Making Better Big Bets In Philanthropy

Giving Compass’ Take:

• Stanford Social Innovation Review discusses how transformative philanthropy will require a lot of investment, capacity building, and experimentation to get right.

• Do we have the resources and willpower to seek out so-called “big bets” in the nonprofit world? In what ways can we encourage bolder thinking?

• Here’s more about “big bets” when it comes to the Sustainable Development Goals.

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It has become cliché to say that the United States is entering a new gilded age of philanthropy — one that could make the original era of the early 1900s seem unambitious by comparison. The question being asked now is, will this philanthropy actually create greater impact on important problems, or will it be mere charity that reinforces an increasingly tenuous status quo?

The stakes have never been higher. The well-known Giving Pledge (where billionaires commit to donate at least half of their wealth while living) now boasts more than 180 families and $800 billion in capital. Additionally, the next few decades will see a massive intergenerational transfer of wealth, as baby boomers pass up to $30 trillion on to heirs, some of which will end up in foundations and donor-advised funds (DAFs). And thousands of recently minted centa- and deca-millionaires are also eager to give back and “make a difference” — total giving in the United States exceeded $410 billion in 2017. The amount of private capital available for philanthropy has never been greater.

The problem is, the philanthropy “marketplace” isn’t set up to support effective deployment of these assets, and new donors face a number of internal and external barriers to giving.

Despite decades of strategic philanthropy, social innovation, and conversations about growth and scale, the sector still lacks efficient mechanisms for matching resources with needs at the magnitude required to create lasting social change. This creates a compelling opportunity to rethink the next decade of philanthropy and build a better giving marketplace — one that motivates donors to deploy resources more effectively to solve meaningful problems.

We think that reinventing philanthropy for a new era — and for greater impact — will require leveraging the assets of traditional foundations, bolstering nonprofit capacity, building more connective infrastructure, and experimenting with new models of capital aggregation. We believe that a new generation of donors is poised to drive enormous changes in philanthropy and that the established sector has a chance to be transformed as a result. With record growth in the number and scale of private foundations, DAFs, impact investing, and mission-oriented LLCs, donors are seeking new ways to organize their efforts and accelerate their impact. Established foundations can be part of the solution — if they want to be.

The big questions remain: Will traditional foundations, with little internal incentive to change, reimagine their roles and use their knowledge and networks to drive greater impact? And will newly wealthy donors put their money where their mouth is, and use their funds to change underlying structures and systems for the benefit of all? We hope so—in fact, we think the future depends on it.

Read the full article about making better big bets in philanthropy by Heather McLeod Grant & Alexa Cortés Culwell at Stanford Social Innovation Review.