Advocacy Project

C hapter 6

G lobal H

ealth Financing

P ersonal and P

ublic H

ealth 6.1

Personal and Public H ealth

•H ealth expenditures are a significant

com ponent of the global econom

y, accounting for m

ore than 8% of the

w orld’s total gross dom

estic product (G

D P).

•Spending on health activities can be divided into tw

o categories: •M

oney spent on personal health •M

oney spent on public health

Figure 6-1

H igh-incom

e countries spend a high percentage of their gross dom

estic product (G

D P) on health.

Data from Global Burden of Disease Health Financing Collaborator Network. Evolution and patterns of global health financing 1995–2014: Development assistance for health, and government, prepaid private, and out-of-pocket health spending in 184 countries. Lancet 2017; 389:1981–2004.

Personal and Public H ealth

(cont’d) •

Personal health expenses relate to the health of one individual or fam

ily. •

E xam

ples: purchasing antibiotics, paying for a m

idw ife, buying test strips for self-m

onitoring of blood glucose levels

• Public health expenses relate to shared activities that protect a com

m unity, a nation, or the global

population at large. •

E xam

ples: investigating and containing outbreaks, m

arketing m ass polio vaccination days, using

insecticides in outdoor areas to kill m osquitoes,

developing evidence-based guidelines for screening for chronic diseases and m

anaging them

Personal and Public H ealth

(cont’d) •

W orldw

ide, m ore than $9 trillion w

as spent on health care in 2015. •

C osts could rise to $16 trillion per year by 2030.

• T

he am ount of m

oney spent on healthcare services for the average resident each year is m

uch higher in high-incom e

countries than it is in low -incom

e countries, even after adjusting for differences in the cost of living.

• T

here is a diversity of m echanism

s for paying for personal health expenses. •

M ost public health activities in higher-incom

e countries are funded by taxes; public health initiatives in low

er- incom

e countries are often financed w ith a com

bination of governm

ental and external support.

Figure 6-2

H ealth spending per capita (2014).

Data from Health system financing profile by country. Geneva: WHO Global Health Expenditure Database; 2017.

Figure 6-3

Total spending on health care per capita by country incom

e level (2014).

Data from Global Burden of Disease Health Financing Collaborator Network. Evolution and patterns of global health financing 1995– 2014: development assistance for health, and government, prepaid private, and out-of-pocket health spending in 184 countries. Lancet 2017; 389:1981–2004.

Figure 6-4

G overnm

ents in high-incom e countries use tax

revenue to pay for m ost health services; in

low -incom

e countries, a m ore diverse set of

funders pay for health activities.

Financing •

F inancing = the provision of m

oney for a particular activity and the m

anagem ent of that investm

ent. •

Financing for global health is allocated to both personal and public functions. •

Som e global health funding helps low

er-incom e

countries expand the personal healthcare services that they offer to residents. •

Som e global health funding supports global health

governance, the developm ent and dissem

ination of new

health technologies, pandem ic preparedness and

response, and other public health functions. •

T here are also expenses that blend the personal and

public health categories.

H ealth System

s 6.2

H ealth System

• A

health system includes all of the people, facilities,

products, resources, and organizational structures that deliver health services to a population. •

W H

O ’s 6 core building blocks:

1. T

he provision of effective personal and population- based healthcare services

2. A

w ell-trained and productive health w

orkforce that is able to provide quality care to all populations

3. A

strong health inform ation system

(H IS) that

collects, analyzes, and dissem inates the inform

ation about population health and health system

s perform

ance that is critical for health system decision-

m aking

H ealth System

(cont’d)

•W H

O ’s 6 core building blocks:

4. A

ccess to essential m edicines, m

edical devices, vaccines, and other health technologies

5. A

health financing system that enables

everyone to access affordable services w

hen they are needed (and at the sam e

tim e provides incentives not to overuse

services) 6.

E ffective oversight of the system

to ensure safety, efficiency, and accountability

SD G

s and U H

C •

T he Sustainable D

evelopm ent G

oals aim by 2030 to “achieve universal

health coverage, including financial risk protection, access to quality essential healthcare services, and access to safe, effective, quality, and affordable m

edicines and vaccines for all” (SD G

3.8). •

U niversal health coverage (U

H C

)is present w hen everyone in a

country has access to high-quality health services (including preventive care, diagnosis, treatm

ent, and rehabilitation) and everyone is protected from

m ajor health-associated financial shocks via a tax-based financing

system or a health insurance plan.

