Giving Compass' Take:

• William Foster, Gail Perreault, and Bradley Seeman unpack the components that must be present for a funder to make a big bet with their philanthropic dollars. 

• How can funders learn from the successes and failures of past philanthropic bets? What are you ready to bet on? 

• Learn about the equity issues of big bets. 

Those of us working with nonprofits have probably thought or heard some version of this sentiment: If I could just get a really big donor to see the issue through my eyes and witness the power of the work, then they would be moved to provide the very large contribution we need. The good news is that philanthropists are beginning to make more and bigger bets on social change. But in our experience, these gifts do not usually stem from getting lunch with the right billionaire. Yes, relationships with donors do matter, and long-term relationships matter when it comes to securing a big-bet investment. Our research shows that recipients receive a median of four prior grants from a donor before receiving the big bet. Several factors, however, particularly lack of clarity on what enduring results a big bet could credibly achieve, often undermine donors’ willingness to take the plunge and make sizable and far-reaching grants.

This hesitancy is in some ways good (we should want the largest gifts to support extraordinary opportunities) and in some ways bad (there is a lot of money sitting on the sidelines). Much of this reluctance is caused by factors nonprofits and nongovernmental organizations (NGOs) cannot control. Too often, aspiring philanthropists let the perfect be the enemy of the good and delay their giving.

When donors consider making a truly big bet, they generally want to do more than fund good work. They want to create change that solves or significantly ameliorates a problem. Yet we have observed that social change leaders, in pursuing exceptionally large gifts, tend to place the heaviest emphasis on the enormity of the problem and on the moral imperative to tackle it rather than on the specific results their efforts could achieve and the specific and logical path to accomplish their goal. Their objective is to make the issue stand out in importance, but the unintended effect is to undermine a donor’s belief that their organizations can make a big impact.

A strong and big-bettable investment concept has five key elements:

  • an important problem,
  • a point of arrival,
  • a credible path,
  • a “why philanthropy” rationale
  • a strong leader and team

Two of these, an important problem and a strong leader and team, will already be familiar to almost any leader who has pitched a potential donor. This article focuses on the other three: point of arrival, a credible path to that arrival point, and the role of philanthropy.

Read the full article about big bets by William Foster, Gail Perreault, and Bradley Seeman at Stanford Social Innovation Review.