Giving away $100 Million for Change

Not me, personally. But earlier today, the John D. and Catherine T. MacArthur Foundation announced a global search for problems for which a one hundred million Dollar grant could significantly accelerate solutions. I have agreed to help them award that prize, as a member of the evaluation panel, because I think the Foundation is doing something interesting and illustrative in the way philanthropy has to evolve to address the challenges facing us in the 21st century.

A prize competition of this nature and size will generate a frenzy of activity among qualifying organizations, as they develop their proposals, scan the landscape for insights about the selection process, and plumb their networks for influence and positioning. That’s only to be expected. It’s one heck of a big carrot to dangle — the winner, you see, takes all.

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Along with the feeding frenzy, there will likely be an outpouring of criticism. It’s easy to imagine how much good could be done with 100 unrestricted grants of $1 million, for example, and there will be cries of “not fair” or worse. That’s also only to be expected, given how pervasive scarcity thinking is in the social change industry, and how hard — especially for non-profit organizations and social entrepreneurs — the struggle is for unrestricted resources and general operating support.

Among the growing number of critics of philanthropic organizations cherry-picking winners through prizes and challenges, perhaps nobody has been more forceful than kevin starr who succinctly recommends dumping them altogether because 1) they waste the time of applicants and their references; 2) put too much emphasis on innovation over implementation; 3) their design too often rewards the usual suspects, uses unqualified juries, and exacerbates the bandwagon effect in social change; and 4) distract from the real problem — which is to build a market for impact where philanthropic grants catalyze a tidal wave of resources going to those people and organizations best able to make change.

By and large I agree with Kevin, which is not surprising given that I have been questioning the business of philanthropy for a while. One of the things that appalls me most about winner-takes-all prizes is the incredible value they leave on the table — the n-1 “losers” whose submissions are of comparable quality and who miss out purely because the funder is, arbitrarily, constrained in the size of the budget they have for a prize. After all, even the MacArthur Foundation’s $100 Million prize purse pales in comparison to the over $156 Trillion in private wealth potentially available to catalyze change.

Against this background, I overcame my skepticism because I am intrigued by what I am hearing from foundation staff responsible for the prize. I am serving on the judges panel because I am intrigued by the market-making opportunity the MacArthur Foundation now has, and by the refreshingly novel behaviors it is exhibiting:

1. A Dose of Humility

The vast majority of foundations practice some version of what has become known as Strategic Philanthropy: they develop a theory of how change happens in a given sector or domain; against this theory they articulate clear goals; they then run responsive grant programs, seeking grantees who perform to said goals with demonstrable, measurable outcomes; and evaluate their and their grantees’ performance using third party assessments. In recent years, reality has caught up a little bit, and even the inventors and proponents of Strategic Philanthropy point to the limitations of the approach in the face of the complexity of the challenges facing us.

It is, however, not easy to pivot from business practices that have become entrenched in philanthropy over the last 20 years. That’s why it’s refreshing to see an institution of the size and age of the MacArthur Foundation exhibiting a dose of humility, and acknowledge that they don’t know everything, that their theories of change have large gaps, and that they have limited visibility beyond their existing grantees and partners.

“Potential solutions may go unnoticed or under resourced and are waiting to be brought to scale.” — MacArthur President Julia Stasch

I like that they are asking participants in the challenge to address both sides of the equation — the problem and the solution, and that no sector or field is out of bounds for this competition. I, for one, am looking forward to some unusual suspects in my pile of applications to read.

2. Transparency

Another prevalent business practice in philanthropy is for program officers, prize jurors, and other decision-makers to be well hidden from grant seekers. Good luck finding the email address for anyone working at any of the major foundations… Non-profit organizations spend an inordinate amount of time and resources to garner access, connections, and — most precious of all — face time with foundation personnel to position their eventual grant proposals for success. To make matter worse, the vast majority of foundations do not accept unsolicited proposals — a staggering 72%, according to a recent analysis by the Foundation Center. That means foundations typically rely on their staff, consultants and advisors for the discovery of worthwhile ideas. Even self-declared disruptors of philanthropy like Sean Parker fall into that trap, and the foundations of many of the newly minted tech millionaires and billionaires essentially follow the blueprint of institutions created by the 20th century moguls of philanthropy, the Carnegies, Rockefellers, and — later — the Gateses. How can you find new solutions when you have tunnel vision? That’s just not scalable, not to mention anachronistic, in our age of connectivity.

It is therefore refreshing to witness the MacArthur Foundation deviate from this practice, and strive for greater level of transparency — both about the process and the people involved in the 100&Change prize. I believe they are genuinely trying to tap new reservoirs of talent and innovation for solving the big problems of the 21st century, and are using personal and social networks to cast a wide and deep net for submissions.

3. Making Markets from Networks

Foundations and non-profit organizations are increasingly realizing that their immediate networks of staff and partners limit their effectiveness and impact. The world of philanthropy has enthusiastically embraced social networks such as Facebook, Twitter and LinkedIn for a number of operational and programmatic purposes. Dominant uses of these platforms are fundraising and community engagement— take, for example, the #GivingTuesday campaign, or any number of annual appeals that come to you via your social media feeds. Communication departments have also embraced these technologies, e.g. with Ford Foundation president Darren Walker taking to Facebook last fall to “chat” about the foundation’s new focus on inequality.

Another relatively recent trend in philanthropy is the use of collective impact networks, which are groups of funders, businesses, public agencies, and non-profit organizations coming together to work on a shared agenda, supported by a centralized infrastructure (referred to as a backbone organization). These networks harness the collective knowledge and experience of many practitioners typically working in the same place, on the different aspects of a complex problem.

Clearly there are many more opportunities for foundations to create and leverage network effects. With few exceptions most prize challenges do not set out to create any kind of lasting community — whether of solutions, people, or organizations. What’s refreshing about 100&Change is that the MacArthur Foundation’s staff fully realize that they can expect a high caliber of entries, and that the limitation of their prize purse creates scarcity that’s entirely artificial. They are committed to not leaving value on the table, and have some encouraging plans for leveraging their networks to provide added value to all who submit entries. I am most intrigued by the opportunity to expose the n-1 “losers” to other funders, both within and beyond the Foundation’s networks. Ideally this will result in some positive plagiarism among foundations, with other funders leveraging the screening and diligence done in the prize context.

With these positive deviations from philanthropy’s business-as-usual, the MacArthur Foundation might just pivot in an interesting way — from being the center of attention and power that comes with having a large purse, into a humble node that serves the larger network of networks for social change, and that helps connect people, solutions and resources with each other. Acting as a market maker, in other words, in the market for impact that we need.

It remains to be seen how all this plays out in practice, but the anthropologist in me is excited to have a front row seat to the Foundation’s experiment, and the opportunity to witness — and participate in — the active evolution of philanthropic practices.

Disclaimer — of course there is one! Several, actually: I have to reveal to the Foundation any conflicts of interest that arise, and will not be reviewing proposals from any organization known to me in any capacity. I cannot suggest specific ideas or solutions that I may want to see represented in the 100&Change applicant pool. And I will not answer questions about the competition or judging process. All criteria, details and necessary information to apply is on the website, For any questions not answered on the website, I am told is the email to use. Follow @macfound, or #100andchange on Twitter.

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