Financing Big Change Networks

I was leading discussion by a half dozen executive directors of Global Action Networks on the topic of competencies critical to success when we turned to the question of resource mobilization. I was surprised that none of the leaders thought of financing as a major issue for them, in comparison to the other competencies.

“But what if you think about barriers to your network really flourishing and realizing its goals?” I asked. That moved the issue of financing to the top of the list of challenges.

The question of financing is wrapped up with stage of development discussed last week and featured in a webinar March 3. At early stages, less money is required and the question is about finding a venture investor to explore possibilities. Later stages require more funds and a sustainable business model.

Gathering finance information is very complicated for a network, since it requires defining what part of the network the data cover. As networks develop, most increasingly depend upon sub-parts (regional, particular program) raising their own funds. In May last year I surveyed 11 networks[1] ranging from 8 to 15 years of age with the initial question:

What was the total income (revenue) that came to/through the Secretariat for the most recent fiscal year including funds that may have gone to other parts of the network?

The response ranged from $500,000 to $11.4 million, with the average of $3.6 million.

Sources of Income

But the finance question is also wrapped up in strategy. Being multi-stakeholder, the networks could be expected to have tax-based contributions from government, civil society-based funding from foundations and revenue generation from services and fees. Table 1 gives responses to the question:

Please indicate the approximate percent of funds that flow to/through the Secretariat that come from the following sources.


Innovative Financing for Global Networks

New financing mechanisms for Global Action Networks (GANs) are being developed under the leadership of the Leading Group on Innovative Financing for Development. The Group’s work is already producing very significant funding for Stop TB, the Global Alliance for Vaccines and Immunization (GAVI), and the Global Fund to Fight AIDS, Tuberculosis and Malaria.

The Leading Group has a wider focus than GANs and health care. And although it has the word “development” in its name from when it was formed in 2006, it actually is evolving a much bigger agenda than that. The agenda is really around addressing globalization, the production of global public goods, and such objectives as the Millennium Development Goals (MDGs). The eight MDGs each focus on one issue, including poverty, gender equality, health and environmental sustainability.

Julien Meimon, Permanent Secretary of the Leading Group, explains that the goal is to generate “…flows that are stable, predictable and complementary to ODA (Overseas Development Assistance).” The financing is to come from beneficiaries of, and costs associated with, globalization, such as air travel, international financial flows, and CO2 emissions.

The Leading Group is a “coalition of the willing” to use George W. Bushes famous phrase. But this time, the US is so far absent and another 60 countries are committed. The Group itself, Julien stresses, is an informal umbrella structure that is producing formal and concrete initiatives. Julien is an employee of the French Foreign Ministry, and has a staff that ranges from three to 20, depending upon the needs. They are determined not to become an international bureaucracy themselves.

There are four mechanisms to date:

State Guaranteed loans: The Leading Group spurred the formation of the International Finance Facility for Immunization (IFFIm).By the end of 2010 nations will guarantee close to €4 billion in 20 year bonds to undertake immunization projects. The Group also produced $1.5 billion in commitments by governments and foundations to fund partnerships with pharmaceutical companies to research neglected diseases and provide affordable distribution of the drugs to the poorest countries. Mandatory Contributions or Taxes: International air fare taxes are funding UNITAID to buy drugs and diagnostics and negotiate significant reductions in prices of pharmaceutical firms. In its first three years with 13 countries participating, the taxes raised $1.2 billion. Norway has applied a kerosene tax to fund UNITAID. Voluntary contributions: In January, 2010 voluntary contributions were promoted with most air ticket purchases; McKinsey estimates the voluntary contributions could produce another $1 billion annually. Market mechanisms: Germany allocates 10 percent of the revenue from carbon auctions to development

These mechanisms fund existing formal organizations like the health GANs and generate formal organizations, like IFFIm and UNITAID to lead the activity.

Task Forces are investigating various other mechanisms. The biggest mechanism of all probably is yet to come. In June a Task Force will report the technical and juridical feasibility of taxing financial transactions. “The (Leading Group) countries have tasked experts to propose a menu of options for what tax or voluntary contribution should be promoted,” Julien explains.

A 2010 review pointed out: “there is a total flow of $777.5 trillion. With a minimal impact on transactions caused by the introduction of such a tax, a levy of 0.005% would guarantee approximately $33 billion for solidarity programs to combat hunger and extreme poverty.”1

The Leading Group arose from a report on mechanisms commissioned by French President in 2004 and a 2006 Paris Ministerial Conference. It is a type of GAN, bringing together 59 countries, various international institutions and non-governmental organizations. It is an “action research/learning” body. Meetings report back on experiments with application of the mechanisms to both share learning and promote their adoption by others. And they are also breaking the model of “development financing” in spite of their name, and moving to “global financing” for global public goods. For example, countries like Namibia, while net recipients, also apply the air tax and contribute to UNITAID.

