Global Goals: Every Achievement Counts (Section 3: Social Enterprise)
MVPSolvingtheGivingPledgeBottleneck
1. The Giving Pledge Bottleneck
The world’s most affluent individuals continue to amass wealth, which has fostered a greater
desire to make high-impact, large scale charitable donations to those organizations providing
solutions to our society’s greatest problems. However, in order to solve these problems,
501(c)(3) organizations face the challenge of developing detailed long-term growth plans, with
measurable results, showing donors how their gift makes a difference. We must alleviate this
bottleneck between the desire to solve and the fruition of the solution, especially as the number
of prospective mega philanthropists continues to increase. To do this, we must offer more
support (non-financial and financial) to 501(c)(3) organizations to increase their scale, in large
part by increasing their internal management capabilities.
Redefining Venture Capital:Investing Charitable Gifts to “Back” 501(c)(3) Management
Teams
By treating charitable gifts as a source of “growth equity” by increasing the scope of the venture
capital realm, we can help 501(c)(3) organizations achieve their goals faster, thereby better
helping those in need.
High Impact, Large Scale Growth Plans
501(c)(3) organizations are chronically underfunded, with management teams taking on a
variety of roles in order to meet their organization’s goals. Such standards take the focus off of
the quality of their services and onto raising financial capital, inhibiting them from solving the
problem(s) they’ve vowed to solve.
Delivering high impact, large scale growth plans, with the appropriate investments in
management, will solve this problem. Management teams should project where they want their
organization to be in 10 years, and then outline the all of the resources needed to get there.
Delivering fair but competitive compensation will help to incentivize management teams to
dream big, and execute big.
Deeper Meaning and the Moral Biography
Many of the world’s wealthiest individuals desire to give significant money to worthy causes, but
lack the ability to find a path needed to better arrive there. Paul G. Schervish, Professor
Emeritus of Sociology and Former Director of the Center on Wealth and Philanthropy at Boston
College, has developed the concept of the “moral biography,” which focuses on helping these
individuals cultivate and deepen this sense of meaning behind their philanthropic endeavors.
Such meaning can reward the donor in much greater ways than a monetary return.
Merton Venture Philanthropy (MVP) seeks to expand upon Schervish’s work not only by
encouraging the development of individuals’ moral biographies, but also by showing these
individuals the impact their gifts can make when siphoned toward organizations with scaleable
solutions to critical issues in their local communities. We believe that the concept of the moral
biography will help us to measure individual families’ giving potential, and thus their potential to
strengthen and expand their impact and personal fulfillment.
2. Solution Capital
Solution capital is the idea of quantifying the amount of money a given family has that exceeds
the spending potential of themselves and their heirs. In short, it is the money they could devote
to philanthropic endeavors that they won’t otherwise spend on themselves. At present, it is
estimated that the world’s billionaires have roughly $3 trillion dollars of solution capital laying
dormant. Using this capital, they can not only improve a plethora of contemporary societal ails,
but can also achieve a dramatic sense of fulfillment.
Social Turnarounds
Ultimately, the goal in securing and managing solution capital is to use it to create meaningful,
lasting social impact in myriad domains. Mental health services, homelessness, human
trafficking, and prisoner reentry are just a few examples of critical social issues. When and if
these issues are addressed, there are enormous cost-savings for governments, both local and
national. Pay-for-Success contracts are showing us the way forward. Also known as Social
Impact Bonds, these contracts use investor capital to show how 501(c)(3) organizations are
effectively addressing the problems they seek to address. If the efforts are successful, and the
issue is adequately addressed, investors get a return on their investment and the government
saves most of the money it would have otherwise spent addressing the issue down the road.
Social Turnarounds build upon Pay-for-Success by focusing on growing the 501(c)(3)
organization and supporting its management team, in order that they effectively address all of
the issues on their plate. Being funded by donations instead of by investors who demand a
return, this concept can be characterized as a Philanthropic Pay-For-Success-Contract.
In this way, the availability of Solution Capital ensures that a 501(c)(3) organization’s mission
can come to fruition and can sustain itself, because the government payments accrue to the
501(c)(3) organization, making it sustainable at a much higher scale.
Fulfillment Metrics
To incentivise donors to give money, 501(c)(3) organizations must find ways to better develop
relationships not only with the donors themselves, but also with their families. Such relationships
give donors a greater sense of satisfaction and purpose in their charitable efforts, thus, in order
to maximize donor giving, we need to know more about how to measure donor satisfaction and
what mechanisms drive it. The moral biography, assessment of solution capital, and
engagement of all the family in intergenerational philanthropic mission alignment are all
components of the process of satisfaction, but we must develop other ways to measure it so
that we can yield a significant ROI in the form of satisfaction, rather than traditional ROI of
capital returns.