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Big Bet Philanthropy: How More Givers Are Spending Big And Taking Risks To Solve Society's Problems

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This story appears in the December 19, 2016 issue of Forbes. Subscribe

David Dornsife recalls the first time he took his wife, Dana, to see the work they were funding to provide water to people in Africa, traveling to a village with no wells in Ghana in 2001. "People had scabies all over their faces," he says. "It was hard to talk with them because there were flies everywhere."

The average life span, they learned, was 46 years; 40% of the village was going blind from a bacterial infection called trachoma; and nearly 10% had contracted a debilitating parasite called guinea worm, which lives in dirty water. Even for the relatively healthy, water dominated their lives. Women and children spent up to seven hours a day fetching and ferrying it in 40-pound jerry cans balanced on their heads. And this village was nothing special: Some 385 million rural Africans lack access to clean water. Around the world nearly 1,000 children under age 5 die every day as a result of diarrhea caused by contaminated water or poor sanitation.

The Dornsifes then visited a village that had a well and latrines. "Once you provide water in the village, you turn a switch," says Dave, now 72. Adds Dana, 55: "The people are vibrant. Their children are in school, and their clothing is clean." Freed from the nearly full-time chore of procuring water, the women grew vegetables or formed co-ops, where one perhaps raised chickens and gathered eggs while a partner watched the children.

That trip eventually led to an epiphany. Dave Dornsife, who owns a steel fabrication firm, had been donating to World Vision, a U.S.-based humanitarian organization, for three decades. What would happen if he put major money toward that specific scourge--lack of water access--on that specific continent? So in 2010 the Dornsifes committed $35 million to World Vision, over five years, to get water and sanitation and teach hygiene to 7.5 million people in ten African countries. In 2015 they doubled down with another $40 million and the goal of ensuring that every rural African in the 25 countries where World Vision works has access to water by 2030. That would be a huge achievement.

In philanthropic parlance, the Dornsifes' $75 million investment through World Vision is a "big bet": an-eight-figure-or-more attempt to create systemic social change. Such wagers aren't new. The civil rights movement, the fertilizer-driven increase in crop yields, charter schools--all were fueled in part by a handful of visionary philanthropists. But increasingly, modern philanthropists, who have used disruptive thinking to create fortunes at ever younger ages, are more inclined to use their money to try to actually solve problems rather than salve wounds, and more foundations have embraced that approach, too. In 2015 alone, the Boston-based philanthropy consultant Bridgespan Group noted 58 philanthropic gifts of $25 million or more centered on solving a large-scale social problem. Sixteen years ago there were just 19.

So does investing a lot in a moon shot provide a higher social ROI than spreading your chips around? To try to answer that question, FORBES partnered with Bridgespan to focus on 30 big gifts of 2015 aimed at social change. We then developed an evaluation methodology rooted in ambition, clarity and potential. From there we solicited ten outside advisors--some working in philanthropy, others in public policy or academia--to rank the ten most promising philanthropic bets (see below). There's Mike Bloomberg's $30 million plan to quickly retire half of America's coal-burning plants and the Rockefeller Foundation's $75 million to electrify rural India. And there's $50 million to provide college grants to undocumented "Dreamers" in the U.S., who might not otherwise be able to get a college degree.

The consistent benefit: These bets free the recipient to focus on actual problem-solving. "Most of the nonprofit sector leaders and their teams have a constant tension between raising resources and focusing on programmatic excellence," says Dan Cardinali, the CEO of Independent Sector, a coalition of nonprofits, foundations and corporate giving programs, who also served on the Big Bets judging panel. Getting a large donation spread over several years "unleashes the leadership team to lean in and face some of the more intractable social problems." Big bets, in other words, can test a thesis rather than just cover a budget.

The downside of big bet philanthropy can be summarized in two words: Mark Zuckerberg. In 2010 the Facebook founder, still in his 20s, committed $100 million over five years to improve the struggling schools of Newark, New Jersey. He did so on Oprah's TV show, crowing to the cheering studio audience that his goal was to "turn Newark into a symbol of educational excellence for the whole nation."

