Taking the Prize in Expanding Donor Interest

While more than $1 trillion in new money for philanthropy has been promised through the Giving Pledge, most of this money remains on the sidelines. Despite the urgency of local, national, and global social and economic challenges, would-be donors have no accessible, trusted, and reliable way to choose with confidence among the many charitable causes, organizations, and projects seeking funding. How funders rise to meet these challenges is a crucial area for reflection and action for those of us working in the philanthropic space.

Philanthropy and Crises, Roles and Functioning of Philanthropy in Times of Societal Upheavals was the theme of the recent European Research Network On Philanthropy (ERNOP) conference held at the University of Zagreb, Croatia. I had the opportunity to attend the conference and present some of our work along with my colleague, Jeff Ubois of Lever for Change (a John D. and Catherine T. MacArthur Foundation affiliate). TCC Group has partnered with Lever for Change (LFC) for the past five years to evaluate its new philanthropic model designed to unlock new funds and address society’s biggest social and environmental crises.

Through Lever for Change’s model of customized open call competitions and donor cultivation/support, a new market has been created where social sector organizations collaborate to develop diverse and bold ideas for solving social problems and receiving funding, with the long-term aim of transforming how high net worth donors engage in philanthropy. This is achieved through three overarching strategies:  (1) leveraging philanthropic capital, (2) helping donors fund social change, and (3) strengthening challenge proposals.

TCC Group’s evaluation has sought to understand the following questions about this model:

• Does the philanthropic prize model give donors confidence to invest in larger-scale projects and unlock new capital?

• Does the prize model incentivize social sector organizations to think in bigger, bolder ways?

• To what extent are social sector organizations better able to access new donors and large capital after the competitions?

• What kinds of bias and equity considerations are mitigated or introduced through this approach?

• How does the competition model compare to traditional models of grantmaking?

Although the evaluation is ongoing, we have some exciting findings to share at this stage of the work.

• As of June 2023, LFC’s competition model has unlocked over $1.3 billion which has been awarded to competition participants working on a variety of the world’s greatest problems. This funding has come from both institutional donors (e.g., W.K. Kellogg Foundation, LEGO Foundation) and ultra-high-net-worth individuals, often new to philanthropy. Funding is administered through customized competitions as well as through a secondary market of proposals that are funded after the competition closes. This illustrates the importance of the multi-tiered model for maximizing the total number of dollars unlocked.
• Donors that engage with LFC in a competition find high value in the services around recruiting and vetting applications as well as minimizing reputational risk. The model allows donors to vet a large number of applications and to look beyond their existing network with a transparent process. It has also provided donors with insights into ideas or landscapes that were newer for them, allowed them to test different ways of working with grantees, and helped build their brand/name recognition in particular issue areas. This has shown that donors can be willing to try different ways of grantmaking when provided with the right support.
• LFC has helped donors identify new opportunities, but many are still hesitant to move beyond funding what they already know and what others in the field are funding. Our analyses showed that more traditional projects (those identified by an external panel as more usual for funders) were more likely to get funding, showing an inclination for donors to fund projects similar to what other funders in the field are supporting or are somewhat common ideas. This finding has helped identify some additional ways in which LFC can work with donors to get more comfortable with funding beyond the status quo.
• Finalists in the competitions were more likely than non-finalists to present bold project ideas and were pushed to think in even bigger and bolder ways when working with their technical advisors. External panel reviewers found that finalist applications were 40% more likely than non-finalist applications to present bold ideas. During stage two of a competition, finalist teams meet regularly with an external technical advisor team. The evaluation showed that this component of the competition pushed big ideas, helped them better tell their story, and assisted them in being able to “put on paper how things would work.” These findings emphasize the importance of the technical advising component of the model.
• Participation in Lever for Change’s Bold Solutions Network has unlocked an additional $744 million that is separate from the competition awards. Out of 148 organizations in the network, 34% received funding following the competition in which they participated. Our analyses showed three overarching factors that positively influenced an organization’s likelihood of receiving additional funding:

1. 1. 1. Competition characteristics (geographic focus^[1] , institutional funders as the competition donor, and the presence of multiple funders^[2]),
      2. Size of organizational budget (small or large operational budgets)^[3], and
      3. Participation in capacity-building offerings.

• Reaching the finalist stage is more difficult for smaller organizations, however, the Bold Solutions Network and capacity-building services appear to offer a level playing field for projects from all sizes of organizations. About half of applicants to LFC competitions had never received a grant as large as $5 million, showing an open accessibility in the competitions’ open call format. However, smaller organizations (0 – 25 full-time employees) were underrepresented in the finalist stage when compared to larger organizations- demonstrating that it was more difficult for smaller organizations to present projects that would be highly rated enough to advance and compete for the larger grants. LFC’s Bold Solutions Network did, however, offer an equitable experience as organizations received similar numbers of visitors and time spent on their project pages regardless of their organizational size. These findings show that while the competition process may be more difficult for smaller organizations, participation in the Bold Solutions Network offers an equitable opportunity for viewing by other potential donors.
• Participants from a range of races, genders, sectors, and geographies applied to the competition and generally experienced it in similar ways.  Additionally, almost all applicants (94 percent) felt the steps throughout the overall competition process were clear and transparent. This finding will continue to be monitored through the evaluation plan to ensure an equitable experience for all participants.
• Competition applicants tend to find the competition criteria and processes clearer than in grant applications, while those who advance to the finalist stage have more mixed perspectives on the preference of a competition or submitting a traditional grant proposal. Some finalists found that the competition model was too time-consuming, had limited donor engagement, and promoted an artificial competition, while others greatly appreciated the technical assistance, increased visibility, and the shot at a larger pot of funds. Our research indicated that finalists consistently find the biggest benefits of the competition to be:

• • Capacity to expand their ideas or set a multi-year strategic plan;
  •  Support through high-quality technical assistance;
  • Increased visibility of their work;
  • Strengthening of teams or partnerships;
  • Validation of their work;
  • Development of a proposal/plan to shop around;
  • Ability to dream big; and
  • Receipt of funds through the competition (via an award or planning grant).

Our presentation at the ERNOP conference was well-received, and led to several continuing conversations with foundations and philanthropic researchers about how we can continue to evolve the philanthropic field to be more effective and inclusive. We are excited to share the full paper presented at the conference and we’d love to continue the conversation with you.

Are you involved in or considering using a social prize competition model? Looking for new ways to unlock capital from new donors? Thinking through how to evaluate your engagement with donors and social sector organizations? I’d love to hear your thoughts and experiences. Reach out to me at lfrantzen@tccgrp.com.

^[1] Organizations in U.S.-based competitions were more likely to receive funding as part of the BSN, however, projects that were from international competitions were more likely to receive large funding amounts than those from U.S.-based competitions.

^[2] P-value significance is geographic focus with p < 0.01, donor type with p < 0.05, and co-funder presence with p < 0.001.

^[3] Logistic regression yielded statistically significant coefficients for organizations with an annual operating budget of $50 million to $500 (p<.01)