• In places w

here patients and their fam ilies pay out-of-pocket for m

ost health services, the poorest households are often excluded from

accessing quality care.

• C

ountries that spread the cost of health services across the w hole population

(through tax revenue or m andatory participation in highly regulated

insurance plans) enable everyone to access the services that are included in the national health plan.

Figure 6-5

U niversal health coverage spreads the cost

burden for health services across the w hole

population.

Data from World health report 1999. Geneva: WHO; 1999.

H ealth System

s Financing •

G overnm

ents aim ing to achieve U

H C

m ust m

ake difficult decisions about w

hich goods and services to cover under the national health plan. •

R esource lim

itations m ay m

ean that only part of a com

prehensive strategy for im proving health can be

publicly funded. •

H ealth system

strengthening requires a process of identifying priorities and resources, strategizing about the policies that w

ill achieve key goals, transform ing

those ideas into operational action plans, and then im

plem enting changes and tracking progress tow

ard m

eeting targets.

H ealth System

s Financing (cont’d)

• G

overnm ent officials m

ust also m ake critical

determ inations about how

m uch funding can be allocated

to the health system and how

m uch m

ust be dedicated to m

aintaining other necessary services. •

Increases in spending on health often require decreases in funding for education and other social services.

• T

he governm ents of high-incom

e countries w ith aging

populations usually allocate m ore of their budget to health

than to education. •

L M

IC s w

ith a large proportion of children in their populations usually allocate m

ore funding to education than to health.

• T

hese spending priorities are reflected in surveys that ask residents about their perceptions of social services and their overall quality of life.

Figure 6-6

Satisfaction w ith health care quality is highest

in high-incom e countries.

Data from World health statistics 2016. Geneva: WHO; 2016.

P aying for P

ersonal H

ealth 6.3

Paying for Personal H ealth

•E ach country has a unique m

ix of strategies for funding personal health, but there are som

e general patterns by country incom

e level.

Figure 6-7

Total spending on health by payer and country incom e level.

Data from Global Burden of Disease Health Financing Collaborator Network. Evolution and patterns of global health financing 1995–2014: development assistance for health, and government, prepaid private, and out-of-pocket health spending in 184 countries. Lancet 2017; 389:1981–2004.

Personal H ealth in H

igh-Incom e

C ountries

• M

ost high-incom e countries have a governm

ent- sponsored healthcare system

that is paid for through general tax revenue, m

andatory paym ents into a

governm ent-run social security system

, or other types of com

pulsory contributions. •

H ealth services are typically provided at

governm ent health facilities or at private facilities

that receive m ost of their funds from

the governm

ent. •

T he health financing and delivery system

in the U

nited States is a notable exception to the general global trend.

Personal H ealth in M

iddle- Incom

e C ountries

•In m ost m

iddle-incom e countries,

governm ents pay for a portion of health

costs but the rem aining m

oney spent on health is expended in the form

of out-of- pocket (O

O P

) paym ents, cash

disbursem ents m

ade by patients and their fam

ilies in order to receive health services. •T

he range of services covered by governm

ental healthcare plans varies w

idely.

Figure 6-8

Sources of funding for health in featured countries. (Prepaid private spending includes private insurance and spending by

nongovernm ental organizations.)

Data from Global Burden of Disease Health Financing Collaborator Network. Evolution and patterns of global health financing 1995–2014: development assistance for health, and government, prepaid private, and out-of-pocket health spending in 184 countries. Lancet 2017; 389:1981–2004.

Personal H ealth in L

ow -Incom

e C

ountries •

In low -incom

e countries, m ost healthcare services are paid for

out-of-pocket on a pay-as-you-go basis. •

A m

ix of public, not-for-profit private, and for-profit form al and

inform al healthcare providers are available in urban areas, but

there m ay be very few

services in rural areas. •

Som e basic clinical services that have been deem

ed necessary for achieving high-priority global health goals are paid for by dom

estic governm

ents and international donors to ensure that these services are available to everyone w

ho needs them .

• For other health conditions, both public (governm

ental) and private healthcare facilities m

ay charge user fees and require additional paym

ent for m edicines and supplies.

• Increasing access to affordable health services for the m

ost vulnerable populations is one of the m

ajor goals for health system

strengthening in m ost low

-incom e countries.

