Landing a Big Bet: How Nonprofits Can Attract and Prepare for Substantial Investment

In a recent webinar from the Stanford Social Innovation Review, grantmakers and recipients of “big bets” discuss the criteria that donors are looking for and the steps that grantees can take to prepare for heightened levels of funding. The webinar was moderated by Mark Edwards (Co-Founder of Upstream), William Foster (Partner and Head of Consulting at Bridgespan), Chuck Harris (Managing Director and COO of Blue Meridian Partners), and Eric Nee (Managing Editor at SSIR).

The market for big bets has increased dramatically over the past decade, with more than double the number of billionaires and triple the number of $25 million gifts. However, there is a significant gap between the eighty percent of philanthropists motivated by social change and the twenty perfect of big bets that go to social change organizations. Part of the challenge, as explained by William Foster, is that few of these nonprofits are ready with $10 million “investment concepts,” where funding is the only missing component. Further, donors typically make big bets after four previous, smaller donations — a prolonged period of trust and relationship building. Bridgespan has found that most nonprofits can successfully explain the compelling nature of their focus issue and how their efforts stand out, but they often face challenges in connecting the two.

Blue Meridian Partners, a collaboration of funders with the capacity and willingness to invest as much as $200 million in a single organization, focuses their big bets on six criteria: proven empirical results, strong leadership, a compelling vision, a track record for growth, a pathway to scale, and a sustainable economic model. The group plans to award $60 million over seven years to the nonprofit Upstream, which was successful in demonstrating how reducing unplanned pregnancy through IUDs and other forms of contraception has a measurable impact on reducing intergeneration poverty. Developing their explicit vision and scaling strategy required a year-long planning process with Bridgespan, a process which provided the framework for both their operational success and ability to secure funding. Both Upstream and Blue Meridian Partners consider the strength of their funding relationship to be founded upon the articulation of an achievable set of outcomes and a clear plan to get there.

Learn more at the Stanford Social Innovation Review.

As Public Funding for Arts Shrinks, Institutional Donors Bolster Giving

Over the past few years, public funding for the performing arts has decreased significantly in terms of real dollars. Under the Trump administration budget proposed in March, funding for the National Endowment for the Arts, the National Endowment for the Humanities, the Corporation for Public Broadcasting, and the Institute of Museum and Library Services would be eliminated completely. Although these institutions comprise 0.02% of the federal budget, they are crucial for sustaining organizations with fewer outside sources of donations. As explained by Robert Lynch, president of Americans for the Arts, “There are a few arts organizations at the top that are very stable, but most of them are struggling every day… Any interruption in that fragile ecosystem has an effect.”

Within this context, the importance of institutional donors such as the Shubert Foundation has heightened considerably. The Shubert Foundation has increased its annual grantmaking from $22.5 million toward two hundred theater and dance organizations in 2014, to $26.8 million and more than five hundred grantees in 2017. Unlike typical funders of the performing arts, which tend to award multimillion dollar gifts toward a narrow range of high-profile projects, the Shubert Foundation provides unrestricted funding to a wide breadth of organizations. The Shubert Foundation now awards more than half the funding provided by the National Endowment for the Arts, which stood at $47 million in 2016. Along with the Doris Duke Charitable Foundation and New England Foundation for the Arts, Shubert and other institutional donors have emerged as a substantial source of reliable funding.

Read more at Inside Philanthropy and The Washington Post.

Philanthropic Giving Reaches New High in 2016

Despite the turbulent year in American politics, philanthropic giving in the United States increased by 2.7 percent up to $390.05 billion in 2016, according to the annual Giving USA report released in June. These figures mark the third consecutive year of record-breaking donations.

Of the four categories tracked by the report, individual giving increased the most at 3.9 percent growth, while foundations and corporate giving both rose by 3.5 percent. Bequests were the only category to fall, having decreased by 9 percent. Within the foundation segment, community foundations increased most significantly by 9.9 percent, while operating foundations rose 4.5 percent and independent foundations were up 2.3 percent. Giving USA found increased donations across all of the measured issue areas, with the largest change to environmental and animal welfare (7.2 percent growth), followed by arts and the humanities (6.4 percent), international affairs (5.8 percent), and health (5.7 percent). Although giving to education saw more than 8 percent growth between 2014 and 2015, donations only increased by 3.6 percent in 2016.

Read more at Philanthropy News Digest and Giving USA.