That goal is no closer than it was when Zuckerberg made the pledge, the kind of humiliation that would presumably drive most funders to stick with big checks for local art-museum galas.

But risk is inherent in big bet philanthropy. "We must take risks today to learn lessons for tomorrow," Zuckerberg wrote in an open letter to his newborn daughter in December 2015. He and his wife's year-old philanthropic venture, the Chan Zuckerberg Initiative, has committed 99% of Zuckerberg's Facebook stock, worth roughly $50 billion today, though they've created the vehicle in a way that allows them to invest in both for-profit and nonprofit entities. Their first big public declaration is the biggest moon shot of all: to cure all disease. Rather than shrink from his Newark failure, Zuckerberg seems to have been inspired by it.

In terms of cash outlay, Bill and Melinda Gates may have underwritten one of the biggest philanthropic losses ever. Their $650 million focus on reducing school size resulted in a startling conclusion: School size had very little to do with student outcome. Money wasted? Not how they see it. "Warren [Buffett] always says you have to swing for the fences," Melinda told FORBES last year. Basically, that big bet, in taking an idea to its full conclusion, had great social value. Countless school districts have presumably reallocated money toward the outcome that does move the needle: teacher excellence.

As with any good portfolio, the Gateses have wins that mitigate the losses, notably the $755 million they've funneled through the Rotary Foundation that has wiped out polio in all but three countries and provided the glimmer of a finish line in those places as well. Tellingly, the Gateses have two of the top three big bets, by our measurement, led by their $1.55 billion bet, through the Gavi alliance, to vaccinate 300 million children by 2020.

Heady stuff, but it still represents a fraction of philanthropic giving, even at the $25 million-and-up levels (more than 100 of the grants in 2015 went to academic or cultural institutions). Bridgespan has found that 80% of philanthropists want to give away their wealth in a way that creates positive social change, but only 20% of their gifts go toward that end. "One factor is that this is risky and abnormal behavior," says Bridgespan's William Foster. The second barrier: finding opportunities. "It's harder than calling up your alma mater," he says. "You may not know where to go."

David Dornsife, whose World Vision efforts came in at No. 5 on our list, knew exactly where to go when he and Dana were ready to make a big pledge. A longtime Bay Area resident, he is the son of a successful entrepreneur. His father, Harold, owned a bus manufacturer, Gillig Corp., and had begun buying a Bay Area steel fabrication company, Herrick Corp., from the founding Herrick family, a company Dave finished buying and now owns. Dave has supported World Vision's work since the mid-1980s, when he and others at his Presbyterian church began giving $24 a month to support a child in Africa.

A few years into it he volunteered to go to Nairobi to see how the Kenyan children were being helped and report back to fellow church members. The work intrigued him. He asked what other projects he could support, and he began visiting World Vision projects in Africa for two weeks nearly every year; he's made 34 trips so far. By 2010, when the Dornsifes decided to give World Vision $35 million, they had come to know the organization and its leadership well. "We knew what worked and what didn't," says Dana. "I'd say it was a calculated risk." That long-term relationship between the donor and the recipient organization was one of six specific criteria the advisors used to rank the most promising bets. The Dornsifes got the highest score possible on the donor-grantee relationship.

They also got high marks on both the clarity of the desired results and the degree of realism in the strategy. Greg Allgood, World Vision's vice president of water, gushes about how the funding from the Dornsifes--which the couple stipulated must be matched by other donations--enables the nonprofit to work more deeply and thus more efficiently. "We have a plan to go county by county, district by district," he says, as opposed to drilling a few wells across a bigger swath of each country. One 23,000-person district in Zambia is fully supplied with wells and latrines; 25 of the 38 districts in Zambia where World Vision works will have clean water in the next five years, Allgood predicts.