H ealth Insurance

6.4

H ealth Insurance

•Insurance is a risk m anagem

ent strategy that protects purchasers against m

ajor financial losses. •H

ealth insurance is intended to protect insured people from

incurring overw

helm ing expenses if they

happen to develop an expensive health condition.

H ealth Insurance (cont’d)

• H

ealth insurance system s, w

hether private or public, are funded based on the principle of pooled risk. •

P ooled risk

assum es that if m

any low -risk people and

a few high-risk people all pay prem

ium s to the

insurance system over m

any years, then there w ill be a

pot of m oney that can be used to pay for m

ajor illnesses and injuries w

hen they occur. •

O nly a few

people w ill develop a very serious chronic

condition or suffer a catastrophic injury, but because everyone is at risk of unexpected health crises, m

ost people are w

illing to pay for protection against a lifetim

e of unm anageable, im

poverishing debt as a result of one m

edical incident.

H ealth Insurance in the U

SA •

T he country that spends the m

ost on health each year, by far, is the U

nited States. •

T he U

SA has a health system

that is unique am ong

high-incom e countries because it is not a universal

health coverage system .

• In 2015, about 91%

of A m

ericans had health insurance coverage and 9%

had no health insurance. •

O f the insured individuals, about tw

o-thirds had private health insurance and about one-third w

ere on a governm

ent plan. •

N early all health services w

ere provided at private facilities.

Figure 6-9

Total spending on health care per capita in featured countries (2014).

Data from Global Burden of Disease Health Financing Collaborator Network. Evolution and patterns of global health financing 1995–2014: development assistance for health, and government, prepaid private, and out-of-pocket health spending in 184 countries. Lancet 2017; 389:1981–2004.

H ealth Insurance in the U

SA

(cont’d) •

M ost w

orking-aged A m

ericans and their children have em

ploym ent-based private health insurance.

• P

rem ium

: a m onthly fee paid for health insurance

• D

eductible: the am ount that an insured person m

ust spend out-of-pocket on health care each year (in addition to prem

ium s) before the insurance com

pany begins paying for health services •

C opay: a fixed fee that is paid out-of-pocket by an

insured patient w hen receiving routine health services

• C

o-insurance: a percentage of the costs of care that is paid out-of-pocket by an insured patient

H ealth Insurance in the U

SA

(cont’d) •T

he m ajor governm

ental insurance plans provide healthcare coverage for older adults, low

-incom e households, and

m ilitary personnel. •M

edicare is the federal health funding system

for people w ho are ages 65 and

older and people w ith serious perm

anent disabilities. •M

edicaid is a federal program

that provides funding to states to support state-sponsored health coverage for very low

-incom e

citizens.

H ealth Insurance in the U

SA

(cont’d) •

W hile health insurance in the U

nited States w as

originally designed to cover only the catastrophic expenses from

serious illnesses or injuries that few

individuals could afford to pay, m any insurance

plans now pay for preventive care and m

inor health problem

s because the insurance com panies have

determ ined that they save m

oney w hen m

inor conditions are treated before they becom

e m ajor

problem s.

• T

he com pany m

ay provide incentives for people w ith

these chronic diseases to participate in disease m

anagem ent program

s that catch em erging problem

s early and avert the need for expensive em

ergency care.

H ealth Insurance in O

ther C

ountries •

Som e other high-incom

e countries use health insurance as part of their strategy for ensuring universal health care coverage. •

For exam ple, in G

erm any every resident m

ust belong to a highly regulated “sickness fund.” •

E m

ployers pay half of the costs for em ployees, and the

governm ent covers the full expense for children and

for unem ployed adults.

• Inpatient care is provided at both public and private hospitals, and m

ost outpatient care is provided at private clinics. •

T he paym

ents that providers receive for their services are identical no m

atter w here they w

ork.

H ealth Insurance in O

ther C

ountries (cont’d) •

H ealth insurance is also being used by a grow

ing num ber

of residents of m iddle-incom

e countries (L M

IC s) so that

they can access advanced care from high-quality private

health providers. •

For exam ple, a large proportion of higher-incom

e B

razilians purchase private insurance plans and seek m

edical and surgical care at private facilities. •

E veryone in B

razil can access free prim ary and em

ergency health care at public facilities—

an im portant right

guaranteed under B razil’s constitution—

but the public health system

offers a lim ited range of services and

technologies. •

H ealth insurance allow

s w ealthier households to access a

greater range of health services, procedures, m edications,

and equipm ent from

their preferred providers.

