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Charity Organizations Throw Strength Behind Risky Big Bets

ROBERT SIEGEL, HOST:

The MacArthur Foundation recently announced a contest. The prize - $100 million all to a single winner. Jacob Goldstein of our Planet Money team reports that it's part of a push in some corners of the philanthropy world to make bigger bets. And we should note, NPR has received funding from the MacArthur Foundation.

JACOB GOLDSTEIN, BYLINE: Cecilia Conrad has worked at the MacArthur Foundation for years. She oversees those genius grants that the foundation gives out, and she's the person in charge of this new contest.

CECILIA CONRAD: It is a little scary.

GOLDSTEIN: Have you ever given away $100 million dollars before?

CONRAD: I have not.

GOLDSTEIN: (Laughter) Me neither.

CONRAD: (Laughter) And the foundation has not either.

GOLDSTEIN: In fact, she says, this is much bigger than anything the foundation's done before. Like a lot of other big foundations, MacArthur has traditionally spread its giving pretty widely, a million here, a few million there. Now, though, some big donors are changing the way they do business. They're giving a few really big grants rather than lots of little ones.

Earlier this year, a group of philanthropies said they were banding together to give grants of up to $200 million each. Part of their thinking - a project that needs $1 million can get the money from any number of smaller donors. But there are not many donors who can give $100 million to projects that need a really big push, to say, turn a local program into a national one.

William Foster is a partner at The Bridgespan Group, which works with philanthropies making big bets. He says there are a few reasons this has been rare until now. For one thing, giving lots of small gifts feels safer.

WILLIAM FOSTER: If you make hundreds of small gifts, they're all good. Everyone appreciates it. And it's very hard to see success from failure. But going out and doing big things with a goal of change, of solving things, you expose yourself to failure.

GOLDSTEIN: One recent example, Mark Zuckerberg's $100 million gift to Newark schools. That donation wound up being controversial. And even if donors are willing to take the risk, it's often hard to find a recipient that knows what to do with a huge chunk of money. Foster says that's why when donors do give big gifts, they tend to go to just a few kinds of institutions.

FOSTER: If you walk into any one of the most established universities in the country and say, I have $100 million, there's a drawer full of ideas. You go to the most high-performing charter school, the most high-performing environmental group, and they don't have a $100 million dollar idea sitting in the drawer.

GOLDSTEIN: Part of the point of the MacArthur contest is to change that, to give different kinds of groups an incentive to come up with those $100 million ideas. Cecilia Conrad, who's running the contest, says the foundation is being deliberately vague about the kind of proposals they're looking for.

CONRAD: I'm not going to offer specific examples.

GOLDSTEIN: You have them in your head but you don't want to say them?

CONRAD: Oh, yes. I have many in my head. But we - I don't want to give a sense that, oh, you know, Cecilia Conrad said we should do this, and therefore, we're going to send in proposals in that area.

GOLDSTEIN: Conrad says she wants the contest to be wide open. It's open to any for-profit or nonprofit organization that can identify a significant problem and a plan to solve it. Jacob Goldstein, NPR News. Transcript provided by NPR, Copyright NPR.