McLeod Group blog by Hunter McGill and Lauchlan T. Munro, April 16, 2020
Aid-funded efforts to promote human rights, gender equality and good governance overseas have encountered many problems over the years. Impediments include low levels of funding, changing donor priorities and a projectized approach that supports individual, time-bound initiatives without building organizations, systems or movements.
A recent Canadian initiative, the Equality Fund, seeks to change all that. With financial support from public, private and philanthropic sources, the Equality Fund will invest in initiatives and organizations using a gender and impact investing lens. Then, it will make grants to feminist organizations out of the returns made on those investments.
The goals of the Equality Fund – gender equality, strengthening of feminist organizations and networks, strengthening of feminist grant making – are entirely laudable. The Equality Fund’s current design-and-build phase has been characterized by extensive consultations with stakeholders. Creating the Equality Fund is an ambitious and innovative step.
But, as with all new initiatives, there are questions to be answered. In a spirit of solidarity, this blog aims to untangle what is really new about the Equality Fund and to ask key questions that the new Fund will have to address.
The Equality Fund’s business model is a clear break from the norm of Canadian development NGOs, which often depend on the federal government for much, even most, of their funding, year after year. In fact, the MATCH International Women’s Fund – the organization at the core of the Equality Fund – almost died a few years ago precisely because of a lack of government funding. Lesson learned?
The Fund is described as a collaboration between government, investors, philanthropists, activists and donors to increase funding for positive change for and by women in the global South, through a new business model centred on “legacy investments”. These investments, it is hoped, will make the Fund less dependent on bilateral donors, especially the Government of Canada, whose frequent shifts in aid policy are well documented.
The Fund will promote feminist causes both through its upstream investments and its downstream grant making. Basing its investment decisions on feminist and environmental principles is a positive step, and one that not all philanthropic foundations have taken. The grant making also promises to have novel (or, in some cases, retro) elements, such as core funding for feminist organizations in the South and more “flexible funding”. Business as usual this is not.
To describe this new enterprise, the Equality Fund’s website uses hyperbolic language, claiming that the Fund is using “cutting edge” practices and promising a “break from traditional paradigms” to forge “new models”. This is pretty grandiose language for an organization that plans to make only $80 million in grants in its first four years, while taking 15 years to raise an endowment of $1 billion.
At the same time, the Equality Fund appears quite orthodox, promising “best practices” (hard to square with being “cutting edge”) and featuring a consortium of ten Canadian and one African organizations, under Canadian leadership. If the Equality Fund is to support systemic change and improvement for women, i.e., going beyond income-generating opportunities, and if the scope of the Fund is to cover other regions as well, voices from other regions will be needed to guide policy and programming decisions.
To its credit, the Equality Fund has already started consultations with Southern feminists and serious efforts are underway to attract experienced individuals to the Fund’s board and advisory committees. But for the moment, it remains a Canadian-centred effort.
Global Affairs Canada (GAC) has committed up to $300 million and serves, for the moment at least, as the anchor investor with around 75% of contributions to date. While GAC’s contribution to the Fund is not designed as a permanent endowment, given the size and nature of its contribution, one may ask to what extent the Equality Fund will be a truly independent entity, rather than another implementing agency for the GAC’s Feminist International Assistance Policy.
Moreover, what scope for truly independent action will the Equality Fund have if GAC can pull out its money if it determines that the Fund has failed to meet the performance criteria? More positively, might future negotiations allow GAC to contribute to a permanent endowment, thus providing the Fund with both predictability in funding and operational independence?
Questions also arise concerning the rather complicated business model. What will the criteria be for the investments to be made? Will, for example, the common standards of the ethical investment movement be applied? One of the proposed instruments, social impact bonds, has proved controversial. Mixed financing, as adopted by the Fund, is a complicated undertaking. In addition, it is not clear if mixed funding means new contributions from aid and philanthropic sources, or just recycled old money. How will grants, commercial investments and impact investments be managed and what are the possibilities for the profits to flow to women’s organizations? How will tough decisions be made regarding investment returns, especially in the context of enormous financial risk and volatility, which may not be short term in nature.
Finally, now that the former MATCH International has become the Equality Fund, how will its previous strengths be preserved? MATCH combined daring and a willingness to learn from experience with a dedication to systemic change in gender relations. We hope these traits will be preserved in the new consortium, which includes such traditional actors as the Royal Bank of Canada.
Other donor countries that have adopted or are considering a feminist orientation to their development cooperation programs will be interested to learn of Canada’s experience with the Equality Fund. Feminists in the South will also be watching this interesting experiment closely. Let us all hope that the result will be worth replicating.
Previously chief of peer reviews at the OECD Development Assistance Committee, Hunter McGill is Senior Fellow at the School of International Development and Global Studies, University of Ottawa. A former international civil servant, Lauchlan T. Munro teaches at the University of Ottawa’s School of International Development and Global Studies.