P aying for G

lobal H

ealth Interventions 6.5

Paying for G lobal H

ealth Interventions

• T

he m oney spent on global public health initiatives com

es from a

different set of sources than the m oney that pays for individual

health care. •

L ocal and national governm

ental spending provides the m ajority of

funding for public health interventions around the w orld.

• G

lobal public health is funded by a com bination of grants from

one country to another, grants and loans from

intergovernm ental

agencies, and gifts from private-sector foundations, businesses, and

individuals. •

T he best financing m

echanism s for new

global health initiatives are sources that are stable and sustainable over tim

e, that are new

funding lines rather than m oney redirected from

another program ,

and that are m anaged efficiently w

ithout dem anding heavy

adm inistrative costs or burdening recipient populations.

Figure 6-10

Typical pathw ay from

global health funders to im

plem enters.

D onor M

otivations •

D onor m

otivations •

For the governm ents of high-incom

e countries, health funding for low

er-incom e countries is part of foreign

policy strategies for building trade alliances and protecting hom

eland security. •

M ultilateral lending groups m

ay consider global health projects to be good financial investm

ents. •

Philanthropic organizations m ay view

global health as a tool for reducing poverty and prom

oting hum an

flourishing. •

L arge corporations m

ay use global health w ork to

cultivate custom er loyalty in new

m arkets, take

advantage of tax incentives, and foster a shared sense of purpose am

ong em ployees.

D onor M

otivations (cont’d)

•M ost of these rationales for funding

global health yield benefits for both the recipients and the donors. •T

he best global health projects achieve goals that are m

utually beneficial to all involved parties.

O fficial D

evelopm ent

A ssistance

6.6

O fficial D

evelopm ent A

ssistance (O

D A

) •

O fficial developm

ent assistance (O D

A ) = m

oney given by the governm

ent of a high-incom e country

to the governm ent of a low

-incom e country to

support socioeconom ic developm

ent. •

A lthough som

e aid is given sim ply to fight poverty,

aid is often tied to the political and econom ic interests

of the donor country. •

M ost O

D A

is donated to low -and m

iddle-incom e

countries (L M

IC s) by high-incom

e countries that are m

em bers of the D

evelopm ent A

ssistance C

om m

ittee (D A

C ) of the O

rganisation for E

conom ic C

o-operation and D evelopm

ent (O E

C D

).

O fficial D

evelopm ent A

ssistance (O

D A

) (cont’d) •T

he Sustainable D evelopm

ent G oals call for

“developed countries to im plem

ent fully their official developm

ent assistance com m

itm ents,

including the com m

itm ent by m

any developed countries to achieve the target of 0.7%

of gross national incom

e (G N

I) for O D

A to developing

countries and 0.15% to 0.20%

of G N

I to least developed countries” (SD

G 17.2).

•In 2015, the five donor nations that provided the greatest am

ount of O D

A in total dollars

w ere the U

nited States, the U nited K

ingdom ,

G erm

any, Japan, and France.

O fficial D

evelopm ent A

ssistance (O

D A

) (cont’d) •A

s a percentage of their gross national incom

e (G N

I), the largest donors w ere

Sw eden, N

orw ay, L

uxem bourg,

D enm

ark, the N etherlands, and the

U nited K

ingdom , w

hich all spent at least0.7%

of their G N

I on O D

A .

•T he U

nited States spent 0.17% of its G

N I

on O D

A , a rate far below

the 0.7% target

in the SD G

s even though the U nited

States had the w orld’s largest O

D A

budget.

O D

A from

the U SA

• T

he foreign aid spending by the U nited States in 2015

provides an illustration of an annual foreign aid budget. •

In 2015, the U nited States spent about $32 billion on

hum anitarian and other foreign aid, w

hich w as about 0.9%

of total national governm

ent spending. •

W hen the $17 billion spent on foreign m

ilitary and security assistance (w

hich is only a sm all portion of the m

ilitary budget used for international hum

anitarian operations and other joint responses w

ith allies) is com bined w

ith non- m

ilitary/security foreign aid, the total spending on foreign assistance w

as about 1.3% of national governm

ental spending.

• A

id m ay be given in the form

of cash transfers, equipm ent

and com m

odities (such as food and com puters), training

and expert advice, or infrastructure developm ent.

