Big Bets for the Long Haul

How to help big bet philanthropy lead to even bigger social change down the road

A fly on the wall at the coffee chats and meet-ups of social changemakers would hear a common lamentation: The social sector’s funding pipeline pales in comparison to the private sector. New private sector enterprises have a well-established conveyor belt, from angel investment to venture capital to private equity to public (stock) markets, rewarding the most successful with ever larger injections of capital. As a result, generally-speaking, adequately-resourced enterprises end up collectively meeting the market demand in a given industry.

In the social sector, because private equity and public market equivalents do not really exist, it is considered extraordinary when anywhere close to half of a social change need is collectively met. For example, our organization, One Acre Fund, supplies over 4 million African smallholder farmers with the finance, supplies, and training to grow more food, plant more trees, and earn more money. But the need still far outstrips our capacity to meet it: Africa’s 61 million smallholder farmers
play a vital role in food security, jobs (especially for women), and land stewardship, but just 27 percent of short-term agri-finance need, 1 percent of long-term agri-finance need, and 0.5 percent of climate adaptation finance need
of smallholders is currently being met by all actors combined. The largest and most evidenced social changemakers in other contexts—such as vision impairment in low and lower-middle income countries (VisionSpring), out-of-school girls in India (Educate Girls), and quality community health work in Africa (Last Mile Health)—also report under 30 percent of total need being addressed by supply, with well under 10 percent by their own organizations and coalitions.

Because the social sector field is collectively capable of achieving bigger social change goals when more resources step up to the plate, we have, of course, welcomed the explosion in “big bet” philanthropy in the past decade. Bridgespan’s Big Bet Database counts 125 United States donor pledges of above $25M to social change efforts in the year 2020, compared to just 18 in the year 2000. Similarly, more than half of the around two hundred large philanthropic collaboratives surveyed (a common form of big bet philanthropy) have been founded since 2010. Still, the laughably low starting base means that just a small number of “big bet ready” organizations are actually receiving such gifts. And for the fortunate few who do, like One Acre Fund, the lack of a “public markets” equivalent follow-on stage means no one is waiting with arm extended to grasp the baton for the important next leg of the race.

What is the next step? Far too little thought and action has been expended by donors and doers alike to ensure this promising funding mechanism of big bets sustains for the long haul of social change. Big bets too often leave doers facing an imposing “funding cliff”: Because they scaled their programs to serve far more people far more impactfully, doers now have larger budgets to maintain, even after factoring in efficiency gains during the big bet period. Such a “funding cliff” comes at precisely the moment big bet doers are ready for a next phase, often characterized by the shift from organizational-centric to field-building-centric pathways, which is crucial to achieving their social change ambitions. Importantly, this “post-big-bet” phase is one where the rate of impact growth will far exceed the rate of resource growth, which should make it a highly appealing investment opportunity.

A line graph showing the potential of big begs to make impact over time

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Drawing from the lessons we’ve learned at One Are Fund navigating the absorption and implementation of big bet philanthropy, we offer two constructive actions each for donors and doers to ensure big bet philanthropy leads to even bigger social change down the road:

1. Donors should get comfortable with commitment strategies

Doers pursuing big bet philanthropy have big ambitions: not just to grow their direct-service reach but to fundamentally improve entire ecosystems in a way that addresses root causes and benefits whole markets. Studies find that social change initiatives take decades to achieve their ultimate goal, so we need big bet donors who want to buckle up for the long ride. Of course, “impact checkpoints” along the way are necessary, but we do great disservice to social change initiatives when we think of them as exit points. In private sector investing, many legendary investors
preach the virtues of “buy-and-hold” strategies for blue chip stocks; we need that same mentality in social change.

For instance, at One Acre Fund, we set a ten-year vision in 2010 to reach 1 million farmers directly. Our next 10-year vision, set in 2020, will see us impact 10 million farmers, predominantly through a systems change model that works alongside public, private and NGO actors in key agricultural systems. If a funder had decided to use the end of our first ten-year goal as a “natural exit point,” they would have missed out on a next phase of more durable and impact efficient growth, and a sea change in our engagement with our broader ecosystem.

Staying committed in the post big bet phase offers funders extremely high impact leverage for each incremental dollar invested. And thanks to the diversifying mix of other funders that doers add to their portfolios while they grow, doers’ dependence on any one donor’s support will decrease even as gift sizes grow. We need a new paradigm, in which doers enjoy ongoing and engaged partnerships with their big bet funders, whose support grows over time in response to accelerated impact growth.

2. Donors should crowd others in

As in the private sector, sustained growth requires an accompanying growth in resources, even for organizations that are becoming more impact efficient over time (which is itself an important indicator that an organization is big bet ready). Each phase of growth will require its own carefully thought through funding mix.

Many in our sector believe there is a natural progression in this funding mix, and expect grantees to “graduate” from philanthropy—which they hold is meant to hone and prove an intervention, and to make it impact efficient and replicable—and move on to an alternative dominant funding source, such as customers, donor governments, or host country governments. But despite how prominent this assumption is, actual examples of a significant transition away from private donor support (for doers committed to rapid growth and a continued focus on people living in extreme poverty) are few and far between. It is usually too burdensome for customers earning less than a dollar a day (particularly when they first engage with a doer) to pay full price for products and services routinely subsidized in the Global North, just as cash-strapped host country governments and belt-tightening donor governments struggle to swoop in with substantial capital injections (especially for proximate organizations, who receive just 8 percent of USAID grants and cooperative agreements).

