Leverage

Overview

The ancient Greek mathematician Archimedes once said that if he only had a proper fulcrum, he could use a lever to move the Earth. The Rockefeller Foundation uses its own form of leverage to move the world in different ways—employing our funding, expertise, innovations, and influence to create change beyond what the Foundation’s resources could accomplish on their own. Optimizing our finite financial and organizational investments is especially important today: the collective financial resources of philanthropies are relatively small compared to that of government or the private sector.

How the Foundation Uses Leverage

  • Catalyzing new and different investments from more sources. By providing seed funding for promising endeavors in the form of grants or investments, The Rockefeller Foundation takes on upfront risk and deploys flexible capital with the goal of bringing in additional resources from other sources including the private sector and government agencies. For example, we worked to build the infrastructure of the field of impact investing, which has since attracted funding and investments from other philanthropies and institutional investors alike.  Our early funding of urban resilience has stimulated a robust and growing collaboration of public and private investment in infrastructure projects and is spurring billions in additional funding far beyond our initial investments.
  • Ensuring existing funding is spent in the most effective ways. We work to influence and inform government policy and ensure that existing or new funding pools for development-related efforts are used effectively. In the United States, for instance, our initial investments for the Rebuild by Design initiative and National Disaster Resilience Competition has steered the use of nearly $2 billion of government funding to build resilience in communities throughout the country, and has also infused resilience thinking and approaches throughout the U.S. government.
  • Using our influence as a thought leader and convener. Our global brand gives The Rockefeller Foundation a unique ability to help to focus attention on a given issue area or catalyze further action around critical solutions through Foundation-sponsored conferences, networks, research efforts and other avenues, including our conference center in Bellagio, Italy.  For example, we were an early advocate for the concept of universal health coverage (UHC), which led to the United Nations’ unanimous support of UHC and the creation of the Joint Learning Network for Universal Health Coverage that includes two dozen countries.
  • Capitalizing on tipping points to bring about broad systemic change. Finally, The Rockefeller Foundation’s use of leverage includes a strategic focus on scalable solutions—thereby leveraging the impact of successful projects—and leveraging tipping points to bring about broad systemic change through targeted initiatives. An example that employs both of these approaches is our Smart Power for Rural Development initiative. This initiative focuses on a key bottleneck to development—the lack of access to electric power in rural areas of developing nations—by creating a model through which concessionary loans encourage the creation of energy-service companies and help find anchor users to create a sustainable market for local mini-grids. The electricity produced by these mini-grids can then be extended to small enterprises and individual residents, leading to greater business productivity, safer conditions, and more opportunities for learning and making a living.

Impact Investing and Innovative Finance

"Private capital is a powerful tool for helping to solve humanity’s greatest challenges—which is critical, because philanthropy and government only have billions between us. Yet, private markets hold an estimated $210 trillion—$80 trillion in pension and institutional funds alone."

Judith Rodin, Rockefeller Foundation President

The Evolution of Leverage

  • When The Rockefeller Foundation underwent a comprehensive strategic reframing early in the 21st century, our ability to use our unique global brand as a source of leverage was identified as a key asset. As the Foundation’s strategic framework evolved, this concept came to include the leveraging of other public and private resources to amplify and extend the impact of our own efforts, as well as leveraging the Foundation’s influence and expertise to convene global actors, focus attention on critical issues, and jointly implement solutions.
  • The Rockefeller Foundation’s Rebuilding New Orleans initiative, launched in April 2006 to support the post-Katrina reconstruction of New Orleans, was one of the Foundation’s first 21st-century projects to leverage governmental resources on a significant scale. An early Foundation commitment of $3.5 million—part of a broader support effort that would eventually total $22 million in Foundation funding—served to jump-start the drafting of a rebuilding plan that in turn unlocked billions of dollars in Federal funding to the city.
  • Also in 2006, the Foundation leveraged its capacity for risk-taking to launch the New York City Acquisition Fund, a partnership that opened the door to private investment in projects to develop affordable housing in New York City.
  • In recent years, as the Foundation has increased its emphasis on promoting systemic change, we have focused more intently on leveraging our influence and resources around “tipping points” in specific project settings and cross-cutting issue areas. These areas include universal health coverage; enhancing resilience in the face of climate change; promoting models that accurately account for the economic value of our ecosystems; developing innovative financing mechanisms to unlock private capital to improve the lives of the poor or vulnerable (such as protecting smallholder farmers from weather-related losses); and providing seed funding and leadership for systems that can detect and forestall emerging disease epidemics.
  • At the same time, the Foundation has continued to refine its use of leverage to channel, maximize, or find more impactful ways to spend public and private sector resources. Our participation in the NYS2100 Commission, for example, has played a significant role in guiding New York State’s resilience building strategy.

The Rockefeller Foundation has also steadily expanded its efforts to leverage its role as a convening organization. For example, a series of Foundation-sponsored international forums at its Bellagio Center in recent years has helped catalyze activity around such critical issues as planetary health, resilience, impact investing, and inclusive economies.

Learn More About The Bellagio Center

Leverage in Action

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Rebuilding New Orleans—Launched in 2006

Why This Initiative?

