What are the challenges faced by funders who wish to generate significant social change through large donations?
Why academic, medical and cultural institutions are perceived as safe social investments and have better success in attracting large donations?
Why are large donations to areas such as social change and closing social gaps more open to public criticism and perceived as riskier?
These are some of the questions discussed during the Committed to Give meeting with William Foster, a partner at the Bridgespan Group and head of its consulting practice.
The meeting’s purpose was to evaluate together the similarities and differences in the challenges faced by funders as revealed in a research conducted by Foster, Perreault, Powell & Addy 2016 (“Making Big Bets for Social Change”)*, while discussing the current status of philanthropy in Israel.
Foster emphasized that there is a gap between the big donors’ aspiration to create social change and finding a social organization in which to invest. This gap has created frustration among donors, and in reality only about 20% of all major donations is invested in organizations working to promote social change.
One of the research’s conclusions is that large investments (“big bets” of millions of dollars) are a significant tool in creating social change, as evidenced by the fact that behind almost every successful social change initiative there are philanthropists who invested a lot of money.
What are the barriers when making a major donation? Foster and his peers identified two groups of barriers:
1. Challenges in closing a deal when solving a complex social problem: lack of opportunities which are ripe for investment and do not require infrastructure development; lack of personal relationships with social organizations’ management; and difficulties in measuring the social impact
2. Perceptual challenges: the media’s tendency to criticize donations to social issues as it does not understand the meaning of social impact; the perception of donations to social issues as riskier (in contrast to donations to institutions), which results in a longer evaluation process; and the fact that not enough efforts (in terms of time and infrastructure) are made when evaluating a deal, unlike in capital markets.
How can we detect opportunities for large investments in non-for-profit organizations that promote social change? Among others, by investing in constructive and fruitful collaborations between an organization and a potential donor based on a common vision; hiring people with managerial and operational experience who know how to develop ideas and implement them; and leveraging philanthropic collaborations on a common social issue (such as the New York-based Robin Hood Foundation and Israel’s Shahaf Foundation).
We were delighted to join hands with the Nova project and Midot’s annual conference on effectiveness in the third sector in hosting this meeting.
Making Big Bets for Social Change, By William Foster, Gail Perreault, Alison Powell, & Chris Addy. Stanford Social Innovation Review, Winter 2016