Though not easy to measure, passion for a big bet is a must-have trait--something the Dornsifes exude when they talk about their work. "When you get our money, you get the Dornsifes," Dave says. John Fry, the president of Drexel University (Dana's alma mater, to which the couple have donated $58 million), accompanied them on a trip to Ethiopia in 2013. "As we got to one village there was a group of guys operating the drill rig. Dave climbs into the rig and was treated to 45 minutes of them showing him service logs. They have such pride in their work," Fry recalls. "And Dave had this big smile on his face, listening to them." Due diligence and altruism in one fell swoop--the kind of combination that turns a philanthropic big bet into an ROI for the world.

GIVING BIG TO CHANGE THE WORLD

Who's going big to change the world? Here are the ten most promising big bets.

For the superrich and the biggest U.S. charitable foundations, donating to universities, hospitals and cultural institutions is the norm. Less common are donations targeted at "social change"--alleviating poverty, increasing employment and the like, though such donations are on the rise. Philanthropy consulting firm Bridgespan Group researched social-change gifts of $25 million or more that were announced last year. Ten outside experts ranked them based on six categories: ambition, clarity of desired results, whether the bet offers a clear role for philanthropy to "move the needle," whether the strategies are logical and realistic, the extent to which learning and improvement are built into the grant, and the strength of the relationship between the donor and the recipient organization. The maximum possible score was 18. It will be years before we know which bets actually succeed, but these are the ones worth paying the most attention to.

1. $1.55 BILLION TO

Gavi, The Vaccine Alliance

Donor: Bill and Melinda Gates

TOTAL SCORE: 17.4

THE BET: In addition to funds from the Gates Foundation, other donors, including the government of Norway, pledged an additional $6 billion. Gavi aims to vaccinate 300 million children for a variety of diseases by 2020.

2. $30 MILLION TO

The Sierra Club's Beyond Coal Campaign

Donor: Michael Bloomberg

TOTAL SCORE: 16.2

THE BET: Former New York City mayor Bloomberg's foundation made the gift to help retire coal-burning power plants in the U.S. Twelve more funders pledged an additional combined $30 million. It will encourage regulators to crack down on pollution.

2. $120 MILLION TO

Family Planning 2020

Donor: Bill and Melinda Gates

TOTAL SCORE: 16.2

THE BET: Their foundation is backing Family Planning 2020, a public-private partnership that aims to provide 120 million women access to effective contraception by 2020 in an effort to reduce unplanned births, abortions, miscarriages and maternal deaths.

4. $50 MILLION TO

TheDream.US

Donors: Donald E. Graham, William and Karen Ackman

TOTAL SCORE: 15.9

THE BET: TheDream.US is a scholarship fund for undocumented U.S. college students who are eligible for temporary residency under President Obama's Deferred Action for Childhood Arrivals executive order. The grant will provide some 5,000 students with scholarships to obtain degrees at 70 partner colleges.

5. $40 MILLION TO

World Vision

Donor: David and Dana Dornsife

TOTAL SCORE: 15.6

THE BET: The five-year grant will help World Vision provide clean water, sanitation and hygiene training to approximately 11 million people in 25 African countries, and help reduce the deaths resulting from unclean water. Children under 5 die at a rate of 1,000 a day around the world from diarrhea.

6. $42 MILLION TO

What Works Cities

Donor: Michael Bloomberg

TOTAL SCORE: 15.3

THE BET: Bloomberg's foundation launched What Works Cities, a three-year initiative to help 100 U.S. cities to better use data and evidence for budgeting and decision making, and to fund "what works" at a time when cities have limited resources.

7. $75 MILLION TO

The Safety and Justice Challenge

Donor: The John D. & Catherine T. MacArthur Foundation

TOTAL SCORE: 15.1

THE BET: Over five years the foundation aims to reduce incarceration in jails by funding 20 jurisdictions in the U.S. that won a competition to implement plans they designed for fairer, more effective local justice systems.

