A glossy book is arriving at the homes and offices of America’s wealthiest individuals. Inside is a charity pitch that aims to raise as much as $6 billion for nonprofits fighting global poverty.

The proposition? Donate and get results — or your money back.

The advocacy group Global Citizen and the finance firm NPX are engineering this fundraising drive. It is targeting the billionaires on the Forbes 400 list, members of the Giving Pledge, and the wealthy generally — a group increasingly criticized for what is seen as tight purse strings. The drive launched recently with dinners, meetings, and a Wall Street Journal ad that asked: “Will you donate … if we achieve results?”

Initially, the effort aims to raise at least $150 million through six $25 million funds. The money will pay to expand an established international-development program focused on clean water, education, food security, malaria intervention, tree planting, and economic support and empowerment for women.

Each of the programs could absorb as much as $1 billion, according to campaign officials.

The drive is an unusually large effort to tap two big sources of capital — the wealth of individual philanthropists and the funds amassed for impact investment. It also is a test of whether a “pay for results” model can get millions of dollars that are earmarked for social good but sitting on the sidelines — including more than $1.3 trillion in foundation assets, $160 billion in donor-advised funds, and an estimated $700 billion managed by impact-investment firms.

Lots of high-net-worth individuals worry that their money won’t be well spent or that results won’t follow, says Lindsay Beck, co-founder of NPX. They declare themselves ready to give — if they see a clear line to results.

“I’ve heard that in lots of one-on-one meetings,” Beck says. “And that’s what we’re solving for here. We’re saying, ‘OK, here are the results.’”

‘Pay for Results’

The “pay for results” financing plan would work like this:

Donors would commit to gifts, but the money would be released to the nonprofit only as measurable outcomes are achieved. For example, $500 from a gift might be awarded for each woman lifted out of poverty. If the nonprofit missed its targets, donors would be able to shift donations to another project or organization.

NPX and other impact investors, meanwhile, would loan the money for the program expansion. Their repayment, which would draw on the cash from the donors, would be based on results as well. If results were high, the return would be high, and vice versa.

The Global Giving plan involves five nonprofits:

• BRAC will expand a 24-month program to lift 50,000 women-led families in Bangladesh out of poverty.
• Charity:water aims to improve and increase clean water supplies for 500,000 people.
• The Global Fund will scale private-sector malaria testing, treatment, and reporting in Africa, aiming to treat 5.1 million malaria cases.
• The International Rescue Committee will expand teacher professional development and digital tablet-based numeracy and literacy instruction for around 300,000 young out-of-school children across Bangladesh, Nigeria, and Niger.
• The One Acre Fund will work with farmers in Ethiopia, Kenya, Malawi, and Rwanda to plant and grow to sustainability 44 million trees over two years. Also, the organization will expand its work with Kenyan farm families to serve an additional 250,000 a year and grow an additional 250 tons of food.

Global Citizen and NPX reviewed these programs to ensure their results were backed by evidence and they could scale quickly. Research on International Rescue’s tutoring program, for instance, found that third graders gained a year and a half in reading comprehension and fluency reading aloud after 21 weeks of instruction. The cost: $63 per child.
Capital to bring these programs to scale is all that’s needed, says NPX’s Beck. “Solutions exist. We know how to bring access to clean water. We know how to educate children. We know how to increase food security. We know how to plant trees and sequester carbon.”

Opening Wallets

For many years, Global Citizen has advocated for increased government spending to address the U.N. 2030 Sustainable Development Goals, according to Mick Sheldrick, the organization’s policy chief. More recently, it has tried to persuade the wealthy to open up their wallets.

At the 2020 World Economic Forum in Davos, it launched a Give While You Live campaign, urging the world’s billionaires to donate 5 percent of their wealth every year to important causes like Covid relief.

Linking donations to results could motivate big philanthropy in ways not seen before, Sheldrick says. “This is a case study. The potential really has no limits if it works.”

Each of Global Citizen’s proposed deals would create a financing arrangement similar to a “social-impact bond.” Typically, with impact bonds, private investors provide upfront capital for an effort on climate, social services, and the like. A municipality or a regional or national government agency repays the investor — with interest — based on the program’s success.

In developing countries, a third party — sometimes philanthropy but often international agencies like the World Bank — frequently will provide all or some of the repayment. These deals are called “development-impact bonds.”

