10 Ways Generous Donors Can Make Big Bets for Social Change

When philanthropists think about making multimillion-dollar “big bets” for social change, they first must resolve what they want to achieve. Most donors readily gravitate toward education, public health, social services, or the environment and state a desired goal, such as advancing kindergarten readiness. Now comes the hard part: how to deploy money and other resources to achieve those goals.

This may seem like a simple question. But it turns out to be a major barrier preventing donors from closing the “aspiration gap” that separates their philanthropic commitment to social change from their actual philanthropic investments. Nearly 80 percent of the largest donors state that social change is one of their two or three top priorities. Yet our research found that only 20 percent of the biggest bets by dollar value ($10 million or more from 2000 to 2012) actually focused on social-change giving. The other 80 percent went to universities, hospitals, cultural institutions, and similar organizations

That rarity of big bets for social change is heart-wrenching, given that large infusions of grant money can have extraordinary impact. Mind you, it’s not a quick process. The biggest bets generally cap years of work. Our research has shown that a median of four smaller grants precede a big bet (with the big bet being 10 times the size of the previous grant), as donors and recipients build relationships and trust and gain knowledge of what’s required to get results. And those big bets are part of a broader arc of social change — one that’s more appropriately measured in decades rather than in years. But ultimately, it takes a lot to do a lot.

The good news is that our continuing examination of more than a decade of big bets by America’s donors shows 10 distinct and significant ways to place a big bet on social change. Almost every big bet in a sample of more than 900 gifts of $10 million or more in our 2000-13 database falls into one of these categories.

Here are the 10 types, starting with the most prevalent. Note that the last six account for only a quarter of the big bets but are associated with some of the biggest success stories.

1. Pay general operating costs.

This is by far the most common type of big bet on social change, accounting for one-third of the contribution dollars in our database. These gifts are typically easier to make and involve less risk than some of the other categories. Because giving money to continue a group’s operations may seem plain vanilla, donors can be tempted to impose extensive restrictions on how grantees spend the money. Yet attaching too many strings can hamper a nonprofit’s ability to put the funds to best use.

2. Purchase a physical asset. For some kinds of social-change efforts, assets like land or buildings can be important. Community-health centers, charter schools, and conservation efforts all may require significant one-time investments in physical assets. These donations typically have the advantage of being relatively straightforward to give, with fairly certain and clear results.

3. Create an organization. Sometimes a need is clear, but there isn’t an existing organization with strong potential to address it. But founding an organization tends to be a major undertaking for a donor — perhaps the most demanding of the 10 types of big bets. Given that fully 14 percent of the big-bet dollars in our database fell into this category, this may very well be one that donors deploy too frequently.

4. Give to an aggregator. Organizations that gather and strategically distribute philanthropic money — like the Robin Hood Foundation, Jewish federations, and community foundations across the United States — are frequent recipients of big-bet dollars. This approach offers donors several benefits, chief among them taking advantage of the aggregator’s strategic and grant-making expertise. Donors, in essence, outsource the process of developing strategies, searching for a worthy recipient, figuring out how to structure the deal, and creating and tracking measures that will tell them if the gift is making a difference.

5. Build knowledge and skills in a social-change area. In most areas of social change, no one organization is going to solve a complex problem. Nor is any solution so clear that a single leader or entity can chart the exact path to a full-scale solution.

An example of a contribution that is paying off now comes from the Rockefeller Foundation and the Omidyar Network. They made major investments a decade ago to develop impact investing from an idea into a field of knowledge. Their support led to the creation of common standards and measures and the growing number of organizations that now work to support impact investors, notably the Global Impact Investing Network.

By investing in building a field, donors can focus on a single overarching goal but still invest in efforts that spur multiple operators to take an array of pathways to achieve that goal. Fields ripe for this sort of investment tend to be ones with viable solutions but whose service delivery is fragmented, important ideas or practices are not in broad use, and competitive dynamics do not seem to push toward improved results.

6. Advance research by colleges, scientific institutes, and other centers of study. Of all the categories on our list, this one comes closest to blurring the line between big bets on social change and what we have termed institutional giving. But we include this category because gaining knowledge can be critical to having impact. Research can shed new light on a social problem or advance thinking on how to solve the problem.

Such was the case in 2011 when Silicon Valley investor Robert King and his wife, Dorothy, donated $150 million to Stanford University to create a center to help entrepreneurs and businesses in developing economies learn to design effective poverty-alleviation interventions.

“The relationships the university has in Silicon Valley, the range of expertise it has among its professors, it can’t be replicated,” said Dorothy King at the time. “The university can make our money more fruitful than we could on our own.” In 2015, the center engaged nine Stanford departments and schools in 19 research projects in as many countries.

7. Endow an organization. Endowing an organization can powerfully advance its ability to address a critical, persistent need. This is particularly true for organizations that simply would not be sustainable without philanthropic support. It’s also true for organizations with volatile revenue streams, such as those that serve young people. Even if an endowment covers just a small portion of an organization’s budget, it still can help stabilize the group’s finances or support work that is hard to raise funds for.

8. Wage an advocacy campaign. For many of society’s biggest problems, lasting solutions require policy or cultural change. In these cases, waging an advocacy campaign can be the right approach. History tells us that big bets can play a crucial role in such efforts. The biggest challenge with this type of big bet is the risk of failure. On many societal issues, particularly those that are culturally or politically charged, it can be very hard to make major changes.

Early “failures,” however, may be essential to softening the ground for later success. The marriage-equality movement, for example, encountered numerous setbacks before shifting the thematic focus of its campaign from LGBT rights to love, which led in 2013 to the Supreme Court ruling that declared bans on same-sex marriage unconstitutional.

9. Provide growth capital. In the nonprofit world, “growth capital” is often used loosely to mean a lot of money. But when used accurately, the term describes something specific and real: a one-time infusion of capital that is more akin to investment dollars in the business world. The recipient doesn’t fall back down to its original state after the growth-capital funds are spent but rather sustains itself at the new, higher plane.

10. Run a competition. Many philanthropists feel tremendous urgency to solve pressing societal problems but do not see solutions at hand. A competition offers them the chance to galvanize the best thinkers to find solutions or take bold leaps. While competitions unleash creative energy, they can also produce great waste — all the effort put in by the “losers.” This puts a real premium on designing competitions so that even those that don’t win move their organizations or causes forward.

Bloomberg Philanthropies’ Mayors Challenge, for example, provides cash awards, management advice, and coaching to winners. Bloomberg also provides postcompetition technical assistance to finalists that continue to work on their ideas.

Throughout history, big philanthropic bets have changed the world. Yet, while giving generously has increasingly become the norm among the wealthiest, making big bets on our toughest problems has not become common. The better known the pathways get, the more these rare acts of philanthropy can become normal. We hope that deepening understanding of these 10 ways to bet big on social change will accelerate that process.

William Foster is a partner and head of the consulting practice at the Bridgespan Group. He was previously executive director of the one8 Foundation (formerly the Jacobson Family Foundation). Gail Perreault is a partner on Bridgespan’s knowledge team. She was previously director of learning and performance management at the one8 Foundation. Elise Tosun is a manager in Bridgespan’s Boston office.