Five Questions to Consider: The First 100 Days of the Trump Administration

The election of Donald Trump last November has precipitated significant movement within the philanthropic sector to mobilize resources, organize collective action, and spearhead advocacy for a wide range of issues and communities across America. Now having reached the first 100 days of the new administration, philanthropists are taking a moment to reflect and assess this response. In their recent article for The Chronicle of Philanthropy, Aaron Dorfman, Cathy Cha, Jaqueline Martinez Garcel, and Lateefah Simon — leaders of the National Committee for Responsive Philanthropy, the Evelyn & Walter Haas, Jr. Fund, the Latino Community Foundation, and the Akonadi Foundation respectively — encourage philanthropists to consider the five following questions:

Have grantmakers committed enough funding and resources?

Grantmakers throughout the country have heightened their giving in response to the shifting political climate and policy priorities of the Trump administration. With the Affordable Care Act under threat, the California Endowment announced it will be creating a $25 million fund for health and safety programs. The William & Flora Hewlett Foundation has dedicated $63 million toward climate change, democracy, and women’s health; the Open Society Foundations has committed $10 million against hate crimes; and the Rockefeller Brothers Fund has increased its giving by 12% in order “to protect and strengthen the vitality of our democracy.” Community foundations and smaller grantmakers have followed suit. However, the authors urge philanthropists to ask whether these efforts are truly enough, considering both the intensity of the challenges being faced and the level of resources at their disposal.

Have grantmakers invested in leaders of color and women?

The authors encourage philanthropists to question whether they have prioritized investing in organizations and institutions led by women and people of color. Regardless of their area of focus, incorporating marginalized leaders and communities is critical toward achieving equity and a lasting impact.

Have grantmakers responded quickly enough?

Although it can be challenging for foundations to swiftly review and process grant requests, many nonprofits are facing imminent threats and challenges. As the authors explain, “a slow response from a grantmaker could mean a missed opportunity to make a measurable difference.” The Astraea Foundation, San Francisco Foundation, Solidaire, and Women Donors Network, among others, have all created rapid-response funds to address these needs.

Have grantmakers expanded their vision?

Many foundations focus resources on a particular set of issues and causes. The authors suggest that philanthropists consider expanding their scope to include communities most in need of assistance: “If we stay in our silos and only support those organizations and campaigns that closely match our program requirements, we will probably miss opportunities to make a bigger difference.” The Barr Foundation, Omidyar Network, and Rosenberg Foundation have all awarded grants beyond their typical priorities to support civil rights, investigative journalism, and Muslim community organizations.

Have grantmakers effectively spoken out to defend those in need?

The authors note that although foundations hold a significant level of influence over society, they have historically been reluctant to speak out on contentious issues. The authors encourage philanthropists to make use of their public standing to mobilize support and action for communities in need.

Read more at The Chronicle of Philanthropy.

Ideas42: Using Behavioral Science to Influence Giving Patterns

Established in 2008 as a research project at Harvard University, Ideas42 has grown into an 80 person nonprofit that uses behavioral science to address topics in criminal justice, development, education, health, and philanthropy. The organization draws upon research in economics, neuroscience, and psychology in order to nudge people toward choices that benefit themselves and society at large. In 2016, Ideas42 brought in $12.5 million for their efforts, largely from foundations including the Bill & Melinda Gates Foundation, Robert Wood Johnson Foundation, MetLife Foundation, William & Flora Hewlett Foundation, and the Laura & John Arnold Foundation.

Through their work, Ideas42 seeks to explain why people tend to behave irrationally and apply those conclusions toward advancing social wellbeing. As co-executive director Piyush Tantia explains, “If you design anything — whether it be a social program, a piece of technology, an email campaign — it’s going to influence people’s behavior. In our experience, most of the time, people don’t really think about that human interaction. They’re assuming that people will be rational.” The Cleveland Housing Network, for example, noticed that many of their tenants would habitually wait until the 10th of the month to pay their rent, sometimes incurring late fees when their payments were delayed. In a pilot project funded by the Citi Foundation, Ideas42 found that tenants could be incentivized to pay on time if they were offered entry into a raffle for $100 or a month of free rent. This has now become a standard practice by the housing agency.

Most recently, Ideas42 has been commissioned by the Gates Foundation to examine ways in which giving patterns can be influenced on a wide scale. In addition to examining research on behavioral science, Ideas42 is collaborating with Paypal, Benevity, and Bright Funds — three digital platforms that enable giving — to test new products that might increase donations. Survey data clearly indicates that donors increasingly value nonprofit performance, but are unsure how to assess it. Mr. Tantia would like to address this disconnect: "The entire charitable-giving industry is set up in such a way that it encourages emotional or impulsive giving. If we want to change that, we have to try completely new approaches.”

Read more at The Chronicle of Philanthropy.