Most Large Gifts Don't Go to 'Big Bets' on Social Change, Study Finds

While many foundations and donors aspire to bring about social change, only 20 percent of their largest gifts are directed to such causes, a new report from the Bridgespan Group finds.

Published in the Stanford Social Innovation Review, the report, Making Big Bets for Social Change, found that out of $8 billion in reported grants of at least $10 million awarded by U.S.-based donors between 2000 and 2012, only $1.6 billion went to social change initiatives. (Grants made by the Bill & Melinda Gates Foundation were not included in the sample.) Instead, the majority of large grants were awarded to established institutions such as universities, hospitals, and cultural organizations. Moreover, just 16 percent of the "big bet" dollars awarded by "giving-while-living" donors and/or their foundations went to social change initiatives, compared to 28 percent of those from other foundations and institutions.

According to the report, factors behind the "aspiration gap" between what donors say they would like to achieve and where they direct their largest gifts include the lack of institutional "shovel-ready" opportunities, the higher bar for success and the difficulty of measuring the impact of a social change initiative, more public risk with less reward (as demonstrated, for example, by the response to the mixed results of Mark Zuckerberg's $100 million gift for education reform in Newark, New Jersey), and the absence of a built-in relationship with like-minded donors such as the one provided by a university alumni network.

At the same time, the report found that when donors do make "big bets" on social change, they can have a significant long-term impact — as, for example, was the case with the $15 million "big bet" made by Gap founder Don Fisher and his wife, Doris, on KIPP charter schools, or the $100 million investment over a decade that Robert W. Wilson made in the Nature Conservancy.

"Philanthropists who do make successful big bets on social change have often approached their philanthropy more like venture capital, investing significant time and effort in finding the 'deal' and knowing that not all big bets pay off," said Bridgespan partner and report co-author Chris Addy. "They move beyond an institutional mindset, rediscover their audacity, and embrace risk by making big bets."

While finding "big bet-ready" organizations remains a challenge, the report notes, donors could get started by exploring intermediaries that aggregate gifts for social change causes such as the Robin Hood Foundation; issue areas that already provide vehicles for large gifts and quantifiable results, such as environmental conservation; and organizations that have received large grants in the past.

"Fortunately, increasing the number of big bets on social change is not dependent on available wealth, willingness to give it away, or desire to support social change. All of that is in place," said William Foster, head of the consulting practice at Bridgespan and co-author of the report. "Continued bold pioneering by donors, and heightened understanding of their lessons learned can pave the way for others to find and structure philanthropic deals. If we were to close the aspiration gap, billions of additional dollars would flow to the world's most challenging problems."