8. $50 MILLION TO

The United Negro College Fund's Career Pathways Initiative

Donor: Lilly Endowment

TOTAL SCORE: 15.0

THE BET: The gift funds the Career Pathways Initiative; it awards grants to historically black colleges and universities and predominantly black institutions to help students gain skills needed in the workforce.

9. $75 MILLION TO

Smart Power for Rural Development

Donor: The Rockefeller Foundation

TOTAL SCORE: 14.9

THE BET: The foundation created a new organization, Smart Power India, in 2015 to promote economic development in rural areas of India by providing access to energy from renewable sources to 1,000 villages over three years, reaching 1 million people.

10. $34 MILLION TO

The ClimateWorks Foundation

Donor: The David & Lucile Packard Foundation

TOTAL SCORE: 14.0

THE BET: The gift broadly funds ClimateWorks, which makes grants to support public policy, education and private sector collaboration with a focus on transitioning toward a low-carbon society.

OTHER BIG BETS FOR SOCIAL CHANGE ANNOUNCED IN 2015:

Recipient Donor Amount Details About The Bet
San Antonio Area Foundation, establishing the John L. Santikos Charitable Foundation John Santikos $605M Bequest; 10 percent of annual disbursements will go to Doctors Without Borders USA and International Orthodox Christian Charities, the rest will be distributed to local nonprofits at the community foundation's discretion.
Government of Rwanda The Howard G. Buffett Foundation $500M To partner with the Government of Rwanda to support their national plan for agricultural development.
Hispanic Scholarship Fund: The Gates Scholarship The Bill & Melinda Gates Foundation $417M To support outstanding minority students from low-income backgrounds, providing financial support at the university of their choice and ensuring access to resources and support services needed to complete their degree.
French Development Agency (AFD), for Gavi, the Vaccine Alliance The Bill & Melinda Gates Foundation $164M To assume the obligation of repayment for a long-term loan to increase vaccine coverage in six French-speaking countries of the Sahel region: Burkina Faso, Mali, Mauritania, Niger, Senegal, and Chad.
Global Alliance for TB Drug Development The Bill & Melinda Gates Foundation $145M To develop and introduce novel drugs and drug regimens to make treatment of all forms of TB more effective, safe, and affordable.
Data for Health Bloomberg Philanthropies $100M To enable 20 low- and middle-income countries to vastly improve public health data collection
Lives and Livelihoods Fund (with the Islamic Development Bank) The Bill & Melinda Gates Foundation $100M To address healthcare, disease, smallholder agriculture, and basic rural infrastructure in 56 IDB member states, with a focus on those least developed
University of Chicago The Thomas L. Pearson and The Pearson Family Members Foundation $100M To establish the first research institute and annual global forum devoted solely to the study and resolution of global conflicts
Novavax, Inc. The Bill & Melinda Gates Foundation $89M To advance the development of a respiratory syncytial virus (RSV) vaccine for maternal immunization to reduce the burden of RSV disease in infants under six months of age in developing countries.
International Bank for Reconstruction and Development's Global Financing Facility for Every Woman Every Child The Bill & Melinda Gates Foundation $75M To contribute to the Global Financing Facility’s Every Woman Every Child fund, to provide financial support to enable countries to invest in strategies and interventions for improving reproductive, maternal, newborn, child, and adolescent health, and nutrition outcomes.
San Francisco General Hospital Foundation Mark Zuckerberg and Priscilla Chan $75M To help fund critical equipment and technology for the new public hospital serving primarily low-income populations.
Emory University's Global Health Institute The Bill & Melinda Gates Foundation $72M To create a long-term network of high-quality sites for the collection of data to track preventable causes of childhood death globally
100 Resilient Cities The Rockefeller Foundation $64M To fund partner cities to establish and implement a strategy that better equips them to prepare for and withstand shocks and stresses, specifically urbanization, globalization, and climate change
Lyme Disease Research The Steven & Alexandra Cohen Foundation $55M To demonstrate the impact of Lyme disease on vulnerable communities and educate healthcare providers on the latest tools for diagnosis and treatment
Climate Change Mitigation The John D. and Catherine T. MacArthur Foundation $50M To help curb global climate disruption by significantly reducing greenhouse gas emissions
Stanford University The Bill & Melinda Gates Foundation $50M To accelerate vaccine discovery efforts for the world’s most deadly infectious diseases such as HIV and Malaria
Teach for America The Walton Family Foundation $50M To support teacher recruitment through partnership building and public outreach, and the training and professional development of 4,000 new teachers across the country
XQ: The Super School Project Laurene Powell Jobs (via Emerson Collective) $50M To inspire teams of educators and students, as well as leaders from other sectors, to rethink high school and develop new high school models. Funding was increased to $100 million in 2016.
Clean energy efforts Joint effort (Bloomberg Philanthropies and the Heising-Simons family) $48M To accelerate the transition to clean energy at the state level
Drexel University David and Dana Dornsife $45M To allow the Dornsife School of Public Health to strengthen its expertise in urban health, attract and retain top faculty, and enhance educational programs and research productivity