The Permanent Secretariat is in Paris, but the Presidency rotates between countries every six months. Japan is taking the Presidency for a 2010 meeting that will be in Tokyo.

What type of mechanisms do you think should be promoted?

Funding Policy/ad.

Raising Billons to Address Globalization with Networks

There will be some form of taxation on international financial flows in the near future. Japan, France and Belgium announced their support for it today at the UN Millennium Development Goal Summit. Billions of dollars will be raised. What should be done with that money? That question behind a meeting I organized last week in Paris of a leading group of Global Action Networks (GANs) and the Permanent Secretary to the Leading Group on Innovative Financing for Development (LG).

I introduced blog readers to the LG last May. Founded in 2006, it comprises 61 nations plus some NGOs. The LG is not a funding mechanism in itself. Rather, participants set up funding mechanisms to funnel new funds, such as they have done with UNITAID to fund the Global Fund to Fight AIDS, Tuberculosis and Malaria. The LG is the forum where Japan, France, Belgium and others developed the financial tax flow proposal. Japan is current President of the LG, France permanent Secretariat of it, and Belgium is EU President. They presented their case for a tax on international financial flows in a report

Important goals for the LG are:

  1. Addressing negative externalities of globalizations…the bad outcomes
  2. Funding “development” which refers to the North-South aid tradition
  3. Raising funds that are (a) new, (b) of significant volume, and (c) stable and predictable.
  4. New funding that comes from those who benefit from globalization.
  5. Funding of the Millennium Development Goals (MDGs), with health being an historic focus and MDG education being the next priority

The broad frame for the LG’s work is global public goods production:

…public goods are those that share two qualities—non-excludability and non-rivalry, in economists’ jargon. This means, respectively, that when provided to one party, the public good is available to all, and consumption of the public good by one party does not reduce the amount available to the others to consume. Traditional examples of national public goods include traffic control systems and national security—goods that benefit all citizens and national private actors but that none could afford to supply on their own initiative.[1]

That’s what the GANs are producing. Those at Paris included the Fair Labor Association, Transparency International, ISEAL Alliance, Social Accountability International (SAI), Forest Stewardship Council, and Fairtrade Labelling Organizations International (FLO) the Global Compact also was a supporter. The Global Reporting Initiative, the Extractive Industries Transparency Initiative and The Access Initiative were keenly interested. These GANs are all giving life to standards (social norms and voluntary rules) that:

  1. Optimize the positive impacts of expenditures such as those associated with the MDGs,
  2. Address negative externalities of globalization,
  3. Support more equitable development globally,
  4. Work for an environmentally sustainable future,
  5. Develop sustainable wealth generation; and
  6. Nurture greater social cohesion – developing positive relationships between organizational sectors, across national boundaries and among diverse cultures.

Global Action Networks Addressing Globalization’s Bads

The GANs are doing the heavy lifting of defining, experimenting with, refining, and applying standards in the public interest. They are doing this in the very demanding cross-national boundary space, where there is no government authority. They are proving increasingly influential in governments’ mandatory standards. But they are anorexic – the needs and expectations far outstretch their resources.

So will the LG’s work like that with finance flows produce financing for GANs? SAI’s Alice Tepper Marlin made an insightful observation when she commented that the LG appears to be focused on only one half of the needed paradigm shift: how to raise money for global public goods. It appears that there is not sufficient attention to, and obvious financing for, efforts to ensure the effective use of those funds in ways that address underlying causes of the MDG challenges.

The GANs concluded that more investigation is needed, to see whether support can be built in the LG for their role in global public goods production. One hopeful sign is that the major conduits of funding to date with the LG focus on health care are GANs – The Global Fund to Fight AIDS; the Global Alliance for Vaccines and Immunization; the Global Alliance for Improved Nutrition; the Stop TB Partnership. This suggests that there is indeed recognition of the importance of applying funds through multi-stakeholder initiatives, rather than simply through governments and contracts with for-profit businesses.

Another hopeful point is the experimental, action learning nature of the LG itself. It is not burdened by the intergovernmental organization tradition of majority or consensus decision-making. Rather, if a country or small group of countries want to get together to investigate and advance an action, they do so. For example, the international financial flows tax will not be applied by all the LG countries or even a majority of them. The experiences of that group then are used by others to smooth broader adoption. That way of working means that if the GANs can obtain support of one or a few countries to create a Working Group, they can advance a strategy to provide them funding.

