Why Don’t We Make Big Bets On Nonprofits?

Nell Edgington

One of the Giving Pledge philanthropists and co-founder of Microsoft, Paul Allen, recently died. But at his death he was worth more than he was when he signed the Giving Pledge, a pledge that 186 of the wealthiest philanthropists have made to give away half of their net worth before they die.

This inspired Alana Semuels, writing in the Atlantic, to ask whether the Giving Pledge is realistic. When Allen signed the Pledge in 2010 he was worth $13.5 billion, when he died he was worth $20 billion. So despite the fact that he made many large donations to nonprofits during that time, he dramatically failed to meet his pledge.

Semuels points out the growing inequality of our economic system where someone like Paul Allen (or any of the Giving Pledge philanthropists) can accumulate so much wealth, while the nonprofits that are trying to address the issues of the remaining 99% are struggling to get by.

But Semuels takes her argument too far by asserting that the vast majority of nonprofits simply couldn’t absorb the amount of money that Giving Pledges warrant, as she writes:

Most nonprofits wouldn’t know what to do with such a large gift, which would likely require growing staff and space exponentially, nearly overnight. The scrutiny around high-profile donations has also made philanthropists skittish: Mark Zuckerberg famously gave $100 million to the Newark, New Jersey, public-school system, only to be criticized for not consulting the local community. The Red Cross reportedly squandered the half a billion dollars it received in donations after the Haiti earthquake. “No one wants to be the one who made a big bet and lost,” Ray Madoff, a professor at Boston College Law School who studies philanthropy and tax policy, told me.

But that begs the question: Why Not?

Why do we automatically assume that nonprofits are unable (or worse unworthy) of large investments or “big bets”? If it’s hard to invest millions in a social change sector that is dealing with trillion dollar-size problems, then that’s a huge disconnect.

The very nature of the social challenges we are facing (climate change, crumbling democratic institutions, struggling public education system) requires exactly that — big bets. If we are truly going to address the challenges our country faces, we need to fully equip our social change leaders to lead that charge.

We need to believe that it is possible and help nonprofit leaders to pivot from the starvation scenario they have spent decades existing in — where they rarely can invest in strong staffing, infrastructure, systems, planning —  to being flush with the people, systems and money truly necessary to address the problems we face.

The money is out there, it is simply a question of believing that nonprofit leaders and their causes are worthy of absorbing those investments. Once we believe that, then we can start creating organizations, networks, leadership teams, systems, budgets that can easily absorb, and put to excellent use, all the money we can throw at them.

It is wonderful that so many generous people have pledged half of their lifetime’s wealth to the social problems we face. Now let’s create a social change ecosystem that can put those investments to use — where multi-million dollar gifts are a normal part of social change efforts, and nonprofit leaders use those investments to create lasting social change.

Photo Credit: Photo by rawpixel on Unsplash

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  • Nell Edgington