Nearly every philanthropist asks the same question when reviewing the impact of their giving: How can I do the most good for the most people? It’s the right desire. Whether someone gives $100 or $100 million, they want their generosity to go as far as possible.
But that’s easier said than done. Charitable giving is notoriously hit or miss. Nonprofits often fall short of fulfilling their noble missions, while foundations face limitations on permitted activities. Social Programs That Work, a website administered by Arnold Ventures that tracks nonprofit effectiveness, has found that most social programs do not “produce the hoped-for effects when rigorously evaluated.”
For philanthropists, these findings aren’t exactly heartening. Hoping for the best is not an ideal donation strategy. Yet that’s the nature of a lot of charitable giving. Philanthropists searching for a better way find it difficult to innovate outside well-trod but often ineffective giving paths.
A new method is clearly needed. The answer may lie with an approach that fuels the nonprofit I lead, Roivant Social Ventures. The organization was spun out of a private health care company, Roivant Sciences, to address growing interest among employees, and society at large, in addressing health inequities. It is structured as a charity, not a corporate foundation, which allows it to invest outside donor dollars in promising social programs while drawing on the company’s expertise.
Rather than feeding into the long-running debate about whether nonprofits should act more like businesses, this approach simply brings the resources of a private company to the charity, including a ready and willing base of volunteers from the business, advanced technology, and IT support. I believe it has the potential to transform philanthropic effectiveness.
How We Work
Here’s how it works. A company establishes the charity and gives it a mission connected to the company’s particular industry. It can receive long-term support from the founding business, but as a charity, by law it must also raise significant and ongoing support from other donors.
The nonprofit supports entrepreneurs, start-ups, and small firms developing groundbreaking innovations, yet unlike a typical charity, it can draw on corporate infrastructure to help those organizations become self-sustaining and no longer need philanthropic support. The nonprofit I lead uses this approach to invest in innovators addressing longstanding health disparities with the goal of bringing about systemic change.
Nonprofits almost never have this level of support. Yet that support is precisely what philanthropists need to supercharge their giving. It offers a combination of benefits for donors that don’t exist elsewhere:
First, donors get co-investors. Donations can be supplemented by contributions and operating support from a business — specifically, a business that’s laser focused on making a social difference through this charity.
Second, donations are re-invested. The charity’s investments generate returns, which go to other promising innovations. Each donation can grow over time, and so can its impact.
Finally, investments are backed by corporate expertise. The charity can rely on a company’s infrastructure and employees at no cost, giving it access to a knowledge base and a resource bank that are fully aligned with its mission.
Advancing Global Health Equity
Sound too good to be true? It’s not. My organization shows what’s possible.
We recently invested in Sunflower Therapeutics, which is working on an accessible means of manufacturing vaccine batches and other critical treatments in developing countries for use by local populations. Global health equity depends on advances like this, as the Covid-19 pandemic has shown, yet little progress has been made over decades.
In addition to our charity’s financial investment, Sunflower benefits from volunteer expertise from our parent company, Roivant Sciences. Its manufacturing experts are assisting Sunflower with its market strategy, and employees with business expertise are identifying partners who can help deploy the Sunflower technology worldwide.
This additional support will allow Sunflower to reach patients sooner and on a larger scale than they would with financial investment alone. The organization is set to roll out its manufacturing technology domestically this year, a crucial first step toward deployment in developing countries. This will keep Sunflower on track to significantly improve global access to affordable vaccines and medicines.
Philanthropists who support an initiative like this can be confident that their donations are having a wide-reaching impact.
Any company in any industry could establish a similar charity. A bank could create a charity focused on expanding minority access to the financial system through investment and support of financial technology start-ups. A nonprofit founded by a homebuilding business could invest in new manufacturing processes that allow for the development of more affordable housing.
A Push From Big Donors Would Help
To date, hardly any companies have taken approaches like these, but philanthropists can help change that. America’s most generous people are also among its most influential. Many started their own successful businesses, serve as senior executives at major firms, or hold positions on corporate boards. On top of their charitable work, most also invest in start-ups and other businesses.
Whatever the case, philanthropists can urge companies to adopt this new model and can offer initial donations to get it off the ground. Companies have ample incentive to go this route. Businesses of all sizes are increasingly looking for ways to do social good — and employees, especially younger workers, are demanding it.
If that isn’t enough to persuade them, there are additional benefits to consider. The company, for instance, would be able to make tax-deductible investments through the charity that it might otherwise avoid but that could have substantial long-term social returns. That includes projects that are either very early in the development process or tailored to small markets. Such investments rarely attract corporate attention because the risk is too high or the return on investment too low, or both. By establishing a charity, companies can legally and prudently invest in such efforts.
Philanthropists can also rally their peers to support these new types of charities. Winning them over shouldn’t be hard since this approach gives them what they want: a chance to make their donations go further. This is not the only way to achieve that goal. But it is a powerful way. Philanthropists who embrace it will quickly realize — as I have — just how effective it can be.