligned funding in recent years. They created the Goalkeepers initiative, a global catalyst to accelerate our progress towards achievement of the SDG Targets.
And yet, foundations across the world still need to do more to increase their spending in an intelligent way in order to increase the impact generated by grantees. On both the supply side (projects, grantees) and on the buyer side (foundations) players must be empowered to develop more informed strategies.
3 Ways Foundations can Increase Spending Intelligently:
Here are three ways that can be done for achieving the SDG Targets:
1. Leveraging the SDG Indicators
The first way this can be done is through more refined alignment with the relevant SDG each side aims to address. The vast majority of SDG-aligned funding goes towards “Good Health” and “Quality Education,” goals number 3 and 4.
Using the SDG Indicator Wizard, a tool from the Foundation Center, the relevant indicators can be obtained for whatever goal an organization wishes to address, and the first step in streamlining collaboration is accomplished.
Because it’s essential that foundation and grantee are able to speak the same impact language (i.e. indicators). Due diligence processes, accountability measures, and shared reporting documents all become much easier to manage.
Impact isn’t just built on passion, it’s also built on efficiency, and efficiency on shared understanding.
2. Empowering grantees with more visibility
Getting a potential high-impact project in front of the right eyes can be the difference between achieving scalable impact or not. What is a foundation’s role in that process?
Of course, the foundation can leverage its own brand to give more credibility and visibility to its grantees. But it could also collaborate in the reporting process, lending resources, expertise and tools as part of the grantee relationship.
One way to achieve this would be through a cloud-based data management platform like the Sopact Impact Cloud. On such a platform, both foundation and grantee have access and ability to house and analyze impact data. And to create reports based on those analyses.
Both sides can manage quality control, communication strategy, etc. Again, there is greater efficiency here.
3. Improving grantee performance through better data management
Leveraging data is ultimately about creating better outcomes for beneficiaries. For a grantee, better outcomes also means they become a more enticing, high-impact potential investment because they are essentially performing better.
Thus, a foundation can either lead by example, use and share impact data tools with its grantees. Or suggest their use. Or screen investments based on how potential grantees are using or plan on using their data.
Without well managed data there is little to be done to assess how scalable an impact intervention may be. That’s why it’s so important for grantees to be managing their data well, and for foundations to either demand such management or support its implementation.
Conclusion: Making the SDG Targets Achievable
Foundations worldwide are sitting on a lot of money. And a lot of money is going to be needed to reach the goals set by the United Nations by the year 2030. But that’s not all that’s needed.
Impact projects need to be better managed, more able to scale. They need more visibility in the marketplace. A foundation sits at a unique place in this marketplace, able to work closely with grantees to achieve bigger and better impact outcomes at scale.
With the right tools, both parties can work together to make that kind of impact happen, and help the world at large inch a bit closer to achieving the ambitious agenda of the Sustainable Development Goals.
Learn More: SDG Reporting
Written by Alan Pierce
Alan is a social sector consultant and one of the founding directors of Quantica Education, a school of social entrepreneurship in Colombia.