Five GIF investments have been selected to receive funds from American philanthropist MacKenzie Scott in her latest $12 billion giveaway. Scott’s announcement praised the use of funds as a means to get money to “a diverse group of smaller organisations”. “Of special note is that many of the organizations are funds. For anyone similarly interested in supporting the leadership of people from the communities they’re assisting, funds are a great resource. They pool donations and spread them across a diverse group of smaller organizations working toward a common cause. The funds we picked look for teams with lived experience in the issues they’re addressing, as we did when selecting the other non-profits in this giving cycle, and the 1,200+ recipients before them, many of which are also funds.”
IPA, PATH, Praekelt, Evidence Action and Educate! (all GIF investments) were all amongst Scott’s choices. The success and promise of these enterprises, now also recognised by Scott, underlines the importance of investing in early-stage, innovative ventures.
The charity said: “We know this is just the beginning. The stakes are high as each day more young people enter the labor market and struggle to build their livelihoods with skills mismatched to a 21st-century economy. We need all hands on deck in responding to the youth skills and employment crisis. Together, we can leverage the momentum of this new investment to untap the limitless power and potential of Africa’s youth.”
This funding round is an excellent example of how crowding in works. This is the idea that an increase in government spending and investment will lead to an expansion of economic activity (or real GDP). This in turn incentivises private sector firms to raise their own levels of capital investment and employment. Essentially, public investment leads to an increment in private investment, as we have seen here, and this rise in private investment is thus more effective.