Oxfam & Meditor Trust

An innovative philanthropic gift helped to protect £10 million pounds worth of vital Oxfam work, at a moment when the charity faced major organisational challenges.

People gathered on the street in Haiti.

Oxfam is an organisation used to dealing with crises. Its work – whether in providing emergency aid or engaging in longer-term efforts to address poverty – regularly involves operating in some of the most challenging places on earth. But in February 2018, Oxfam was faced with a major crisis of its own, after the Times newspaper ran a front-page story alleging widespread sexual misconduct by former Oxfam staff in Haiti and raising questions about the charity’s safeguarding procedures.

Several institutional funders, including the UK Department for International Development, immediately announced that they would pause funding for Oxfam until they had further information. The charity clearly recognised the need to take this issue seriously and investigate the allegations properly; at the same time, however, this sudden withholding of funding posed a major operational challenge for many of their vital ongoing programmes of work around the world.

As part of its crisis response, Oxfam immediately began contacting key stakeholders – including funders and donors - to update them on what lay behind the headlines. One of these phone calls was to Talal Shakerchi, a hedge fund manager and professional poker player who had been a long-term Oxfam donor. It was this conversation which eventually led to an innovative philanthropic solution to the charity’s short-term funding challenges.

Shakerchi’s background as a financier meant he had plenty of experience of designing solutions to meet funding needs - including short-term loans –so that is what he proposed to Oxfam. Through his philanthropic fund, Meditor Trust, Shakerchi offered to cover the gap that would be left by DFID and others withholding funding. Crucially, this would not be a straightforward gift, but a loan, on the basis that the money from institutional funders would hopefully come back online before too long so the charity would recoup any money it might have lost.

Before the loan could be finalised, however, it was necessary to clarify the terms of the agreement. Firstly, to ensure that there was no danger of Oxfam ending up out of pocket, the loan would be made at 0% interest and would also be forgivable – i.e. if it turned out not to be repayable for some reason, Meditor Trust would just write it off as a grant. Secondly, the exact scope of the work being covered by the loan needed to be agreed. Bridie Layden, who was working at Oxfam at the time and was heavily involved in brokering the relationship with Shakerchi and Meditor Trust, explains that a careful choice was made to focus on programmes “which met critical humanitarian need, and where the chances of recovering costs were fairly high”. This meant identifying countries where there weren’t many other donors or INGOs operating, so any reduction in Oxfam’s work would be particularly damaging; and also where there were contracts in place which ensured that institutional funders would backpay any missing funding when suspensions did get lifted.

Oxfam identified £10.6 million of funding that fit this bill, and Shakerchi immediately agreed to underwrite the whole amount with a loan. The only remaining nagging doubt was whether the fact that the loan was forgivable offered a perverse incentive for the charity not to try as hard as it might to recoup the institutional funding it had lost (as they would know at the back of their minds that they would get the money as a grant in any case). To counterbalance this, Shakerchi decided to add a positive incentive, in the form of an additional £1 million grant that would be given to Oxfam if the loan was repaid.

It still wasn’t quite plain sailing from this point, and it took more time than either side anticipated to put the agreement in place. In the end, however, Oxfam was able to make use of the loan and to continue its work. Thankfully the other institutional funding did return and the charity was able to repay the loan, so it received the additional £1m grant from Meditor Trust as planned.

From Skakerchi’s point of view this unusual bit of philanthropy was a big success:

“One of the advantages we have is that we can be more flexible than some other funders, so it’s nice to be able to use that in a way that is helpful…. And it felt very good, as we would have achieved impact whether or not the loan was returned. Programmes could continue, and Oxfam could maintain capacity in-country, avoiding inefficiencies of temporarily scaling down during a period of financial uncertainty.”

The loan from Meditor Trust undoubtedly played an invaluable role for Oxfam at a time when it was facing unprecedented challenges: enabling the organisation to keep vital work going in countries where the loss of that work would have been felt very keenly, and would almost certainly have cost lives. Philanthropic loans of this kind remain relatively uncommon, but given the challenges faced by the international aid and development sector following the closure of USAID and significant cuts in governmental aid around the world, perhaps now is the time to look again at whether they could be a valuable addition to the toolkit of donors and funders.