As Foreign Aid Dwindles, Rockefeller Foundation Aims to Fill a Void

(John Moore/Getty Images)

Key Points

• The dismantling of USAID and cuts by Western nations could lead to over 14 million deaths by 2030, according to a Lancet analysis.
• A new philanthropic model emphasizes developing nations leading their own development, with organizations like Rockefeller facilitating high-risk investments.
• Mission 300, a World Bank and AfDB initiative, aims to provide electricity to 300 million people by 2030 through public-private partnerships.

President Donald Trump’s administration dismantled the $40 billion U.S. Agency for International Development earlier this year, and other Western countries, including Britain and Germany, followed with their own cuts to foreign assistance.

The fallout from billions of dollars in lost funding to global healthcare and food aid programs for countries throughout Asia, Africa, and Latin America, is expected to be severe. A June 30 analysis by the Lancet —an international, independent research publication—concludes the destruction of USAID alone could lead to more than 14 million deaths by 2030.

Rajiv Shah, president of the $6.2 billion Rockefeller Foundation and head of USAID for five years under President Barack Obama, sees the crumbling of foreign aid as a tragedy. Yet he argues that a new model that relies on developing nations themselves is emerging.

Countries throughout Asia, Africa, and Latin America are “stepping up and trying to show more leadership, more accountability, more responsibility for funding their own development, their own health, their own disease control priorities, and their own efforts to feed and educate their kids,” Shah said in an interview.

What’s the role of wealthy donors and foundations such as Rockefeller as low and middle-income countries take the reins of their own development? Stepping in to replace desperately needed funding is important—and philanthropic advisers have been counseling individual donors to keep money flowing to the causes they support. Earlier this week Mackenzie Scott reportedly gave $60 million to the Center for Disaster Philanthropy as the Trump administration steps back from disaster aid through the Federal Emergency Management Agency.

But even a large, wealthy foundation such as Rockefeller doesn’t have enough cash to make a dent in lost government funding.

Rockefeller’s strategy—which predates the current shortage in foreign aid—has been to facilitate efforts by governments, development finance institutions, and the private sector, with philanthropic and concessionary investments (i.e. those that may deliver little financial return) and by coordinating all kinds of actors in pursuit of larger goals.

As Shah explains, philanthropy’s role is to “spend the super high-risk money to do things that might not work, study the impacts,” and then with breakthrough, promising solutions in hand, to build partnerships with governments, entrepreneurs, technology partners, and other philanthropists to scale it up.

An example of how Rockefeller’s approach to philanthropy meshes with this new model for development aid is Mission 300—an initiative of the World Bank and the African Development Bank (AfDB) to bring electricity to 300 million people by 2030. About 600 million Africans currently don’t have access to electric power.

Rajiv Shah, president of the Rockerfeller Foundation Photo: Photograph by Nate Palmer

When it launched, the World Bank (with up to a $40 billion commitment) and the AfDB (with an $18.2 billion commitment) knew the initiative would require a broad coalition of African governments, funders, and philanthropic partners if it was going to meet its goals, according to Erik Fernstrom, co-lead of Mission 300 at the World Bank.

At the core of Mission 300 are national energy compacts created by the governments of Zimbabwe, Ethiopia, Kenya, Sierra Leone, and many others, in cooperation with the World Bank and AfDB. The compacts detail how they plan to expand access to affordable electricity throughout their countries.

But they don’t just focus on electricity connections—they also include goals such as increasing access to clean fuels for cooking or boosting allocation to clean energy, and they outline how much capital they need.

“It involves the power grid, it involves reforms, it involves private sector enabling,” Fernstrom said in an interview. To make all this happen, Mission 300 includes “compact delivery and monitoring units” installed within a core division of each government to execute the investments and reforms essential to the program.

That’s where philanthropy steps in. Rockefeller, the Global Energy Alliance for People and Planet—a philanthropic platform the foundation seeded and then co-founded along with the Bezos Earth Fund and the IKEA Foundation—and Sustainable Energy for All, an international nonprofit hosted by the United Nations Office for Project Services, “are like one big team of people to try to figure out the strategy for achieving that 300 million goal,” says Andrew Herscowitz, CEO of the Mission 300 Accelerator at Rockefeller’s RF Catalytic Capital unit.

These philanthropies “have been a key partner to this,” Fernstrom agrees. They are “interfacing with governments on the delivery units, financing, staffing, identifying needs, and setting it up.”

The seeds of Mission 300 go back to India when Rockefeller worked with a group of partners to develop distributed renewable electrification strategies to reach communities without power in the northern part of the country’s Bihar state, near Nepal. There, Rockefeller’s private-sector partners “innovated solar mini-grids with battery backup and remote AI management and got the cost down of providing electricity to those communities to 15/16 cents a kilowatt hour,” Shah recalls.

The projects in India—which Shah estimates Rockefeller funded with about $100 million over a decade—also gave the foundation experience in creating public-private programs with “the right degree of public subsidy and the right degree of private capital and the right kind of philanthropic engagement,” he says.

The foundation took that model to Africa in 2021 as it partnered with the International Finance Corp. (IFC), the World Bank’s private sector arm, to invest $150 million in catalytic capital intended to spur $2 billion in private investment in distributed renewables in sub-Saharan Africa. That model became the basis for Mission 300.

The foundation also incubated the Global Energy Alliance through its RF Catalytic Capital arm and co-founded it in 2021, providing $500 million in funding. The purpose was to create “a platform that could facilitate this kind of collaboration,” Shah says.

For all this effort, Rockefeller’s actual monetary contribution, while significant, is relatively small compared with Mission 300’s likely cost “north of $100 billion,” Shah says. But it’s how philanthropy works to effect change.

“Our initial money is designed to catalyze others to do what they can do to help us all achieve the goal,” he says.

The foundation’s approach to Mission 300 could create a road map for tackling other thorny global challenges. A 34-country survey commissioned by the foundation in late summer found 75% globally “would support international cooperation if proven to effectively solve global problems.”

But, globally, this support weakens to around 60% when it comes to trusting institutions that facilitate international cooperation, such as the United Nations or World Health Organization.

“The new global cooperation architecture that we hope to inspire is grounded in countries showing leadership and accountability themselves,” Shah says. And, it should involve “nations coming together with the private sector and saying, ‘What can we do to make this model succeed?”

For Shah, that means all parties “making targeted aid investment in collaborations like Mission 300.”

Some critics such as Germanwatch, a research-based nonprofit focused on sustainable global development and society equity, take issue with Mission 300 for its reliance on the private sector, saying, “without adequate regulation and tax frameworks, privatization tends to prioritize corporate profits over public welfare.”

But Shah counters that public-private partnership is the way to solve big problems, like lack of access to electricity, healthcare, or nutrition.

“Mission 300 is about reaching people who are trapped in poverty because they don’t have access to low-cost production of electricity,” Shah says. “We build public-private partnerships to serve people who are vulnerable and that’s different from what I think a commercial enterprise would do on its own.”

Write to Abby Schultz at abby.schultz@barrons.com