Big Grant, Big Learnings

Lessons from MacArthur Foundation’s USD 100 million grant on funding long-term change.

This article was originally featured on IDR Online here.

5 min read

When it comes to funding organisations, I’m a big believer in product diversity: there should be different forms of grant making and different sizes of grants available in the sector; which is not necessarily the case right now.

We have players who are sending small amounts of money a year, over a long period of time. And given the kinds of problems in the world, we might not make much headway if this continues to be the primary approach we follow.

There is also a sense that philanthropic organisations—foundations in particular—want to fund the next new thing, and want to be the only ones doing it. But what happens when the new things are no longer new? Or, when a once-new approach is found to be effective, where is the funding to scale it?

We realised that there was a space that needed to be filled.

In 2017, Bridgespan did a chart for us (MacArthur Foundation) that mapped out philanthropic gifts. It showed a lot of activity in the below USD 10 million segment. But between USD 10 million and USD 100 million, there were three dots on the graph.

The 100&Change competition—which seeks to grant USD 100 million to an organisation seeking to address a significant problem—was our attempt to create a product to fill this gap. Having conceptualised, managed and completed the first challenge, here are some of our learnings from the process.

1. Listen to external voicesJulia Stash, president of the foundation, often says we must recognise that we are not always the smartest people in the room. Her philosophy was that we should be willing to commit our resources to a problem we did not pick, engage external voices to tell us what was possible, and have them design the solution.In our experience, there are two ways to engage external voices: One is to let the organisations and their teams tell us what they want to do. The second is to engage several people from outside of the foundation and let them play a pivotal role in the process. And because in this project we were theme agnostic, the people we approached were smart, critical thinkers—those who could look at the proposals we received and make an assessment based on the criteria we had set out—that the solutions be meaningful, verifiable, feasible, and durable.
2. Help organisations refine their plansOf the 1,900 applications we received, 800 met the basic eligibility requirements. A top 200 had plausible plans for how they could deploy USD 100 million. They all needed extra help though with refining their plans—which included additional research, project development, and authentic engagement with communities of interest. Once we got to our finalists, we brought in technical experts to help them build out robust plans. Even the biggest organisations were a little weak on their plans of how they were going to deploy USD 100 million.
3. Provide longer time framesInitially we thought the time frame for organisations to implement their USD 100 million projects could be between three and five years. And what we saw was that all the applicants essentially asked for five years. We soon learned that organisations would take five years to yield results because they would spend the first six to nine months figuring out how they would use the money, working out the terms, building their own capacity and so on.
4. Put some structure in placeWhile the organisations themselves chose their projects, partners, and deliverables, we asked them to formalise some of the elements of the approach.For example, in the case of organisations that had applied as collaboratives, we asked that they sign MoUs with their potential partners as part of their application. We received several complaints initially, because it’s a lot of work to get an MoU done. But it proved helpful because the organisations said that prior to this, they had not had conversations with the partners about how they were going to divide up the money, and this process helped them streamline partner relationships.
5. Identify possible risks upfront as best as you canThere are different kinds of risks that programmes of this size could face:
   • Implementation: The ability to implement a solution could be constrained by natural resources, the availability of a labour force with the requisite skills, and by interdependencies with other projects or programmes.
   • Political: If they are dependent on a friendly government, there is the real risk that the government will change during the course of the programme.
   • Scaling: Depending on how the programme plans to scale—and keeping in mind that in some cases scaling is really just replication—there is a real risk that what worked here, will not work there; that it won’t translate or transfer.
   • Bundling: In some cases, projects might involve putting together diverse components. For example, the Sesame Workshop/International Rescue Committee (IRC) work in the Syrian refugee region bundles two components: (1) Sesame’s early childhood education and (2) community health workers. Individually each of those parts might have strong evidence that they work, but would it work when all bundled together?
6. Ensure that the grant money is flexible and pays for all costsIt is important to think of project costs more inclusively. When one is managing a project this big, one has to build organisational capacity and not just project capabilities to deliver on it. Most funders tend to think of organisation building costs as overheads. But these are really project costs because in the absence of a strong organisation, one cannot deliver on a USD 100 million ‘project’.There also has to be a great deal of flexibility—you must have an ongoing relationship with your grantee where you can help problem solve, make introductions if needed, help find the right partners, provide access to policy makers and so on.
7. Look at outcomes that are achievable within the time frameMost projects, regardless of size, usually have two sets of goals—short term and some longer term. In the case of Sesame Workshop and the IRC, our 2017 USD 100 million grant recipients, the shorter-term goal is to help refugee children in Syria become school ready. They have some baseline metrics and four years from now they will look at the children with whom they have intervened, to see what their school readiness looks like. A significant improvement in this indicator is the outcome that we would like to achieve during the term of the grant.Sesame is also working closely with scientists who have been studying the issue of toxic stress; there are some markers of toxic stress that are short-term markers that they will try and capture via a controlled trial.We believe that in the longer term the children will grow into healthier adults, but we have to recognise that we will not know whether they have been successful on this front at the end of five years.
8. Consider post-grant durabilityThere are different ways to look at durability. One is what we call the magic pill. There are not a lot of them out there but there are some problems that we can solve, even if it is for a small population.One such example is the work that the River Blindness Carter Center—one of our semi-finalists—is doing. If they could have received the money to cure river blindness in Nigeria, it would have been cured forever for Nigeria.The second approach is that there is a big upfront cost that will create the infrastructure, after which there is an identifiable stream of revenue that will sustain the programme for life. Several of the proposals that we got from social enterprises were of this nature.The third is unlocking other financial resources—both public and private. If you can fund scaling—which sometimes involves just replicating the model—it can unlock public resources. The organisation would have convincingly demonstrated that their model works, and the government would then take it on. In the case of Sesame and IRC, there is a notion that it will attract a bigger share of humanitarian aid to this problem.

We are excited to see what we learn from the second round of 100&Change; most importantly, we hope it continues to inspire the broader public to believe solutions are possible.