O D

A from

the U SA

(cont’d) •

M ost non-m

ilitary/security O D

A flow

s through the U .S.

A gency for International D

evelopm ent (U

SA ID

). •

M ost m

ilitary aid flow s through the D

epartm ent of D

efense (D

O D

). •

T he U

.S. governm ent considers foreign aid to be a critical

contributor to national security because aid supports econom

ic grow th, prom

otes stability, and com bats illegal

activities. •

T he top recipients of non-m

ilitary/security O D

A from

the U

nited States in 2015 w ere A

fghanistan, Jordan, Pakistan, K

enya, E thiopia, South Sudan, Syria, and the D

R C

. •

A ll of these countries w

ere engaged in civil conflicts or located adjacent to conflict areas and housing large refugee populations.

Figure 6-11

Foreign aid expenditures by the U nited States

in 2015 by spending category, w ith and

w ithout m

ilitary/security assistance.

Data from Tarnoff C, Lawson ML. Foreign aid: An introduction to U.S. programs and policy. Washington: Congressional Research Service (CRS); 2016.

D evelopm

ent A ssistance for

H ealth (D

A H

) •G

lobal health has becom e a prom

inent O

D A

priority. •D

evelopm ent assistance for health

(D A

H )= donor aid for health = O

D A

designated for health activities. •D

A H

is an im portant com

ponent of the health budget in low

-incom e countries .

•G lobally, m

ore than $20 billion of O

D A

w as spent on global health in

2015.

D evelopm

ent A ssistance for

H ealth (D

A H

) (cont’d) •T

he U nited States allocated nearly $10 billion

of its foreign aid budget to global health activities in 2015, m

aking it the largest contributor of D

A H

both in term s of the total

budget for D A

H and the percentage of its

foreign aid budget assigned to D A

H .

• A

bout 70% of those funds w

ere dedicated to H

IV /A

ID S, tuberculosis, and m

alaria program s.

• O

ther supported activities w ere in the areas of

neglected tropical diseases, reproductive health, child health, nutrition, w

ater and sanitation, and global health security.

Figure 6-12

D evelopm

ent assistance for health (D A

H ) is an

im portant com

ponent of total spending on health in low

-incom e countries.

Data from Global Burden of Disease Health Financing Collaborator Network. Evolution and patterns of global health financing 1995–2014: Development assistance for health, and government, prepaid private, and out-of-pocket health spending in 184 countries. Lancet 2017; 389:1981– 2004.

Figure 6-13

The U nited States is a large donor of

developm ent assistance for health (D

A H

).

Data from Financing global health 2015: Development assistance steady on the path to new Global Goals. Seattle: Institute for Health Metrics and Evaluation (IHME); 2016.

FD I and R

em ittances

• T

he SD G

s em phasize that O

D A

is only part of the plan for funding developm

ent activities. •

T he SD

G s call for action to “strengthen dom

estic resource m

obilization, including through international support to developing countries, to im

prove dom estic capacity for

tax and other revenue collection (SD G

17.1) and to “m

obilize additional financial resources for developing countries from

m ultiple sources,” including foreign direct

investm ents and rem

ittances (SD G

17.3). •

F oreign direct investm

ent (F D

I)= business investm ents

m ade by corporations and individuals in other countries.

• R

em ittances

= funds transferred by international w orkers

back to fam ily m

em bers in their hom

e com m

unities.

FD I and R

em ittances (cont’d)

•T he total am

ount of O D

A globally

in 2015 neared $150 billion (about 0.3%

of G N

I in D A

C countries);

about $765 billion in FD I w

as invested in L

M IC

s, and about $430 billion in rem

ittances w ere sent to

L M

IC s.

M ultilateral A

id 6.7

M ultilateral A

id

•T here are tw

o m ain types of O

D A

, bilateral aid and m

ultilateral aid. •B

ilateral aid = m oney given directly from

one country (usually a high-incom

e country) to another country (usually a low

er-incom e

country). •M

ultilateral aid = funding pooled from m

any donor countries. •

T he largest m

ultilateral organizations include the U

nited N ations, the W

orld B ank and other

developm ent banks, and the E

uropean U nion.

M ultilateral A

id (cont’d) •

M ultilateral organizations receive tw

o types of funds from

m em

ber nations: •

A ssessed contributions are m

andatory dues calculated from

each country’s econom ic and population statistics.

• V

oluntary contributions are extra funds a country opts to donate.

