Q&A: MacArthur Foundation's Cecilia Conrad on 'big bet' philanthropy

The John D. and Catherine T. MacArthur Foundation made a second grant of $100 million last week through its 100&Change competition, which funds a single proposal promising measurable progress on a societal problem. Community Solutions, an effort to end homelessness in the United States, was selected for the big prize, and other finalists also walked away with major commitments from donors. The MacArthur Foundation has leveraged $559 million in philanthropy over the past three years through two rounds of 100&Change, along with foundation affiliate Lever for Change, which works with philanthropists to design competitions, said Lever for Change CEO Cecilia Conrad on Wednesday at the Skoll World Forum, an annual event hosted by the Skoll Foundation taking place virtually this week. Conrad discussed “big bet” philanthropy — large grants intended to catalyze meaningful social change — which is celebrated for providing large, multiyear, unrestricted grants but also criticized for failing to reach all the organizations worthy of such investment and helping them grow at the right pace. “They’re a method for liberating organizations,” she said of grants totaling $10 million or more, while acknowledging that big bet philanthropy is just “one piece of the philanthropic ecosystem and should not be something that everybody runs to and everybody has to do.” Conrad spoke with Devex about what she’s learned from 100&Change, including one of the central questions of the panel: Would she “big bet” again? This conversation has been edited for length and clarity. Some question whether large grants place locally led organizations in low- and middle-income countries at a disadvantage because they may not have the “absorptive capacity” to handle big grants. What is your reaction to that? Hardly anyone is prepared to absorb grants of the size we’re talking about. This has been such a rare event that for any organization, it will require planning, which is why we work with finalists for three to six months on “how are you going to do this?” As someone who is a beneficiary of affirmative action, I sometimes reflect back on how people would say, “We’ll have to change the standards because people can’t meet the standards.” But you don’t know that because you haven’t given me a chance to meet them. What we try to do is to build into the process ways in which we can set up organizations to succeed. And some of that is recognizing that maybe the best form of participation can be collaboration across organizations. The question should really be: How do we make sure these organizations can compete for these big bets? When 100&Change was getting off the ground, did you have a sense that most of the organizations in the running to receive a $100 million grant would need support to be ready for that kind of money? I knew it long before we had the finalists in the first 100&Change, but I can’t say that I had it in mind when we first designed the competition. Someplace in that interval, from talking to people, I started to understand that was going to be a need. “What we try to do is to build into the process ways in which we can set up organizations to succeed.” --— Cecilia Conrad, CEO, Lever for Change I had a conversation with someone from Bridgespan who said, “I predict you’re going to find that organizations have great ideas of how to solve the problem, but they don’t have an engineering plan to get from A to B.” That’s why, in 100&Change, we’ve worked with MSI [Management Systems International], which focuses on building out scaling plans. There’s also: What do you have to do to get the donor to make the grant? What are the things you have to position? One of my surprises is how risk-averse these donors are, particularly given that many have earned wealth in high-risk areas. They are cautious on multiple fronts. They don’t want to feel like they invested in something and it doesn't yield an impact. And they are people who have been in control. They think if you increment out money in small amounts, you maintain control in a way that you don’t have if you give a really big grant and you commit to multiple years. Those are obstacles we try to work with donors to — first of all — acknowledge and then build out into a process. And this is part of building out an implementation plan. We ask the organizations to have clear milestones where we know “this is going well if this is happening, if that is happening.” This helps the donor understand and appreciate the point of view that the expertise for doing this particular thing rests with the organizations, with the people in the field. Sometimes we bring in the external validators, and that starts with the evaluation panels. Donors want to read what those judges had to say and want to be involved in knowing who those judges are. And we also bring on additional technical reviews so they know it’s a solid idea. That enhances their confidence that something will work. It reduces the reputational risk. And it gives them a sense that “it’s okay for me to trust the organizations and to cede control in the process.” You also work to get other donors to commit to supporting the finalists, beyond the $100 million winner. What lessons have you learned from that process? The first part is there is just a lot of direct outreach. You have to get a connection to the donor to put in front of them what information you have available. We start with prior and existing funders because what we have found is this process sometimes helps some of them realize they could think bigger. We get their help in bringing others to the table. What is sometimes attractive in working with an intermediary is that donors are also afraid of being inundated. Having us in between can encourage them to take a look where maybe they would have shied away. We’ve also learned patience. These [commitments] can take a while to happen because the donor is going to want to get to know the organization, and that may mean having several meetings, it may mean deliberating, it may mean talking to their peers and spanning that out over time. How can big bets help to unlock even larger-scale financing? The idea that many of the organizations have put forth that I have found persuasive is: For some larger sources of funding — for governments, for international agencies — you really have to show a proof of concept. You need to roll it out in different environments so it’s not just a fluke that it worked here; it needs to work in all kinds of places. That’s one of the ways in which the large grants can be important. To show the proof of concept, for the concept to scale, you need a large amount of initial funding. Philanthropy can provide the jump-start capital. Knowing what you do now, would you “big bet” again? Yes, and … we really do have to test and assess how well we’re doing at opening the gate so that the organizations who are closer to the ground, who have the proximate leadership, are really getting an opportunity to fully be part of [a big bet]. There is a disadvantage in being smaller. People look at you and say, “How are you going to do this?” So, how do we build the scaffolding to help support that participation? Some of that requires more people to do the seed funding. It may require funders who are willing to actually fund the process of developing the idea so it’s ready for an application for a big bet. We have work to do to make sure we’ve got that scaffolding in place.