How the Gates Foundation Approaches Resource Allocation

Have you ever wondered how the world’s largest philanthropic organization allocates their resources? Today, we’ll take a look behind the scenes at the Bill and Melinda Gates Foundation and discover the principles they hold to steward their resources well.

How We Work

To bring about the kinds of changes that will help people live healthier and more productive lives, we seek to understand the world’s inequities. Whether the challenge is low-yield crops in Africa or low graduation rates in Los Angeles, we listen and learn, so we can identify pressing problems that get too little attention. Then, we consider whether we can make a meaningful difference with our influence and our investments, whether it’s with a grant or a contract.

All of our strategies—more than two dozen across the foundation—have emerged through this process of identifying what we want to accomplish for people and where we can have the greatest impact. Once we commit to an area of need, we define our major goals and identify a clear path to achieving them.

How We Develop Strategy

In each of our divisions, we develop goals and strategies before allocating resources and making investments. We continually collect and share data on our progress, reflect on lessons learned and make course corrections as needed. Essential to this process is ongoing dialogue with our grantees and partners—which is embedded throughout our strategy lifecycle.

How We Make Investments

Within each strategy, which has an allocation of resources, we collaborate with grantee and partner organizations to develop proposals that align with our strategic priorities and the organization’s focus and capabilities. An important part of this process is reaching agreement on what success will look like for the investment.

We use a standard four-phase process to develop all of our grants and contracts. The duration of each phase depends on the complexity of the project as well as the capacity and geographic location of the prospective partner.

Phase 1: Concept Development

Our program officers work to identify ideas that support our strategic priorities, in consultation with foundation colleagues, researchers, policymakers and other partners in the field. This phase concludes with an internal decision that a concept is aligned to a strategy, and that we should proceed with development work.

Phase 2: Pre-Proposal

We use a variety of ways to explore and refine concepts, with the help of organizations in the field. Regardless of the approach, we remain committed to understanding the perspective of others, in order to further shape the proposed body of work. This phase ends with the decision to solicit a grant or contract proposal.

• Direct solicitation—When we know that an organization is well-suited to perform the work, we directly solicit an early phase concept memo or proposal.
• Discussion—In some cases, we invite one or more organizations to discuss the concept with us and explore their interest together with their capacity to undertake the work. If the organization has the expertise, capacity and interest, we will invite them to submit a concept memo or proposal.
• Request for proposal (RFP)—When we want to broaden our network or fund multiple organizations for a project, we may issue an RFP. Public RFPs are posted on our website; private RFPs are directed to specific organizations.

Phase 3: Investment Development

We give applicants guidelines and templates for developing a proposal, a budget, and a results framework and tracker. A program officer reviews submitted materials with internal and, at times, external experts and works with the applicant to integrate recommended changes.

We also complete our due diligence, confirm the applicant organization’s tax status, determine how to structure the transaction and assess risk. Our legal and financial analysis teams may also participate during this phase.

A foundation executive makes the final decision about whether to fund the proposed grant or contract. Before funded activities can commence, the foundation and the partner organization sign an agreement that includes intended results, targets, milestones or reporting deliverables and a payment schedule.

Phase 4: Management and Close

During the life of an investment, the program officer and partner discuss how they will work together and keep in close communication to understand the progress and challenges of ongoing work. By maintaining quality interactions with clear and consistent communication, they are able to share feedback early and often.

Occasionally a program officer or foundation staff member will participate on advisory committees, and occasionally they take a seat on the board of the organization.

At the end of the project, the partner will work with the program officer to submit a final report that summarizes the results achieved and lessons learned.

How We Measure And Evaluate Results

From the outset of the grantmaking process, we work with partners to define the overall results we hope to achieve and the data needed to measure those results. We call this approach Outcome Investing.

To give our partners flexibility in how they achieve results, we do not require them to report on all of their activities. Instead, we focus on purposefully measuring the most critical metrics of progress that support continued learning, adjustment and alignment. However, the nature and frequency of measurement depends on the type of work. For example, scientific research projects may be measured differently than efforts to expand vaccine coverage.

Our foundation evaluation policy sets out parameters for evaluation, and it explains how and why we use evaluation and where variation is warranted. We acknowledge the ongoing debate about evaluation methods in many fields in which we work. We avoid one-size-fits-all prescriptions and strive to make selective, high-quality evaluation an integral part of how we carry out our work.

A complete version of this explanation originally appeared on the Bill and Melinda Gates Foundation website.