• M

andatory funds go to the general budget of the m

ultilateral organizations. •

V oluntary contributions can be designated as core

(unrestricted) or non-core (restricted) funding. •

C ore funding can be used by the m

ultilateral organization on any projects they deem

to be priorities. •

N on-core funding is given for a specific purpose by the

donor and m ust be spent on that particular activity.

M ultilateral A

id (cont’d)

•In 2013, about 59% of O

D A

w as

bilateral O D

A distributed by bilateral

agencies, about 28% w

as core m

ultilateral O D

A from

assessed and voluntary contributions, and about 13%

w

as earm arked non-core bilateral aid

distributed through m ultilateral

organizations to designated recipient countries.

T he W

orld B ank and IM

F •

Tw o m

ultilateral institutions have played a unique role in financing econom

ic developm ent projects because they

offer both loans (borrow

ed m oney that m

ust be repaid w

ith interest) and grants (m

oney that does not have to be repaid): the W

orld B ank and International M

onetary Fund. •

B oth institutions w

ere founded in 1944 during a sum m

it held at B

retton W oods, N

ew H

am pshire.

• B

oth are headquartered in W ashington, D

C .

• B

oth are ow ned by their nearly 180 m

em ber nations.

• B

oth m ay require recipient countries to im

plem ent

econom ic policy reform

s as a condition of receiving loans. •

B ut the tw

o institutions have distinct functions and m odes

of operating.

T he W

orld B ank

•T he W

orld B ank

is an investm ent bank

that m akes loans to developing countries.

•B ecause W

orld B ank loans m

ust be repaid w

ith interest, lending nations can m ake a

profit by lending m oney to poorer countries,

assum ing that the principal is repaid w

ith interest. •D

ebt repaym ents to international financial

institutions are also used to m ake new

loans for developm

ent projects in other countries, including projects focused on health.

T he W

orld B ank (cont’d)

• T

he W orld B

ank’s prim ary lending institute is the

International B ank for R

econstruction and D evelopm

ent (IB

R D

), w hich issues bonds in order to be able to m

ake loans to m

iddle-incom e m

em ber countries.

• T

hese loans carry an interest rate that is slightly above the m

arket rate, and they are usually supposed to be repaid w

ithin 15 years. •

T he m

ajority of loans are for specific infrastructure projects.

• T

he International D evelopm

ent A ssociation (ID

A ) m

akes interest-free loans to low

-incom e m

em ber nations using

m oney that has been donated from

high-incom e countries.

• ID

A loans are usually supposed to be paid back over a 40-

year period.

T he IM

F •

T he International M

onetary F und (IM

F )

provides a structure for international m

onetary policy and currency exchanges, and it also m

akes loans to countries of any incom

e level that have a balance of paym ent need and

w ould otherw

ise not be able to m ake paym

ents on their other international loans. •

T he goal of IM

F loans is to allow countries to rebuild

their m onetary reserves, stabilize their currencies,

continue paying for im ports, and create conditions for

econom ic grow

th and high em ploym

ent rates. •

T he interest rates for IM

F funds are usually slightly below

m arket rates, and m

oney received from the IM

F is usually supposed to be paid back w

ithin a few years.

T he W

orld B ank and IM

F •

A m

ajor criticism of the international loan system

is that paym

ents on debt divert m oney aw

ay from

education, health, clean w ater, and other essential

hum an services in low

-incom e countries.

• T

he SD G

s acknow ledge the significant problem

s associated w

ith overw helm

ing debt in low -incom

e countries, and they aim

to “assist developing countries in attaining long-term

debt sustainability through coordinated policies aim

ed at fostering debt financing, debt relief, and debt restructuring, as appropriate, and address the external debt of highly indebted poor countries to reduce debt distress” (SD

G 17.4).

T he W

orld B ank and IM

F (cont’d)

•C oncerns about debt burden are one of

the reasons that developm ent banks are

now playing less of a role in global

health funding than they did in the past: in 2000 m

ore than 20% of developm

ent assistance for health (D

A H

) cam e from

developm

ent banks, but in 2015 less than 10%

of D A

H w

as disbursed through developm

ent banks.

F oundations and

C orporate D

onations 6.8

Foundations

•F oundation

= a charitable trust that gives grants to other nonprofit organizations. •A

private foundation is one that is established and funded by an individual, fam

ily, or corporation as a m echanism

for m

aking tax-deductible donations to entities that align w

ith values of the funders. •T

he w ord foundation is also often used to

describe public charities that solicit financial support from

other individuals, foundations, and governm

ent agencies in order to engage in nonprofit activities.

