This Grantmaking Pyramid Strategy Ensures That Nonprofits Won't Topple

For the superrich and the biggest U.S. charitable foundations, donating to universities, hospitals and cultural institutions is the norm. Less common are donations targeted at "social change" such as alleviating poverty or tackling global warming - but that is beginning to change. An in-depth study from the Bridgespan Group is showing how big bets in philanthropy are paying off, as well as what factors - such as a close donor-recipient relationship - are key to success.

The company that manufactures Lifestraw, a water purification device, has found a way to distribute their product to impoverished Kenyan families for free, while still making a profit. In the global carbon credit market, businesses receive carbon credits for projects that reduce greenhouse gas emissions. These credits can then be sold to companies who need to offset their carbon emissions, allowing green companies to make a profit off of their small ecological footprint.

The company that manufactures Lifestraw, a water purification device, has found a way to distribute their product to impoverished Kenyan families for free, while still making a profit. In the global carbon credit market, businesses receive carbon credits for projects that reduce greenhouse gas emissions. These credits can then be sold to companies who need to offset their carbon emissions, allowing green companies to make a profit off of their small ecological footprint.

Evaluating evidence of an organization’s impact informs charitable giving. Ratings organizations like ImpactMatters and Charity Navigator provide transparency to donors by reporting on the effectiveness of charities and social programs. The organizations make comparisons by analyzing the tax forms of nonprofits. Some, like GiveWell conduct further investigations and provide in-depth evaluations.

Investments into the arts serve as significant economic catalysts. In Pittsburgh, Pennsylvania, legacy foundations like the Heinz Endowments, Benedum Foundation, and Richard King Mellon Foundation pooled their resources to create the Pittsburgh Cultural Trust, which supports art and culture in the city’s downtown districts. By purchasing and refurbishing existing real estate, as well as lending support to smaller initiatives like the Pittsburgh Playwrights Theatre Company, PCT’s investments have served as an engine of growth for the city.

Too often socially useful businesses end up failing because they get ahead of themselves and end up not being profitable. Companies now can select from an 'opportunity map' of ventures that serve the poorest individuals, and are more likely to be profitable and sustainable.

The Restaurant Resiliency Program, which was adapted as a government initiative during COVID, tied up restaurants with charities with the aim of ensuring that vulnerable communities had access to meals while the restaurants were able to keep their business running in those uncertain times. However, when the funding abruptly ended on February 3 without reaching all the beneficiary restaurants, it showed how the much-needed program required better implementation and thought.

Food Connect is a nonprofit that acts as a middleman between businesses with edible food waste and people battling food insecurity. From donations to delivery, the whole process is streamlined through an app.

The 8th Street Collective, a loose organization of Oakland food industry workers, and Oakland Bloom, a group that supports refugee and immigrant chefs, opened a new restaurant, bar, and community hub space. A team of four worker-leaders rotates operational roles of Understory, the restaurant, and are working with lawyers to become cooperatively owned. The restaurant serves a pop-up-style rotating menu four days a week, including dishes by Oakland Bloom chefs and the other days are dedicated to the nonprofit’s incubator and training program called Open Test Kitchen, as well as other programming.

Prime Coalition is financing clean tech startups and climate-focused technologies that often don’t get a lot of funding. These technologies can be expensive to build and don’t generate profits immediately. So far, the public charity has secured $89 million that it has given into 18 energy ventures. “What’s important here is that the climate crisis is such a large-scale problem that we need lots of different types of solutions,” says Sarah Kearney, founder of Prime Coalition, “and so we need to match up right-fit capital to each kind of solution.”