In Defense of Big Bets

(Photo from iStock/Zolnierek)

Thanks to Kevin Starr for shining a spotlight on how to strengthen big bet philanthropy.

As a leading member of the growing movement to mobilize big bets in the philanthropy sector, I’d like to point out that what was a tiny band of believers just a few years ago (including the Audacious project, MacKenzie Scott, and Co-Impact, as Starr points out) has grown substantially. It now includes my organization, Lever for Change, as well as ICONIQ Impact, Lego Foundation, Yield Giving, Pivotal Ventures, W. K. Kellogg Foundation, and the MacArthur Foundation, among others.

We need to grow this group further—not to the exclusion of other types of philanthropy, but to complement it.

As Starr points out, not every organization is ready to, or will ever be ready to, catalyze a big bet into transformative impact at scale. But many are. Starr does these organizations a disservice by warning that they can be “broken” or stray from their sweet spot by the siren’s call of big bucks.

First, this framing promotes and perpetuates the myth that small organizations cannot or cannot be trusted to responsibly absorb large amounts of funding. Our experience has taught us the opposite. Small teams of dedicated individuals often have transformative and field-tested ideas, but desperately need funding to scale. For most nonprofits, scarcity is the real threat.

Second, this framing is a misrepresentation of big bet philanthropy. As someone who led the creation of the MacArthur Foundation’s 100 and Change blockbuster competition, which awards a single $100 million grant each year, I can tell you that big bet philanthropy isn’t about dropping nine-figure checks willy-nilly around town and running for the exit. Most organizations, regardless of size, need support and time to responsibly absorb significant pots of funding. When we awarded the first $100 million grant in 2017 to a collaboration between the International Rescue Committee and Sesame Workshop—both highly experienced and large organizations—we provided them with six months to outline plans, with support from our expert advisors, for how they might effectively absorb and deploy the funds.

The size of philanthropic gifts should be guided not by the size of the organization’s current budget, but rather, the size of the challenge it is positioned to address. And it should reflect the unique needs and vision of the organization’s leaders—with the goal of achieving durable impact.

For some, the most suitable big bet might be establishing an endowment that can give the organization long-term stability and allow it to think big. In other cases, it might be a long-term investment in organizational development (as prioritized by the local organization’s staff and leaders). In still other cases it might be funding for two or more aligned organizations to encourage them to work, grow, and manage risks together and spark a movement. And for still others, it might make sense to follow MacArthur’s lead and give the organization six months or so before a grant is finalized to outline how it might use the funds.

We have not solved the funding puzzle. As Starr points out, funders and organizations need to consider upfront what will happen when an initial big bet runs out. We need more funders to provide follow-on support as needed. But that is no reason to withhold funding at scale.

This is particularly true at the present moment when the United States is in the midst of the largest intergenerational transfer of wealth in its history. Economists estimate that $84 trillion will be passed down to lucky heirs over the next roughly 20 years. Very high-net-worth individuals (people who own liquid assets valued between $5 and $30 million) and ultra-high-net-worth individuals (those with more than $30 million) control nearly half of this wealth, though they make up less than 1.5 percent of US households, according to one 2020 report.

We absolutely need to channel more of these dollars away from trust funds and toward the greater good. Big bet philanthropy is one, but not the only, powerful tool for achieving this goal.

Rich people, ultra-high-net-worth individuals, or whatever terminology you prefer, are in a unique position to support sustainable transformative impact at scale. Let’s not dissuade them with warnings that their good will and good money will break an otherwise optimally functioning and impactful nonprofit. Instead, let’s highlight what is possible and provide guidance and encouragement.

We are presented with a historic opportunity to support of some of the most sophisticated and effective tools ever developed to address many of the biggest and most stubborn challenges in the world, from new high-yielding, high-nutrition seeds that can eliminate micronutrient deficiencies to low-cost or no-cost tools to control high blood pressure to technology that converts waste into renewable energy and fertilizer, and harnessing satellite technology to connect farmers with the water they need to feed their families and their communities. The funds on the sidelines that could push transformative change through big bets should not be framed, as Starr does, as “a new way to fail.”

The most dangerous failure facing the world isn’t big bet philanthropy. It is a failure of ambition.

Read more stories by Cecilia Conrad.