As New Orleans began the first steps of recovery following Hurricane Katrina, the city hit a funding bottleneck: In order to qualify for the significant U.S. government aid it had been promised, New Orleans had to develop a citywide redevelopment plan that met strict federal and state criteria. The Rockefeller Foundation, which had already committed $2.5 million to the city’s rebuilding effort through grants and program-related investments and had an active presence there, was asked by Louisiana state and local leaders to provide financial and logistical support for this stalled planning process. Seeing the potential for leveraging substantial additional funds and achieving a system-wide impact on the city’s planning process, the Foundation agreed.

The Solution

Moving quickly, in April 2006 The Rockefeller Foundation committed $3.5 million to cover the costs of developing a citywide comprehensive land use plan—the Unified New Orleans Plan (UNOP). This effort was the start of what would become a $22 million Foundation commitment to support New Orleans’ rebuilding process by strengthening the city’s organizational and operational capacity. That investment created leverage for hundreds of millions more in government, philanthropic and private capital invested early in the UNOP.

Using Leverage to Achieve Change

In addition to providing essential support funding for New Orleans’ recovery plan, The Rockefeller Foundation also leveraged its expertise to guide the drafting of the plan itself. Our staff recognized that a state-of-the-art planning process and a new citywide land use plan would be the most powerful force for advancing and sustaining New Orleans’ recovery. While the ultimate rebuilding effort involved significant resources from across the philanthropic, governmental and private sectors, the early commitment of the Foundation’s targeted philanthropic dollars, along with its leadership, shaped the substance and the tone of the work that followed. As one of the Foundation’s earliest resilience-building efforts, the Rebuilding New Orleans initiative also had an important impact on the philanthropic field as a whole by helping to establish resilience as an effective framework for global development.

In addition to direct support for the development of a plan for recovery, the Foundation focused on the systemic change needed for the sustainability of the solutions, including increasing the productivity and performance of local actors and institutions—especially governmental agencies, local philanthropy, and private and nonprofit developers; introducing a neighborhood-based planning approach that had not previously existed; and building new local capacity to develop systemic policy solutions.

These Foundation-sponsored efforts resulted in a broad-based, innovative planning process and a single citywide plan that continued to guide local recovery efforts in the years that followed. In addition to encompassing all 13 of the city’s planning districts, UNOP introduced the idea of targeted area development as a way to set neighborhood revitalization priorities, creating a broad blueprint for both district-level and citywide redevelopment. The UNOP plan was reviewed and approved by the City Planning Commission, the City Council, the Mayor, citizen participants, and finally, in June 2007, the Louisiana Recovery Authority—opening the way for New Orleans to access essential federal recovery aid totaling nearly $2 billion over the long run. Today, based on the post-Katrina recovery process, New Orleans continues to be a leader in building resilience. It was among the first round of municipalities designated to participate in The Rockefeller’s Foundation’s 100 Resilient Cities (100RC) Initiative, and was also the first participating city to release its detailed resilience strategy. Developed with support from The Rockefeller Foundation and 100 Resilient Cities, this plan was unveiled in August 2015, coinciding with the tenth anniversary of Hurricane Katrina. It outlines 40 specific actions aimed at building citywide resilience in New Orleans, including using a matching funds program to establish emergency accounts for low- and moderate-income residents; developing a “green” stormwater management system that delays and detains stormwater in landscaped spaces; redeveloping watersheds and the natural infrastructure; installing backup energy sources for critical city systems; and launching an initiative to deploy private-market assets to improve or repair critical systems after a disruptive event. The initiative has also supplied New Orleans with the funds to hire a Chief Resilience Officer, who is now supervising the implementation of these plans.

Today, based on the post-Katrina recovery process, New Orleans continues to be a leader in building resilience. It was among the first round of municipalities designated to participate in The Rockefeller’s Foundation’s 100 Resilient Cities (100RC) Initiative, and was also the first participating city to release its detailed resilience strategy. Developed with support from The Rockefeller Foundation and 100 Resilient Cities, this plan was unveiled in August 2015, coinciding with the tenth anniversary of Hurricane Katrina. It outlines 40 specific actions aimed at building citywide resilience in New Orleans, including using a matching funds program to establish emergency accounts for low- and moderate-income residents; developing a “green” storm water management system that delays and detains storm water in landscaped spaces; redeveloping watersheds and the natural infrastructure; installing backup energy sources for critical city systems; and launching an initiative to deploy private-market assets to improve or repair critical systems after a disruptive event. The initiative has also supplied New Orleans with the funds to hire a Chief Resilience Officer, who is now supervising the implementation of these plans.

Learn More about Our Work in New Orleans

Why This Initiative

In the aftermath of Superstorm Sandy, which devastated the northeastern United States in the fall of 2012, the U.S. Department of Housing and Urban Development (HUD) wanted to generate innovative flood mitigation and resilience solutions for New York City and the surrounding region.

The Solution

  • In 2012, Hurricane Sandy became the most destructive hurricane of the 2012 Atlantic hurricane season, as well as the second-costliest hurricane in United States history.

