Show Me the Money

As managing editor of Stanford Social Innovation Review, I receive lots of news releases trumpeting a large gift made by a philanthropist or a foundation to a nonprofit. Many of these are six- and seven-figure gifts, but some are eight figures or more—what the authors of this issue’s cover story call “big bets.”

You’d think that these big bets (of $10 million or more) were always a good thing, but all too often that’s not the case. The problem with many of them is that they go to institutions that are already well funded or that do little to improve society’s ills. Instead of donating $25 million to build a homeless shelter or to expand an afterschool program, most wealthy donors give money to construct a new museum wing or build a new university gym.

According to data collected by the authors of “Making Big Bets for Social Change,” during a recent 12-year period about 80 percent of big bets went to nonprofit institutions (such as universities, hospitals, and cultural organizations), and only 20 percent went to nonprofit social change organizations (such as human services, conservation, and economic development).

Other writers have taken the wealthy to task for giving such large sums to institutions that largely serve to prop up their own class. And still others have criticized the US tax code for allowing the wealthy to get a tax deduction while doing so. But few researchers have dug deep to understand the social change organizations that have gotten big bet gifts and why they were able to do so—the “outliers” and “positive deviants.” That’s what makes this article so interesting.

It turns out that some nonprofit social change organizations are actually pretty good at garnering big bets. In fact, 28 social change nonprofits received four or more big bets between 2000 and 2012 (the 12-year study period). You could probably guess the names of some of them, like Nature Conservancy and Teach for America. But others might surprise you, like Youth Villages and Institute of International Education.

Of course, not every nonprofit needs a $10 million-plus gift, or could make good use of that much money if it did get one. But plenty of nonprofits are proven and ready to tackle a social problem if they only had enough money to do so. And yet few wealthy donors are willing to step up and fund them.

One donor that is willing to bet big on nonprofit social change organizations is the Bill and Melinda Gates Foundation. The foundation has been criticized for many things—some of them rightfully. But one thing you have to give the Gateses credit for is that they put their money where their mouth is. Between 2000 and 2012 the Gates Foundation gave almost as many big-bet dollars to social change as all other US donors combined. That’s all donors, not just all foundations.

Yes, Gates has more money than other foundations, but the threshold for a big bet is $10 million, not $100 million. Plenty of donors could write that big a check for social change if they wanted to—but they don’t. Social change nonprofits must do a better job of making themselves big bet ready, but it’s ultimately the bettors themselves who decide where to put their money. It’s time that more of them begin to invest in social change.

Read more stories by Eric Nee.