Can a Grant-Making Competition Stop Rich Donors From Getting Cold Feet?
Inside Lever for Change’s $1 billion philanthropic haul.
Among the experiments is Lever for Change, which in 2019 announced an audacious goal: to drive $1 billion in philanthropic funding over four years to nonprofits competing for multimillion-dollar gifts. Lever for Change is the brainchild of the MacArthur Foundation, which tested the approach in 2018 when it awarded a $100 million grant to a
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Among the experiments is Lever for Change, which in 2019 announced an audacious goal: to drive $1 billion in philanthropic funding over four years to nonprofits competing for multimillion-dollar gifts. Lever for Change is the brainchild of the MacArthur Foundation, which tested the approach in 2018 when it awarded a $100 million grant to a single proposal through a competitive process. (The MacArthur Foundation is a financial supporter of the Chronicle of Philanthropy.)
Lever for Change’s premise is that a moonshot competition with a big payoff can prod and inspire nonprofit leaders to do more to solve systemic problems. Small grants keep nonprofits’ expectations and ambitions small, according to Lever for Change, which notes the median philanthropic grant made by America’s large foundations is $50,000 and lasts about 18 months.
The competitive process is intended to make rich donors feel confident their money will have an impact, says Cecilia Conrad, Lever for Change’s executive director.
“They need some support and hand-holding to take that step,” she says. “There’s this risk aversion that’s quite different when they think about their philanthropic pursuits than what they have done in business.”
For example, Lever for Change’s stronger-democracy challenge attracted $2 million from Cipora Herman, former vice president of finance at Facebook, and her husband, Vlado, former chief financial officer at Yelp, who wanted to improve political discourse and get more people to vote.
Cipora Herman says the competition largely got her attention because it was set up by longtime friends, tech veterans Erin Hoffmann and Mike Schroepfer, whom she trusted to help identify high-impact organizations.
“I wanted to do something to help democracy in the United States, but I wasn’t exactly sure how I would start,” she says. “None of those groups would have found a path to my doorstep without this process.”
Last year, Lever for Change met its goal ahead of schedule, finishing 11 contests that resulted in $1 billion in grants to address climate change, improve maternal and infant health, support women’s equality, strengthen democracy, and support other causes. It has attracted gifts from big donors, including MacKenzie Scott and Melinda French Gates.
Over the next two years, Conrad expects donors will pledge another $1.5 billion to other competitions.
While the big-grant approach has yielded philanthropic commitments to 22 nonprofits and coalitions, vying for a Lever for Change grant often feels like make-or-break proposition for the nonprofits in competition. It can require a lot of extra work. For those that win, however, the big grants can be transformative. And for big grant-making coalitions, the hope is that nonprofit competitions will continue to attract the very wealthy.
Donors Set Priorities
Lever for Change’s competitions are very donor-driven.
Donors choose a cause to fund, and Lever for Change makes an open call for entries. Those who give a minimum of $10 million serve as judges. Applicants are also judged by the people they are competing with, along with a panel of experts and leaders. A small group of finalists receive intensive coaching from Lever for Change and philanthropy and management consultants.
For some nonprofits, especially for the ones that don’t win, the Lever for Change challenges can be a huge time burden.
The effort and wait time can distract nonprofits from their ordinary work and can make losing all the more heartbreaking, says Shaady Salehi, executive director of the Trust-Based Philanthropy Project, which has never participated in a Lever for Change competition and is dedicated to addressing power imbalances between foundations and nonprofits.
MacKenzie Scott committed $250 million in March in an open call for small U.S.-based nonprofits. Melinda French Gates contributed to Lever for Change’s $40 million gender-equality competition through her Pivotal Ventures investment organization. And Lyna Lam and Chris Larsen gave $10 million to an effort to help refugees.
Individual donors aren’t the only ones taking interest. Foundations that want to contribute to a cause without designing and staffing an entire program have joined. The W.K. Kellogg Foundation devoted $90 million to support five organizations that won a racial-justice challenge, including a mental-health services provider in Chicago and an indigenous land-ownership program in Latin America.
The Hilton Foundation provided $4 million for a challenge designed to help refugees, and the Charles and Lynn Schusterman Family Philanthropies contributed to the $40 million gender-equality challenge.
Of nearly $1.7 billion that’s been committed since MacArthur spun off Lever for Change, Conrad says $736 million went directly to prize winners and $935 million to finalists in the competitions who became members of the group’s “Bold Solutions Network.”
“When an organization is going for big money like that, it can bring everything else to a screeching halt,” she says.
In June 2020, Joan Lundgren, then senior director of resource development at the Chicago Community Trust, learned that her team was a finalist in Lever for Change’s $10 million economic-opportunity challenge. For an “intense” three months, she says, she worked to fine-tune the proposal with several other nonprofits and city and state agency leaders. Called Chicago ABCs, the program would have used a visiting-nurse program run by the City of Chicago as a conduit to open and make cash transfers to savings accounts for newborn children.