Regional Opportunity Initiatives (Southwest Central Indiana) Lilly Endowment $42M To advance a range of activities focused on research and development, workforce and education initiatives, and projects that enhance the region’s quality of life
Inner-City Scholarship Fund Stephen A. and Christine Schwarzman $40M To kick off the "Kids Are Our Capital" campaign to provide tuition assistance to children from underprivileged families attending Catholic schools in the Archdiocese of New York
Monterey Bay Aquarium Research Institute The David & Lucile Packard Foundation $40M For operations, research projects, and ordinary capital expenses during 2016
Westport Weston (Connecticut) Family YMCA Ruth Bedford $40M Bequest to ensure long-term viability, with earmarks for current and future capital development, and to endow programs for wellness and youth
Hydroelectric Plants in the Democratic Republic of the Congo Howard G. Buffett Foundation $39M To develop two additional hydroelectric plants in North Kivu, Democratic Republic of the Congo to add 33 megawatts of power to the region
Teacher Preparation Transformation Centers The Bill & Melinda Gates Foundation $35M To bring together higher education institutions, teacher-preparation providers, and K-12 school systems to share data, knowledge, and best practices
University of Washington Foundation The Bill & Melinda Gates Foundation $35M To expand the evidence base for effective policymaking in health by improving how we map and track major global health challenges, including major causes of under-5 mortality
San Francisco Foundation Anonymous $34M To create pathways of opportunity in the City of Oakland
European Climate Foundation The William and Flora Hewlett Foundation $33M To expand the European Union’s climate ambitions through the development and implementation of its 2030 framework
World Health Organization's Global Malaria Program The Bill & Melinda Gates Foundation $31M To support the WHO Global Malaria Program to achieve its goals and targets, and for an analysis on strategies to achieve malaria eradication
CDC Foundation: Haiti Malaria Elimination Consortium The Bill & Melinda Gates Foundation $30M To eliminate indigenous cases of malaria on the island of Hispaniola by 2020
Forest Park Forever (St. Louis) Jack C. Taylor $30M To the endowment, which provides support for the maintenance and operations of Forest Park
NewSchools Venture Fund The Silicon Valley Community Foundation (Anonymous DAF) $29M No gift information available
FHI 360 The Bill & Melinda Gates Foundation $27M To support a clinical trial comparing HIV incidence and contraceptive benefits in women using three family planning methods in four Sub-Saharan African countries
Indianapolis Neighborhood Housing Partnership Lilly Endowment $27M To create a strategic acquisition fund to buy and maintain properties
Natural History Museum's DeWorm3 Program The Bill & Melinda Gates Foundation $27M To identify effective drug-delivery strategies to interrupt soil-transmitted helminth (intestinal worm) transmission
International Development Association: WHO's Expanded Program on Immunization in Pakistan The Bill & Melinda Gates Foundation $26M To increase equitable immunization coverage against vaccine-preventable diseases, including polio, for children between 0 to 23 months in Pakistan
CityArchRiver Foundation Taylor family (Jack Taylor) $25M To support the City Arch River project to make the Arch in St. Louis easier and safer for everyone to experience by connecting, invigorating, and expanding the park’s grounds and museums
Collective Shift The John D. and Catherine T. MacArthur Foundation $25M To launch a new nonprofit whose mission is to redesign social systems for the connected age
Constitutionalism Fund (in South Africa) Joint Effort (The Open Society Foundations, the Ford Foundation, the Atlantic Philanthropies) $25M To launch a joint fund to support organizations promoting and advancing constitutionalism in South Africa
GiveDirectly Good Ventures (Dustin Moskovitz and Cari Tuna) $25M To provide cash transfers to thousands of individuals and families, and to accelerate GiveDirectly’s growth and build its capacity to partner with international aid agencies
Health Research Initiative The Robert Wood Johnson Foundation $25M To fund innovative research on policies, laws, system interventions, and community dynamics to improve health and well-being, with emphasis on sectors not typically associated with health, such as transportation and housing
International Crops Research Institute for the Semi-Arid Tropics The Bill & Melinda Gates Foundation $25M To develop high-yielding, pest and disease resistant legume varieties, and to deliver these new varieties to smallholder farmers in Sub-Saharan Africa and South Asia
International Development Research Center The Bill & Melinda Gates Foundation $25M To support research and development on neglected livestock diseases
Robin Hood Foundation Anonymous $25M To launch a fund investing in the best education and technology initiatives
Robin Hood Foundation The Pershing Square Foundation (Bill and Karen Ackman) $25M For Robin Hood’s overall mission of fighting poverty, with an emphasis on funding programs directed to the Latino community in New York City
Special Olympics The Golisano Foundation (B. Thomas Golisano) $25M To expand Special Olympics' health services globally for people with intellectual disabilities
Water Smart Agriculture The Howard G. Buffett Foundation $25M To directly touch 250,000 farmers and reinsert soil health as a priority on Central American policy agendas

