Perspective

Big gift, big bet, big impact

Whether or not you are a believer in capitalism, you must admit: Capitalism is an astonishing force. When a company produces value, our capitalist system is remarkably efficient at encouraging growth. Historically, the same has not been true for non-profits. But, in this article from the Stanford Social Innovation Review, two nonprofit directors write about the role big bets and audacious givers can play in helping an organization expand its impact.

By Andrew Youn and Matthew Forti

Early on, angel investors put in small investments. Then venture capital takes over. Then private equity, and eventually, public markets. Successful companies routinely attract $10 million, $100 million, and even $1 billion investments. This regular deployment of large sums of money–big bets–enables rapid, dramatic growth.

Not so in the nonprofit sector, where $10 million-plus gifts are comparatively rare. From 2000 to 2012, we estimate that such commitments comprised only three percent of total social change giving in the United States (where data are more readily available). Regardless of an organization’s success, it is extremely unlikely to attract a significant philanthropic investment that can help it reach a meaningful size.

We run One Acre Fund, a nonprofit that provides professional services to smallholder farmers in sub-Saharan Africa. Our aim is to help them grow their way out of hunger and build lasting pathways to prosperity. Every year, we work diligently to meet our budget and hopefully eke out a little bit of growth for the next year. But as we have grown, we have found it increasingly difficult to enlarge our grant base. Even though we are a leading organization in smallholder agriculture, with an effective and proven program model, we are serving less than two percent of the total need for our services. In the nonprofit sector, there simply is no equivalent of venture capital, private equity, and public markets – in other words, the kinds of backers who can help us to truly grow.

But an increasing number of philanthropists are beginning to change the story.

Read the full story at the Stanford Social Innovation Review.
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