The application did not receive a Lever for Change award, and while Lundgren, who is now senior director of philanthropy and corporate partnerships at ChildFund, a global child-welfare organization, believes the effort produced “good visibility” for some of the participating nonprofits, the proposal didn’t draw any attention from donors after it lost. The reason? The application was crafted for a $10 million gift, beyond the reach of most donors.
“I think it was hard to sell outside of the challenge because it was so complex,” says Lundgren.
Just Community, which invests in women and entrepreneurs of color, was also a finalist in a Lever for Change competition. In 2021, deep in the pandemic, the organization’s in-person financial coaching came to a halt. Steve Wanta, Just Community’s co-founder, decided to use the lull in services to go for the $10 million Lone Star Prize, a Lever for Change competition for nonprofits in Texas.
Wanta says the lure of the big prize forced him to create a more expansive vision for the nonprofit. His team came up with a plan to invest in 20,000 women entrepreneurs in Texas and to assist people in purchasing homes.
While Just Community didn’t get the $10 million, other grants came rolling in, Wanta says, because of the exposure the nonprofit received as a finalist. Just Community grew from managing $2 million in loans before the pandemic to managing a $17 million portfolio of social investments last year, thanks in part to grants from the Dovetail Impact Foundation, the Rockefeller Foundation, Schmidt Futures, and others.
Wanta says the Lever for Change grant process did have downsides.
The application and extra work with an outside consultant were extremely rigorous. That was doable because much of the nonprofit’s work was on hold due to the pandemic, “but we wouldn’t do something like this every single year,” says Wanta.
For Civic Revolution, a coalition of groups devoted to getting more young people to vote, the extra effort also was worth it: Last year it won a $2 million slice of Lever for Change’s $22 million Stronger Democracy award.
Coalition members — Parents Together, PushBlack, Pulso, and Noticias Para Inmigrantes, all of which use digital media to encourage civic involvement among young people of color — expected the application process to be time-consuming, says Peter Murray, president of Accelerate Change, which organized the coalition.
Civic Revolution members focused their grant proposal on the result of several statistically rigorous surveys to demonstrate how they could narrow voting gaps. The data persuaded the judges that the coalition’s news-sharing and voter-information work could be translated to projects across the country, Murray says.
“Usually the processes in our grant world involve who you know and how you can use your connections to get money,” Murray says. “It was a breath of fresh air to have someone ask, ‘What’s the evidence?’”
Marshaling Huge Gifts
Conrad is aware of the criticism that Lever for Change’s contests can sap applicants’ energy. To attempt to make the competitions less onerous for nonprofits, Lever for Change requires donors to provide additional funds to finalists to cover staff time. And judges from small nonprofit groups are also paid for their time.
Over all, Lever for Change donors have contributed $1 million per challenge to pay consultants and grant finalists and to cover a range of administrative and technology costs.
The MacArthur spin-off is one of several recent attempts to marshal huge sums of cash to chosen nonprofits. Others include: the Audacious Project, run by the nonprofit media organization TED with support from Bridgespan, a philanthropy consulting group; Co-Impact, a donor effort heavily funded by Bill Gates and Melinda French Gates; and Blue Meridian Partners, a coalition of grant makers that provides nonprofits with mentoring — as well as tens of millions of dollars — to increase the number of people they help.
These organizations help donors feel more assured that their philanthropic efforts won’t backfire, says Alison Powell, a partner at Bridgespan, who noted that fear of failure may be part of what is holding them back.
Donors with assets greater than $500 million gave away about 1.2 percent of their net worth in 2017, according to the latest available tallies in a Bridgespan report. But as their wealth accumulates through investment gains, the amount they give doesn’t cut into the principal of their fortune. That means, according to Powell, there are billions of dollars not being deployed to help society.
Powell says donors are faced with layer upon layer of dizzying questions when making philanthropic choices: “Will my money make a difference? How do I find high-impact organizations? Who can I rely on to guild me to manage this process? How do I even get started?”
Conrad of Lever for Change says would-be donors often get close to the point of making a big gift and then get cold feet. She hopes the competitions help more donors follow through.
“There is a need for information that’s been curated,” she says. “Usually you find donors who have multiple interests, and so there is the work of helping them figure out which of those interests might be best served by a challenge. There is probably more need to help the donors identify what their interests are than we expected.”
Reporting for this article was underwritten by a Lilly Endowment grant to enhance public understanding of philanthropy. The Chronicle is solely responsible for the content. See more about the Chronicle, the grant, how our foundation-supported journalism works, and our gift-acceptance policy.