Forbes and Bridgespan Group tapped these 10 seasoned advisors to rank the most promising big bets: 

Advisor Position
Melody Barnes Co-Founder and Principal of MBSquared Solutions LLC
Dan Cardinali President and CEO of Independent Sector
Cheryl Dorsey President of Echoing Green
Joel Fleishman Professor of Law and Public Policy, Duke University
Dr. Charlie MacCormack Executive Chair of the Millennium Development Goals Health Alliance
Adam Meyerson President of The Philanthropy Roundtable
Nitin Nohria Dean of Harvard Business School
Eric Nonacs Principal of Golden State
Robert Reischauer Institute Fellow and President Emeritus of the Urban Institute
Patty Stonesifer President and Chief Executive Officer of Martha’s Table

*Note: Patty Stonesifer was CEO of The Bill & Melinda Gates Foundation until 2008; she recused herself from weighing in on any grants that she had worked on while at the foundation.

METHODOLOGY

The Bridgespan Group identified all U.S. donors’ publicly announced 2015 gifts of $25 million and higher that it could find using a range of sources and outreach. It included bets pledged in 2015, rather than fulfillments of prior commitments. Internal Bridgespan field experts, using a rubric it designed and research, narrowed the nearly 60 bets found to the 30 most promising. The assembled external Advisory Board then rated these 30 against six characteristics (ambition, clarity of desired results, whether the bet offers a clear role for philanthropy to "move the needle," whether the strategies are logical and realistic, the extent to which learning and improvement are built into the grant, and the strength of the relationship between the donor and the recipient organization) and also provided qualitative assessments. We limited each funder to only two spots in the top 10 (otherwise The Bill & Melinda Gates Foundation and Bloomberg Philanthropies would have merited more mentions). The top 10 list spans nine funders and seven issue areas around the globe.

The Bridgespan Group also has additional information about big bets here.

Follow me on Twitter at @KerryDolan