In 2013, HUD and The Rockefeller Foundation announced Rebuild by Design, a multi-stage regional design competition. The goal of the competition was to encourage world-class talent to focus on new flood mitigation solutions that would strengthen the resilience of the New York City metropolitan region in the face of similar storms in the future, and yield multiple benefits for each investment. It also adopted the Foundation’s resilience concept of employing deep community engagement in the process. Knowing that a significant amount of federal funding would be committed to implementing the top designs, The Rockefeller Foundation was the lead funding partner of the competition phase and provided support for the project’s analysis and design process.

Using Leverage to Achieve Change

In this intervention, The Rockefeller Foundation opened another important avenue for our resilience-building efforts. The Foundation provided a grant of $3 million to support the development of innovative, implementable proposals to promote resilience in the Sandy-affected region by groups from across the globe. Out of 148 international applicants, proposals from ten interdisciplinary teams of engineers, architects, urban planners, and social scientists were ultimately selected. Supported by $920 million in HUD funding, these groups then worked closely with communities to develop locally tailored solutions. The winning designs included a flood barrier that doubles as an economic engine for Lower Manhattan, oyster bed restoration in Staten Island, and an intricate system of berms and marshes that will protect against ocean surges while also providing for a park in the Meadowlands area of New Jersey. The Foundation’s original $3 million investment ensured that the project’s nearly $1 billion in federal funding was spent in the most innovative and effective way possible—leveraging its original grant on a scale of more than 300 to 1.

The success of Rebuild by Design led HUD to launch the National Disaster Resilience Competition in 2014. This competition used a similar approach to bring resilience-building practices to other states and communities that have been affected by disaster in recent years, with communities competing for more than $1 billion in HUD recovery funds. The Rockefeller Foundation partnered with HUD to bring this resilience model to 67 communities across the United States, an effort that included providing $8 million to support a series of Resilience Academies where competition participants could learn principles of resilience-based design. The competition winners were announced in January 2016. The content developed for the Resilience Academies is now being leveraged to train funders across a wide spectrum of U.S. and global development partners.

Learn More About Our Resilience Work

Smart Power for Rural Development—Launched in 2015

Why This Initiative

Around the world, an estimated 1.3 billion people lack access to power. The large majority of those without electricity live in rural areas of Sub-Saharan Africa and South Asia. In India alone, nearly 250 million people live without regular access to power. In addition, many of those who do have access to power still experience frequent and unplanned outage periods. Lack of access to power is a major barrier to achieving a more inclusive economy and to building the resilience of poor or vulnerable communities. It hinders economic development by limiting people’s ability to enhance their incomes, educate their children, and access key information services. It especially burdens women with physically taxing activities and reduces their safety within communities. Conversely, providing power to previously un-electrified areas represents a classic “tipping point,” producing a widespread, positive ripple effect. Research indicates that access to power increases per capita household income by 39 percent. Power also enhances the productivity of small businesses, processes that improve agricultural yield, and enhances safety and learning.

The Solution

In 2015, The Rockefeller Foundation committed $75 million in funding and launched Smart Power India—a nonprofit company that is partnering with ESCOs, telecom tower operators, investors, non-governmental organizations (NGOs), and government agencies to electrify 1,000 rural villages within three years in the districts of Bihar and Uttar Pradesh. This first goal of 1,000 is intended to demonstrate the capacity to scale a sustainable business model to reduce energy poverty in an area where fewer than 10 percent of rural households are connected to the national grid.

The Smart Power for Rural Development initiative is currently focusing on India to facilitate the implementation of a new rural electrification model based on decentralized mini-grids, each connected to a local power plant with the capacity to provide electricity to the surrounding area. These plants are powered by solar photovoltaic cells, biomass energy, or other renewable energy sources, thus helping to achieve important climate change mitigation goals as well.

Using Leverage to Achieve Change 

The Rockefeller Foundation’s strategy for supporting the development of these plants involves, in part, leveraging the power needs of freestanding telecommunications towers, which have seen explosive growth across rural India in the past decade. Previously, most of these towers obtained their power from dedicated, diesel-powered generators. By signing power purchase agreements with the energy service companies (ESCOs) that operate multiple plants, tower operators reduce their own costs. They also serve as “anchor tenants” for the plants, allowing ESCOs to obtain stable cash flows and hence better access to financing. With capital, ESCOs can build plants that are large enough to sell to the towers and to businesses and low-income households in the local communities.

  • Installing the final module on a solar panel.

In order to support the private sector ESCOs that are building plants, the initiative has provided loans to finance their capital expenditures through program-related investments (PRIs), and has supported these companies as they access additional investment from other sources. In addition, we have further leveraged our funding by encouraging the growth of micro-enterprises in the areas being electrified, through partnerships and other mechanisms—thereby spurring economic development, which is beneficial for the communities, as well as additional demand for the locally-produced electricity.

Building on the lessons learned in India, the Foundation is now expanding the model to additional countries after assessing the model’s viability in seven African and Asian nations, and determining that this approach had substantial potential to be adapted and scaled up in these countries.

Learn More About Smart Power for Rural Development

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