In 1990, there were only 60 billionaires in the US. In 2023 there were 748. This steep rise in concentrated wealth has reshaped philanthropy. Many of these high-net-worth individuals are embracing “big bet philanthropy.” Big bet philanthropy is an approach defined by big injections of funding meant to address the world’s most pressing problems.
Within philanthropy, there’s been both hand wringing and enthusiasm for how big bet philanthropy is changing the landscape. What’s clear is that it’s not going anywhere. Big bet philanthropy is here to stay. It’s not worth trying to litigate whether it should exist.
The best thing to do now is clarify what works well about big bet philanthropy and what doesn’t. The great thing is that big bet philanthropy offers lessons to funders of every size about how to make the next era of philanthropy more effective.
4 types of big bet philanthropy
One of the main issues with big bet philanthropy is that there’s no clear fully agreed-upon definition of what it actually is. That makes it difficult to form a clear consensus or even have a productive discussion.
For instance, Lever for Change defines big bet philanthropy as the practice of making multimillion-dollar investments in a single organization with the intention of transforming a sector, issue, or organization.
On the other hand, Bridgespan has a more simplistic definition. They categorize big bet philanthropy as a donation of $25 million or more.
Everyone seems to agree that big bets are always high dollar amounts (eight or nine figures). But beyond that, there are four distinct types of big bet philanthropy.
Developing new solutions
Sometimes big bet philanthropy is meant to spur innovation. This could look like a large grant to help organizations or individuals develop a new technology or strategy.
Big bet philanthropy is set up well to support innovation because developing new solutions can come with risk. Funders might pour resources into projects that don’t pan out. It’s the kind of risk that philanthropists can take, but governments and nonprofits can’t. They generally don’t have the latitude to risk that kind of capital.
Example: The Gates Foundation Reinvent the Toilet challenge was launched to support the creation of new technologies to make sanitation services more accessible for poor communities and regions that are prone to flooding or where infrastructure and water resources are scarce. Researchers around the world get grants to develop new toilet solutions.
Focusing on a specific cause
For funders who feel strongly about a specific cause, a big bet might mean spreading resources out to many organizations that are all focused on the same core issue.
This approach can help build systems resiliency across the nonprofit sector. With an influx of funding, nonprofits can do the kind of capacity building they need to thrive over the long term, like investing in hiring, infrastructure, and strategic planning.
Example: In 2020, Mackenzie Scott awarded grants to 116 organizations dedicated to equity. Her total giving that year added up to $5.7 billion. And this year, Melinda French Gates’s organization Pivotal Ventures is collaborating with Lever for Change to distribute $250 million to organizations dedicated to improving women’s mental and physical health.
Providing a large infusion for one program
Some big bets funnel resources to one specific organization to help them build capacity, launch a program, or execute their long-term vision.
For many nonprofits that have to spend much of their time chasing funding, an infusion of resources at this scale can be transformational. In this type of big bet, funders often build partnerships with nonprofits. Beyond writing a big check, funders offer more holistic support, including consultations, training, and networking.
Example: Through the Lever for Change Economic Opportunity Challenge, Lever for Change awarded a $10 million grant to Per Scholas so they could launch new training locations and expand existing ones.
Launching a joint initiative
Sometimes a big bet happens when a collection of funders pool their resources together. They often choose a specific cause.
A joint initiative often features alignment and cooperation between philanthropic funders and government agencies that are working toward the same goal.
Example: The 2017 funding to Global Polio Eradication Initiative brought together a group of six funders: the Gates Foundation, Global Affairs Canada, Rotary International, United Arab Emirates, the US Agency for International Development, and the US Centers for Disease Control & Prevention. They all shared a desire to eradicate polio and created a joint plan to execute on that goal.
Lesson 1: Communities must set their own priorities
Sometimes funders try to dictate priorities for a community. That dynamic can be even more exaggerated when the funders are giving millions or tens of millions of dollars. But the most effective programs often start with communities setting their own priorities.
No matter how much support a funder brings to the table, they need to take a supporting role. Community members should be the ones leading the way.
John Brothers, president of the T. Rowe Price Foundation, likes to share a story with other funders that highlights what can go wrong when funders impose their priorities onto communities. “There’s a playground in West Baltimore that like fifteen companies came and built, because somebody said, ‘hey, let’s go build a playground.’ And that playground has sat there unused for eight years. No community members ever asked for that.”