Realizing financial support for GANs appears to require 18 months or more of work. Paris meeting participants decided to pursue their investigation by getting more information from current participants in their networks; as well, with the same objective FLO’s Adrian Sym will attend the next meeting of the LG plenary in Tokyo Dec. 16-17.


A Funder’s Guide to Networks

My mind cried out “YES!” repeatedly as I read a succinct report titled Connected Citizens;  The Power, Peril And Potential Of Networks.  It is a wonderful summary of some networking basics.  And best of all, its target audience is funders and it was paid for by the Knight Foundation – and presented this month to a meeting of the Network of Network Funders!

11-04-20 Connected Citizens-2

The report’s starting point is (1) individual citizens and (2) communications technology.  So it doesn’t directly touch inter-organizational networks, and it asks questions specifically about implications of communications technologies.  Moreover, it focuses largely on American community-level examples.  But its well-formulated lessons provide some good guidance for global multi-stakeholder inter-organizational networks, too. 

Early on, author Diana Scearce compares the 1960s organizing of the farm workers union in the U.S., with the development of Linux as an open-source operating system.  Despite their technological contrasts, Diana gets at the essence of networking by pointing out that both are about “…aligning and coordinating their individual efforts to make a collective impact. Both models offer valuable lessons for community change today.”

The heart of the report describes five “…network-centric practices:

  1. Listening to and consulting the crowds: Actively listening to online conversations and openly asking for advice. 
  2. Designing for serendipity: Creating environments, in person and online, where helpful connections can form.
  3. Bridging differences: Deliberately connecting people with different perspectives.
  4. Catalyzing mutual support: Helping people directly help each other.
  5. Providing handrails for collective action: Giving enough direction for individuals to take effective and coordinated action.”

For me, the description of serendipity was particularly insightful.  “…ser­endipity means creating spaces that focus more on people and less on specific results.”  Diana points out that a magical contribution of well-functioning networks is emergence of the unpredictable.  For me, this should be a “both-and”:  the traditional linear connections and coordination,and the innovations that come from “stewarding” (yes, she uses that word as well) the space:  creating and holding “…spaces where members can fulfill their own and the community’s needs.”  People share a sense of community and purpose, but being narrowly driven by discipline around work plans is something much more associated with organizations, than networks (although networks “secretariats” are, of course, organizations in this case).  To get the real added value of networks requires serendipity. 

One of the five “network-centric practices” that didn’t seem to ring true for me with Diana’s individual citizen and communications technology-driven examples was “bridging differences”.  The examples seemed to me relatively weak.  One is CouchSurfing, an on-line “network connecting travelers with members of local communities, who offer free accommodation and/or advice.”   The other is Localocracy:  an “online town common where registered voters using real names can weigh in on local issues.”

It seems to me that bridging significant differences over time relies on much more sophisticated facilitation, capacity-development and intense face-to-face interaction than individual citizen-led virtual networks can provide…and certainly more than communication technologies can support. Also, to realize transformational change at significant scale really requires some sort of formal role for organizational participation.

Diana goes beyond the usual network euphoria, to give three scenarios for our future:

Digging Foxholes

  • A world of extreme distrust and polarization
  • People cocooning themselves according to their interest

Know Your Neighbor

  • Trusting, vibrant local communities with grassroots social action
  • Myopic at times


  • A hyperconnected, transient world
  • Stark class divisions

Diana ends with some specific recommendations for funders that all funders interested in realizing change would do well to read. 

With over-reliance on networks as virtual communications, I think that the “Digging Foxholes” seems pretty likely.  There needs to be strong support for the role of face-to-face in network development, as well.   Your thoughts?

Some Thoughts from Diana

Thanks for your thoughtful post, Steve!

In the report, we were working to tease out how the forces of increased interconnectedness, decentralization and transparency are playing out today, what might happen in the coming years, and what this means for investing in citizen engagement. New communications technologies are, of course, an important part of the equation – but not the whole the picture. Our interest is how are – and will –people be connecting to create the change they care about in their communities.

While I agree that face-to-face time is critical to building trusted relationships, I don’t think it’s an either /or. People will be connecting fluidly through multiple venues and vehicles, different people will have different preferences for how they connect, and in most cases, there will be a range of online and offline. For example, Localocracy sets up digital forums for each town in which they’re operating. They go into communities where there are local leaders, like a city official or a news organization, who are willing to partner and actively engage residents with diverse perspectives in the conversation. Their intent is to create an additional space for engaging in public deliberation that is integrated with the live local community and in-person dialogue.