The $40 Billion Funding Gap: How Companies and Philanthropy can Scale Impact

Corporate sustainability teams face a seismic shift. For years, companies partnered with bilateral donors like USAID, FCDO, and GIZ to amplify their sustainability efforts worldwide. Yet Official Development Assistance (ODA) is projected to fall by up to $40 billion between 2023 and 2027, as the US and other traditional donors gut their foreign aid programs[i]. The consequences will be staggering: a recent Lancet study found that the USAID shutdown alone will result in more than 14 million preventable deaths by 2030. Beyond the tragic human toll, the decline in foreign assistance threatens co-funding and technical expertise that many companies rely upon to reach their sustainability targets.

Legitimacy and Trust – critical drivers for success

It is no secret that the public remains skeptical of corporate social impact and sustainability initiatives. Greenwashing accusations have sunk many brands, and communities around the world remain wary of outreach efforts and programming. Partnering with government funders used to provide critical legitimacy to build trust with local governments, civil society, and community groups. While USAID-corporate partnerships may not always have been a cakewalk, they resulted in stronger agricultural supply chains, increased innovation, and better transparency in emerging markets. Those key sources of insight and foot in the door has just disappeared.

With government funders scaling back, the question isn't whether corporates should engage private philanthropy—it's how. Corporate sustainability leaders who master private foundation partnerships will gain a competitive advantage as traditional government funding wanes.

 The Feeling is Mutual

For decades, bilateral donors provided foundations not only complementary funding to scale ambitions far beyond the scope of a single foundation, but also in-country presence and operating capability. USAID in particular offered depth of reach to foundations headquartered in the US. Multinational companies—with their global reach and strong operational capacity—are uniquely positioned to help fill this gap for philanthropy. Corporate supply chains in agriculture, manufacturing, fisheries, and critical minerals often operate in the rural communities across Africa, Asia, and Latin America that foundations seek to reach.

Our work supporting corporate clients to identify high-value partnership opportunities has highlighted several key benefits of working with philanthropy:

• De-risk innovation: Innovation is the lifeblood of growth yet is inherently risky. Foundations can help absorb early-stage risk for innovations with broad societal benefit, allowing companies to pilot bold sustainability solutions. For example, CATL (the world's largest battery manufacturer) partnered with the Ellen MacArthur Foundation to develop a circular battery economy, creating opportunities across the entire battery value chain. Pharmaceutical companies have worked with the Gates Foundation for decades to help derisk drug development for the poor, yielding innovations that have saved millions of lives, including the first vaccine for malaria with GSK.
• Accelerate adoption: Philanthropic investments in policy, infrastructure, and human capital can smooth the road for corporate initiatives. The Alliance for the Green Revolution in Africa (AGRA) with support from the Gates, Mastercard and Rockefeller foundations, is working to accelerate the adoption of improved seed varietals by smallholder farmers. By serving as a 'one-stop shop,' AGRA is accelerating market demand for improved seed varietals, such as high yield maize seeds from Bayer Crop Science.
• Strengthen credibility: Trusted foundation partners lend legitimacy, helping companies navigate skepticism and build stakeholder trust. In our work managing The Tuna Consortium, we have helped strengthen local fishing communities’ trust in the commercial fishing industry, partnering with government and civil society to ensure sustainable tuna harvest strategies in Indonesia. The Walton Family Foundation has been a critical convening partner, bringing stakeholders together.

Seizing the Opportunity

The $40 billion funding cliff creates a narrow window for corporate sustainability leaders looking to improve lives and drive impact. Companies that build foundation partnerships in the next 12-18 months will secure access to resources, expertise, and credibility that competitors cannot readily replicate.

Don’t know where to start? Here are three steps to get started:

1. Assess current partnerships and sustainability priorities. How do you currently find and vet potential partners? How successful have past partnerships proven? What are the critical sustainability and impact goals where you need support to make gains?
2. Map foundation alignment. Which private foundations share your impact objectives, target geographies and populations?
3. Assess your partnership readiness – Do you have the capabilities to provide a strong value proposition to philanthropy? Are your internal teams set up to work with philanthropic systems and expectations?

We’ve developed a detailed diagnostic to help you map your foundation partnership potential. Get in touch if you’d like to walk through it.

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Resonance is an award-winning sustainability and impact advisory firm, working with leading companies, governments, and philanthropies to deliver impact and advance sustainable prosperity for all. 

[i] OECD