As funders step into relationships with community organizations they must be willing to listen and collaborate, rather than dictate. Unrestricted funding is a great tool to put the decision-making power into the community’s hands. And tenets of trust-based principles can provide a good framework for how to build a collaborative relationship.
Example: The Headwaters Foundation of Western Montana works alongside community members to set priorities. Before they started developing programs, they went out into communities and asked people what issues they should focus on. Then they used that feedback to build the organization strategy and mission.
Lesson 2: Innovation should have a clear purpose
Innovation should never be just for the sake of innovation. Funders can get caught up in the excitement of creating something new, but that’s not always what a community needs most.
Funders must be careful to not assume that a specific issue stems from lack of innovation. The right solution might already exist but may not be in place because of an accessibility issue, a lack of the infrastructure, or not enough personnel. Before jumping in, funders should do the research to determine if a lack of innovation is what’s holding progress back.
For projects that require innovation, it’s important for funders to consider the timeline. They have to balance long-term goals with meeting immediate needs. For instance, if funding is dedicated to developing a new solution that will benefit a community in 20-30 years, people who need more immediate support run the risk of being overlooked. In certain cases it might be worth splitting resources between long-term innovation projects and programs that provide more immediate relief.
Funders should also prioritize scalability as they innovate. A new solution is only useful if it’s feasible to scale in terms of cost and logistics.
Example: For innovation that has a clear purpose, look to the development of climate-smart crops for small-scale farmers. The initiative received funding from the Gates Foundation as well as other government and private funders.
Lesson 3: Strategy work can’t be overlooked
Funders cannot expect organizations to do big, systems change work without time and resources dedicated to strategy. That’s like asking someone to build a house without giving them time to create a blueprint.
For community organizations that have limited funding or restrictions that tie funding to specific programs, strategy work often doesn’t get the time and attention it needs. High-dollar funders are well positioned to provide support for strategic planning, but funders of all sizes should consider how they can better prioritize this essential step.
One approach is to give organizations a grant specifically for strategic planning or dedicate part of their total grant to enable that work. It’s also helpful to provide support beyond the check. Many organizations could benefit from a consultant or thought partner who can help guide them through the process. The best way to know what a nonprofit needs is to ask them directly.
Example: Lever for Change, gives their challenge finalists strategic planning grants so that the organizations can develop and fine tune their plans. Some of the organizations they work with describe the $1 million planning grant as pivotal for their organization.
Lesson 4: Additional funding should be a collective goal
No single donor is going to be enough support for a nonprofit to sustain their work for the long term. Nonprofits need relationships with a variety of funders. Grantmakers of all sizes should aim to help their nonprofit partners build a community of support.
One criticism of big bet philanthropy is the threat of a huge funding cliff that looms after a high dollar award. If nonprofits build their programs and infrastructure up when they have an influx of funding, they risk hitting a point when that funding runs out, and they cannot sustain their expanded programming.
All funders can help alleviate the risk of a funding cliff by allowing nonprofits to use funding to build up their fundraising capacity, rather than tying every dollar to specific programs.
Grantmakers should also see themselves as a bridge to connect their nonprofit partners to other funders, big and small. Some funders create a partner network, which is a collection of community organizations they have worked with. These networks can help attract more funding—as other funders can more easily find nonprofits dedicated to specific causes that are vetted by a fellow funder they know and trust.
Example: Two existing partner networks are Lever for Change’s Bold Solutions Network and Focusing Philanthropy’s giving portfolio. Both of these networks help to amplify the work of their nonprofit partners so that those organizations can build relationships with more donors.
Partnerships are at the heart of good grantmaking
One thing big bet philanthropy has proven on a big scale is that the funder-grantee partnership is most effective when it’s built on collaboration, trust, and honest dialogue. That takes funders willing to go beyond writing a check to truly build a relationship with the organizations they support. And you don’t have to be a “big bet” funder to do it.
The relationships between funders and nonprofits often start with a grant application. Be sure to choose a grant management platform designed to help you build a strong connection and ease the burden on both you and your grant partners.
Laura Steele is a social impact writer and editor at Submittable focused on the world of grantmaking and corporate giving. Her work often explores the connection between technology, equity, and social good. She also writes fiction and nonfiction. You can read some of her stories and essays at laurapricesteele.com.