What is Giving Compass?
We connect donors to learning resources and ways to support community-led solutions. Learn more about us.
Currently, the average grant from large U.S. foundations is $50,000 and recipients have about 18 months to deliver successful results. Imagine trying to solve racial inequity or homelessness in your community with $50,000 in a year and a half. It’s time for a new business model.
Communities United, a small, youth-led movement, has a big, bold goal: they want to heal the effects of systemic racism on youth in Chicago. Normally, it would take a grassroots team like this several years to build up enough of a reputation to receive significant funding from donors. However, a quiet revolution is underway in the predictable world of philanthropy. Last fall, Communities United received $10 million for their “Healing through Justice” initiative from the W.K. Kellogg Foundation’s Racial Equity 2030 Challenge. The scale and nature of this funding is unusual, but it shouldn’t be.
Historically, funding goes to the usual suspects, including elite museums and universities, rather than to organizations working on pressing social issues. While cultural institutions are deserving of donor support, they shouldn’t take up the lion’s share. One solution is to grow the available funding pool and invest in more big ideas to accelerate social change. According to a recent report, the richest Americans are sitting on $4 trillion — that’s $4,000,000,000,000 — much of which could benefit families and communities in America and around the world. So, why is this money not moving where it is needed?
The truth is that most funders find it difficult to give away large amounts of money. They often lack the infrastructure. Staffing a foundation or launching a charitable initiative is expensive and labor-intensive. For these highly successful people who have often made their fortunes in business, there is also an organizational and reputational risk when they venture into a new field like philanthropy. Sometimes it’s easier to fund what you know.
Yet, there are many organizations like Communities United with big ideas that need funding, but without access to wealthy networks. The John D. and Catherine T. MacArthur Foundation recognized this need several years ago and proposed a bold solution of its own: 100&Change is a competition for a $100 million grant to fund a single proposal that promises real and measurable progress in solving a critical problem of our time.
In 2017, International Rescue Committee and Sesame Workshop received the inaugural $100 million award to educate young children displaced by conflict in the Middle East. The competition revealed more bold ideas and, thankfully, additional donors who wanted to fund them: more than 20 funders have committed an additional $511 million to support 100&Change applicants.
This model of large-scale awards and additional or “leveraged” funding was an eye-opener for many of us. The promise of this model to activate large-scale, long-term funding made something abundantly clear — the usual way of doing business wasn’t a recipe for change. Timid philanthropy funneled through existing networks wasn’t going to solve the world’s big problems.
The MacArthur Foundation launched Lever for Change in 2019 to address the gap between philanthropic aspirations and reality by offering our philanthropic advisory services to other donors. Four years later, we know our approach and model work because we have helped donors give away over $1.25 billion dollars — funding that’s not just pledged, but actually in the hands of more than 100 different organizations like Communities United.
Since our launch, we have addressed issues including racial inequity, gender inequality, lack of economic opportunity, and climate change. We have done this through 11 customized challenges on behalf of a variety of funders and their advisors — from high-profile donors to institutional funders, corporate funders, and philanthropic advisors, as well as new and anonymous donors. Along the way, we have learned some valuable lessons.
Here are five ways we recommend donors do things differently:
- Shift the power dynamics: expand your pool of applicants to include historically overlooked communities and social entrepreneurs.
- Give more money: larger grants allow nonprofits the space to plan and implement their big ideas rather than having to focus as much on meeting year-to-year fundraising goals.
- Leverage your donations: you don’t have to go it alone. Engage with other funders early. They can provide expertise and even additional funds.
- Build equity into your process: consider more than your usual grantees, including teams who do not have pre-existing social connections with your network.
- Share what you learn: making your information accessible to other donors benefits potential grantees and can provide insights for others working to address the same issue.
At Lever for Change, we’re intentional about shifting the balance of power: our challenges are open and transparent because we want the best ideas out there. We actively promote equity by supporting not just the awardees, but finalists and other highly ranked teams we’ve identified as well. In fact, we try to find funding for as many bold solutions in our network as possible. So far, the sponsors of our challenges have committed a total of $708 million to 23 outstanding organizations, and we’ve facilitated another $610 million in follow-on funding to 87 teams.
Our team encourages donors to give money long-term (five years minimum) so organizations don’t have to worry about fundraising and can focus on scaling their idea. We also “de-risk” investments in big, bold ideas by vetting proposals. We have a proven framework, so donors don’t have to create their own.
The bottom line is this: business is full of rebels, disruptors, change-makers and yes, even innovators; we need more of this energy in philanthropy.
Recently, Lever for Change partnered with MacKenzie Scott to manage the $250 million Yield Giving Open Call, focused on elevating organizations working with people and in places experiencing the greatest need in the U.S. We need more transformational giving like this: large, unrestricted grants that place trust in the vision of creative thinkers and problem solvers in communities that are often overlooked.
My question to you is this: How can you be bigger and bolder with your giving so that grassroots organizations like Communities United can access the funding they need?