The Potential for Big-Bet Philanthropy to Drive Social Change

The Potential for Big-Bet Philanthropy to Drive Social Change

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Across the world, the number of billionaires has grown exponentially in the past few decades. In 1993, only about 300 people had hit the billionaire mark, but there are now more than 2,200 people worth at least a billion dollars. Collectively, their worth adds up to more than $9 trillion. One of the biggest effects of this growth in wealth has been in the area of philanthropy, especially through movements such as the Giving Pledge, which challenge these wealthy individuals to spend their money for good sooner rather than later. Excitement about how this growing wealth can be used to solve social issues and help people has understandably increased sharply in recent years. However, there is also growing concern that billionaire philanthropy effects undemocratic change, as it allows the wealthiest people to choose those issues that are most deserving of funding.

A great lens of delving into this debate relates to “big bet” philanthropy. The phrase refers to gifts of $10 million or more. These sizeable gifts have driven a number of important social advancements, which include eradicating disease and protecting civil rights for marginalized communities. At the same time, the majority of the largest gifts do not go to social causes. The most common recipients of these largest gifts remain universities, cultural institutions, and medical research organizations, meaning that little of this money goes toward solutions related to poverty, justice, and other prominent social issues. The problem is that the donors behind these large gifts say that social issues remain the primary drivers of their giving. Thus, some sort of disconnect exists.

A Growing Focus on Social Issues

At the same time, there has been progress over time. More big-bet philanthropists are focusing on social issues than ever before. In 2000, only 18 gifts that each totaled $25 million or more were given directly to social causes. By 2017, that number had grown to 69. Experts in the philanthropic sector believe that this increase reflects a growing desire to make thoughtful gifts that address the most persistent social problems. However, it is also important to note that the growth in grantmaking does not accurately reflect the overall potential for giving. Analysts have found that families worth more than $500 million in the United States donate an average of 1.2 percent of their wealth annually toward philanthropic causes. However, for these families to give away half of their wealth in the coming two decades, they would need to increase their giving to over 11 percent annually.

Understandably, many nonprofit organizers are seeking ways to effect this ten-fold increase in giving and attract more big-bet donations to the social realm. Some degree of anxiety exists about this increase in giving that must occur for the wealthiest Americans, most of whom are now in their 60s, in order to fulfill their Giving Pledge obligations. On the one hand, big-bet giving could fuel a new era of innovation and impact that dramatically shifts what society looks like and how it operates. On the other hand, giving could start to focus on less ambitious outcomes and cause only minimal change as it increases. Thus, the question of how to encourage big bets that are disciplined, enterprising, and humble has arisen.

The Impact of a Hub-And-Network Approach to Big-Bet Philanthropy

A solution that shows a lot of promise recognizes the fact that few donors can effect lasting change alone, even with their big bets. The JPB Foundation has created a unique approach to giving that it calls the “hub-and-network” approach. This means that the foundation avoids placing all of its big bets in a single organization and instead places multiple bets on one centrally positioned grantee that becomes the hub. Subsequently, the hub can serve as a focal point for grantmaking. However, the foundation also makes additional investments around the hub to create a network of organizations all working toward a similar goal. For example, JPB placed a big bet on Community Change, a movement-building organization, as the hub for its poverty prevention work, although it has also funded several nonprofits that undertake different but complementary work on the same issue. These network organizations include the Sargent Shriver National Center on Poverty Law, the National Employment Law Project, and the Center on Budget and Policy Priorities.

The hub-and-network approach to grantmaking allows JPB to make its big bets in a more intelligent manner. The approach allows the foundation to capitalize on the distinct expertise, experience, and philosophies of its network while continuing to funnel sizeable funding into a particular socially focused work area. The flexibility of this approach facilitates experimentation and promotes collaboration. The decision-making is undertaken jointly with the network, as well as other funders connected to it. Each of the organizations can weigh in on those aspects of an overall strategy that they understand the best or feel the most passionate about so that the big bet can have the largest impact possible. JPB has also noticed that this model has encouraged some supported organizations to explore new sides of an issue. One of its hub-and-network portfolios focuses on energy efficiency, and several of the network organizations have become involved with tangential, but related issues such as affordable housing.

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