Jjumba Martin

The first impact bond was created in 2010. Today, nearly a half billion dollars is invested in 226 impact bonds in 38 countries, according to the Brookings Institution Global Impact Bond Database, which tracks available data monthly. Twenty-two of those are funding work in developing nations, of which 15 are development impact bonds.

The proposed Global Citizen-NPX impact bonds are unusual both in size and in philanthropy’s role paying for outcomes, says Emily Gustafsson-Wright, a Brookings global economy and development senior fellow. The upfront capital investment for the impact bonds on the market today averages only about $3.2 million, according to Brookings.

Deals “have on average have been a lot smaller and don’t have as many outcome funders or investors or different service providers,” Gustafsson-Wright says. “But we’re moving in the direction of more pooled outcomes funding and investment and more actors in each project.”

If completed, she adds, it would be the largest outcomes-based program in which philanthropy alone provided the outcomes funding. The Quality Education India Development Impact Bond, which aims to improve outcomes for more than 200,000 primary-school students, counts only philanthropy among its outcome funders. They are the Michael and Susan Dell Foundation, Comic Relief, the Larry Ellison Foundation, and the Mittal Foundation. But their combined commitment is only $9.2 million over four years.

In another twist for philanthropy and impact investing, Social Finance Israel recently completed a social-impact bond in which it raised the investment capital from small investors through crowdfunding — a first, according to the organization. In a four-week campaign featuring video endorsements from an acclaimed actress and former government official, it raised $310,000 from 230 first-time impact investors. The funds will support work to reduce loneliness among elderly residents of Tel Aviv.

Giving Pledge Involvement

NPX has put together other impact bonds in recent years. In its first to close, the Last Mile, a San Francisco nonprofit that prepares incarcerated individuals for re-entry to society, used $800,000 from impact investors to create a web-development shop inside San Quentin State Prison to teach coding. The deal, which concluded last year, exceeded its inmate participation goal, with 89 percent of students now employed. The outcomes released $900,000 donated by 16 philanthropists and foundations.

All of the six Global Citizen funds aim to address the U.N. 2030 Sustainable Development Goals. Presented together, they are a package intended to provide donors an offer they can’t refuse. “To be honest, it removes an excuse not to give,” Sheldrick says. “A donor can’t say: ‘You don’t cover my issue.’”

Chris Stadler, chair of Global Citizen and managing partner of the private-equity firm CVC Capital Partners, said he plans to make a mid- to high-seven-figure contribution, with dollars split between a donation and an impact investment. Stadler, who has endorsed the Initiative to Accelerate Charitable Giving coalition of philanthropists and grant makers, believes the combination of impact investing and philanthropy will appeal to others. Investors will like that the programs are proven, he says, which means there’s little risk to their principal. And donors will appreciate that their money pays only for results.

Donors sometimes lament the lack of opportunities to make big gifts to scale up good work, Stadler says. “Well, we think that’s something that is available. We’d like to help connect people who are having trouble finding impact that can scale.”

Global Citizen and NPX expect executives in the financial industry will be drawn to the model, but also the wealthy generally. NPX donors include five members of the Giving Pledge: Richard and Joan Branson; Charlie and Candy Ergen; Gordon Gund and his late wife, Llura; Lyda Hill; and Pierre and Pam Omidyar.

Flexibility for Nonprofits

Jeannie Annan, International Rescue’s chief research and innovation officer, says the outcomes financing approach gives the organization more freedom to run its education interventions in the best way possible. Too often, she says, gift arrangements tie money to specific activities, making any tweaks to programs difficult.

“What we are all striving for as nonprofits and donors is outcomes and meaningful change in people’s lives, but that hasn’t made it into the way that we fund work,” Annan says.

BRAC has been exploring impact bonds for some time and believes they can accelerate and simplify big gifts, says Donella Rapier, president of BRAC USA.

“It takes a very long time for philanthropists to feel like they know an organization well enough to write a million-dollar check,” Rapier says. “With this, we can guarantee that their dollars will have impact. They don’t need to spend years getting to know us.”

Global Citizen and NPX expect to raise the $25 million for each fund over six to nine months. Gustafsson-Wright of Brookings says completion of the deal will depend in part on how investors perceive the pricing and financial and social return.

The Wall Street Journal ad and other promotion of the deal are a sign of how far the field of outcomes-based financing has come in just over a decade, she adds. But deals in which philanthropy provides all the payment for results raise some questions.

“Sustainability will be critical,” she says. “What happens when the outcomes contracts end? Ideally, government steps in after seeing the success of the interventions. But if they don’t, hopefully the funders decide to commit again.”