Foundations (cont’d) •

E ndow

m entis a large donation m

ade to a nonprofit organization so that the funds can be invested and the interest from

the investm ents can be used to support the

operation of the charity. •

E xam

ples of foundations w ith large endow

m ents:

• T

he B ill and M

elinda G ates F

oundation, w hich is the

largest private foundation in the w orld (w

ith $40.4 billion in assets at the end of 2015); the G

ates Foundation gave aw

ay nearly $4 billion in 2015, w ith about $2.9 billion of

that total allocated to developm ent assistance for health

(D A

H ).

• T

he Ford Foundation ($12.2 billion in assets) donated $512 m

illion in 2015. •

T he R

obert W ood Johnson Foundation ($10.3 billion)

donated $348 m illion in 2015.

C orporate D

onations

•A corporate social responsibility (C

SR )

plan spells out the positive social and environm

ental actions a com pany

voluntarily supports. •In-kind donations of goods or services

related to the corporation’s core business are often part of C

SR program

s. •Pharm

aceutical corporations are som e of the

biggest donors to global health initiatives.

C orporate D

onations (cont’d) •

W hy donate? •

A n expression of hum

anitarian values •

A tax deduction

• H

elp develop international m arkets

• Increase brand recognition am

ong potential custom ers

• Populations w

ith increased incom es and decreased

health expenditures as a result of successful charitable health initiatives have m

ore m oney to

spend on other goods and services. •

B y investing in helping potential and current

consum ers becom

e healthy and m aintain their health,

com panies are doing good w

hile expanding their m

arkets and gaining brand loyalty.

P ersonal D

onations 6.9

Personal D onations

• M

any people all over the w orld have been and continue to be

generous in their support of nonprofit entities. •

For exam ple, people in the U

nited States donated nearly $375 billion to charity in 2015, w

ith 71% of this total given by

individuals, 16% by foundations, 9%

from bequests (donations

released to a charity from the estate of a deceased person w

ho nam

ed the charity is her/her w ill), and 5%

by corporations. •

In total, those donations represent about 2.1% of the country’s total

gross dom estic product (G

D P).

• Individual donations account for 2%

of all disposable incom e in the

U nited States.

• T

he m ajor recipients of funding w

ere religious groups (32% of

donations), educational institutions (15% ), hum

an services organizations (12%

), and health charities (8% ).

• M

any of the organizations w ithin all of these categories provide

services that support health and the tools for health.

Personal D onations (cont’d)

• T

he generosity of individual donors is especially visible after m

ajor natural disasters like earthquakes and tsunam

is, w hen charities m

ay receive m illions of dollars

of donations in the days im m

ediately after the event. •

T he A

m erican R

ed C ross received $581 m

illion in designated donations after the devastating Indian O

cean tsunam

i in 2004, $488 m illion in designated donations after

the m assive earthquake in H

aiti in 2010, and $2.1 billion after H

urricane K atrina hit the G

ulf C oast of the U

nited States in 2005.

• A

nother popular giving option for individuals is child sponsorship, a charitable donation m

odel in w hich a

donor selects a child to sponsor and then receives regular updates about that particular child in exchange for continued m

onthly contributions to the host organization.

Personal D onations (cont’d)

• M

ore than 20 nonprofit organizations in the U nited States that

w ork in the international arena generated revenue exceeding $250

m illion in fiscal year 2015 (including funds from

both charitable donations and governm

ental contracts for im plem

enting international developm

ent projects). •

T he best-rated charities spend a relatively sm

all proportion of their budget on adm

inistration and fundraising and apply m ost incom

e to direct program

expenses. •

T he annual reports of registered charities allow

potential donors to evaluate the financial perform

ance of organizations before m aking a

contribution. •

T he organizations’ w

ebsites and other online tools allow potential

donors to assess the im portance and effectiveness of the

organizations’ w ork.

Figure 6-14

M ajor nonprofit organizations based in the

U nited States and w

orking internationally.

Data from Charity Navigator. Glen Rock NJ: Charity Navigator; 2017.

Figure 6-15

M ajor m

ultipurpose hum an services and disease-

specific charities based in the U nited States.

Data from Charity Navigator. Glen Rock NJ: Charity Navigator; 2017.