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Funders have long encouraged collaboration among their grantees, but historically they have been far less enthusiastic about collaborating with each other. That’s perhaps understandable given that effective collaboration means surrendering a degree of control, and many donors are loath to do that.
But, done well, effective funder collaboration can have outsize impact at scale. This is being increasingly recognized by foresightful donors and those who influence them, and has led to growing interest in collaborative funds, in particular.
While this growing interest is welcome, there is little agreement on the best way to establish collaborative funds. As a result, the way they are set up is often quite haphazard, driven more by donor interests than by the needs of those they aim to serve. A more systematic approach could unlock even greater impact.
The Appeal of Collaborative Funds
Collaborative funds have distinct advantages over traditional, single-donor philanthropy:
- Larger-scale impact: By pooling money from multiple donors, collaborative funds can tackle large, complex problems that would be too big for individual donors to address alone.
- Shared expertise: Funders benefit from collective wisdom and specialized knowledge, leading to more informed and strategic giving decisions.
- Streamlined access for grantees: Grant-seeking nonprofits can engage with multiple funders through one entity, reducing the administrative burdens that come with donor engagement, applications, and reporting.
- Inclusive, equity-focused funding: These funds are often more effective at directing resources to historically marginalized groups and movements, influencing the broader philanthropic sector in the process.
How Collaborative Funds are Launched Matters
Although there are now hundreds of collaborative funds covering issues from humanitarian assistance to modern slavery to gender justice, little attention has been given to the mechanics of launching such a fund. Having helped establish and advise several, I’ve observed three primary approaches, each with its own strengths and challenges.
1. Sole Funder Founder: A Lead Donor Sets the Stage
A single philanthropist or foundation conceives a bold idea and invites others to join. This model ensures a clear vision and often leverages a road-tested program or intervention, but it can face resistance from potential funders who may perceive it as “someone else’s initiative,” especially that of a well-endowed foundation.
The END Fund, initiated by the Legatum Foundation in 2012, began as a focused effort to combat neglected tropical diseases. While it took time to bring others on board, the fund ultimately scaled successfully, demonstrating the power of a single donor’s leadership. It has now raised over $500 million and provided nearly 2 billion treatments in 30 countries.
2. Funder Co-Creation: A Partnership From the Start
Multiple funders join forces from the outset, collaboratively shaping the fund’s mission, governance, and strategy. This model enhances buy-in but requires extensive coordination and alignment of donor priorities.
The Freedom Fund emerged from a collaboration between Legatum, Humanity United, and Walk Free Foundation to address modern slavery. They collectively agreed on the theory of change – with a very clear focus on shifting power and resources to frontline organizations in the Global South – and each committed an initial $10 million over five years. The result was a new fund with an ambitious mission, significant start-up capital and donor legitimacy which has now raised over $230 million.
In another example, Co-Impact was launched in 2017 with the objective of funding local changemakers to make health, education, and economic systems stronger and more inclusive, with a specific focus on gender justice and women’s leadership. Initial capital exceeded $500 million, with a group of several launch partners including the Gates Foundation and Rockefeller Foundation.
3. Community-Led: Found First, Fund Later
In this model, community and nonprofit leaders identify the need for a collaborative fund and take steps to establish it before securing funding commitments. This approach can help ensure the fund is designed to be responsive and accountable to the communities it aims to support, and it puts all donors who join on equal footing. But it can present a higher barrier to attracting funders, who may be reluctant to join an initiative they didn’t help design.
A group of Canadian activists guided by the concept of Ubuntu founded the Foundation for Black Communities in 2020. They wanted to build a community-led model where local experts made collective decisions resourcing Black communities. Through collective advocacy, the Canadian government awarded the Foundation a historic $200 million.
Growing a Collaborative Fund: The Role of Different Donor Types
Launching a fund is just the beginning. Its long-term success depends on attracting and integrating different types of donors over time.
- Early adopters: These funders join within the first year or two, validating the concept and providing momentum. They are often drawn to the pioneering spirit of a new initiative. At the Freedom Fund, a handful of individual and foundation funders signed on in the first year, giving us momentum to begin grantmaking and confidence that the model was scalable.
- Restricted partners: Some funders prefer to earmark their contributions for specific programs. While their support is valuable, intentional structures, such as discreet engagement offerings for unrestricted vs. restricted funders, may be required to prevent mission drift. A few of the Freedom Fund’s donors restricted their initial giving to a particular program or geography due to the limitations of their funding portfolios or a hesitance about giving through an intermediary. Some eventually transitioned their involvement to unrestricted grants.
- Tried-and-tested funders: Typically large foundations or government entities, these funders wait for a proven track record over a number of years before committing. Their involvement can bring stability and credibility to an established fund, but they may require more engagement and convincing than earlier adopters. Often these donors come in at a tipping point moment, when a fund is growing rapidly and has developed strong evidence of impact.
A Call for a More Systematic Approach
While collaborative funds have already demonstrated their value, there is an opportunity to improve how they are launched and scaled. Bridgespan, Gates Foundation, Philanthropy Together, and others have made strides in tracking and making the case for support for established funds, but those looking to launch new funds are faced with an overwhelming series of choices. Better analysis of how existing funds were formed and the consequences of those decisions might help them to navigate the start-up process with greater clarity.
Once established, fund leaders spend a considerable amount of time seeking out the right donors. I know from experience that identifying funders who both care about an issue and understand the value of the collaborative funding model can be an all-consuming task. One solution could be a marketplace or incubator — a structured mechanism to match interested funders with collaborative funds, similar to the role Y Combinator plays for startups. Such a platform could reduce inefficiencies, help donors to find promising initiatives, and ensure that more funds are built on strong foundations from the start.
While the case for effective collaborative funding is clear, a collaborative fund’s long-term impact will be shaped by the way it is launched and the funders who join along the way. By sharing more openly about the origin stories of highly impactful funds, and by fostering more structured pathways to fund formation, philanthropists can ensure collaborative funding models thrive, driving greater impact at scale.
Nick Grono is CEO of The Freedom Fund and author of “How to Lead Nonprofits: Turning Purpose Into Impact to Change the World.” Find him on LinkedIn.
Editor’s Note: CEP publishes a range of perspectives. The views expressed here are those of the authors, not necessarily those of CEP.
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