That has two big implications. First, big bet philanthropists should work harder to build bridges to these alternative funding sources. Most philanthropists readily admit that their rolodexes are quite sparse when it comes to their counterparts in government, who don’t seem to run in the same circles. Big bet doers like One Acre Fund want to see that their funding partners are actively seeking out relationships with USAID mission officers, Global South civil servants, and the like (as well as an understanding of their motivations and incentives). We need to see more public-private funding partnerships as part of, and to follow, big bets.

Second, big bet philanthropists should look to other foundations and high net worth individuals not just as big bet co-funders, but as follow-on funders. This seems eminently reasonable with the stock market run-up of recent years and the massive intergenerational wealth transfer underway. But it won’t happen on its own, as evidenced by the staggering amount of wealth still sitting on the sidelines, especially among those—such as Giving Pledgers—who are predisposed to charitable giving. Success in fundraising goes way up when existing donors rally their own. And with robust efforts this past decade to identify, vet, and codify high-impact social change initiatives (see searchable big bet-ready clearinghouses such as Lever for Change’s Bold Solutions Network and Focusing Philanthropy’s curated campaigns), big bet donors can disabuse their peer high net worth givers of the notion that shovel-ready opportunities for social change don’t readily exist.

3. Doers should use big bet funding to build fundraising capacity

While ideally big bet donors will continue the journey and attract others for the long haul, doers must take advantage of the sizable and often flexible nature of the grants to make investments in their own fundraising capacity, to attract new donors to their missions themselves. At One Acre Fund, because big bet grants we received from Co-Impact
and Audacious Project
were structured to require co-funding during the big bet period, we were incentivized to build our fundraising muscle in new geographies, sources, and thematic areas. In fact, since receiving these big bets a few years ago, we began growing our fundraising team at the same pace as our programs. Other big bet donors should be comfortable not only encouraging, but actively facilitating their grantees to make such investments, through capacity-building supports
that give nonprofits access to the best resources and experts in the fundraising value chain, on anything from hiring fundraisers and donor research to storytelling and more.

4. Doers must stand their ground when circumstances change

With Mackenzie Scott’s giving as a notable exception, big bets typically and explicitly fund highly ambitious strategic plans assembled to stretch programmatic growth as far as the rubber band will allow. But as Mike Tyson famously put it, everyone has a plan until they get punched in the face. Especially for big bet recipients with operations in the Global South, the punches have been fast and furious these past few years: COVID, inflation, conflict, and climate, to say nothing of the always messy nature of true systems change work. Windows of opportunity can open and close in an instant. Sometimes by momentarily slowing down, we can ultimately speed up to achieve our goals.

In highly dynamic environments, doers must feel empowered to slow growth or take other measures in service of the long-term health of their organizations, even if that means uncomfortable dialogues around big bet milestones. At One Acre Fund, we were grateful that our big bet partners encouraged us to reset milestones as soon as we could project the negative impacts of COVID on our operations, which also served to establish a culture of trust and transparency for the duration of our partnership. Sadly, conversations with our peers suggest that this may be the exception rather than the norm, which only increases the odds that the rubber band will snap.

The Long Haul

For social changemakers, big bets offer the tantalizing prospect of furthering the journey to significance. We hope the four actions suggested here add to the growing dialogue (from Kevin Starr, Cecilia Conrad, and Panorama Global, to name a few) on how to shape this promising funding mechanism for maximum impact. Most importantly, we believe it is time for a stronger, shared contract between big bet donors and their big bet doer recipients; to tackle head-on (and from the very beginning of the big bet) how best to sustain momentum for however long the “long haul” is to reach their shared social change objectives. The stakes couldn’t be higher for our sector: 61 million smallholder farm households facing chronic hunger in Africa; 800 million people globally lacking a pair of basic reading glasses; 28 million girls in India who are out of school; and 1 million African community health workers lacking the salaries, skills, and supplies to be effective; to use the examples above. Surely blue chip social changemakers are no less deserving than their counterparts like Samsung, Nike, and Coca-Cola to raise the capital they need to reach their full potential.

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Read more stories by Matthew Forti & Claire McGuinness.


Philanthropy & Funding

Matthew Forti
Matthew Forti is managing director at One Acre Fund, where he leads the organization’s work outside of Africa, and helps oversee its partnerships, and measurement & evaluation function . Previously, Forti was a manager at the Bridgespan Group, an advisory firm to mission-driven leaders and organizations that supports the design of performance measurement systems for continuous learning and improvement.

Claire McGuinness
Claire McGuinness is the strategy and partnerships manager at One Acre Fund, where she supports the strategic direction and collaboration opportunities in areas of climate resilience and mitigation, digital transformation, and measurement and evaluation. Previously, McGuinness was an independent strategy and evaluation consultant to global philanthropies and manager of strategic projects at VisionSpring.