Morgan Stanley
  • Wealth Management
  • Jul 15, 2016

Small Nonprofits, Large Impact

A new paradigm for philanthropy takes programs and practices that succeed on a local level and magnifies them to generate global change.

American foundations and individuals have invested over $2 trillion in philanthropic endeavors over the past seven years, including $373 billion in 2015 alone.1 State, local and federal governments have spent trillions of dollars more on social programs.2

While these are impressive numbers, the question remains: are we making progress in solving the world’s most difficult problems? The income gap has grown, our educational systems are still falling short, climate change has accelerated, and millions of children still go to bed hungry each night.

Clearly, something is not working.

According to Alexander Rossides, President & Co-Founder of the Social Impact Exchange (SIE), the primary problem is not the level of resources, nor availability of quality individual programs. Instead, the issue may be the lack of coordination between high-impact programs, and the inability to consistently identify the best solutions and bring them to scale.

A New Paradigm for Change

Over the past decade, the concept of “scaling impact” has emerged as an innovative model for making real broad-based change. While there are hundreds of organizations worldwide that have shown impressive results in affecting change, many rarely reach more than a tiny fraction of the population in need. The notion of scaling focuses on taking programs and practices that succeed on a local level and magnifying them to generate widespread change.

“The key to large-scale impact is to systematically collaborate,” says Rossides. He advocates for “communities of interest” comprised of hundreds of stakeholders who coordinate their efforts to address complex problems from multiple perspectives. In essence, there are already a thousand points of light—now the goal is to focus them into more singular and powerful beams.

With this thought in mind, SIE and Morgan Stanley Philanthropy Management joined together at the recent “2016 Conference on Scaling Impact” to share high-impact programs appealing to families, foundations, philanthropists, and funders, as well as bringing together prominent philanthropists with a shared goal of curing cancer.

“Building a marketplace to scale our world’s most innovative and successful nonprofits requires creating opportunities for collaboration both on a large scale, like at a conference, and in smaller settings, like intimate, topic-focused dinners,” says Melanie Schnoll Begun, Managing Director and Head of Philanthropy Management at Morgan Stanley Wealth Management. “We gain as much value and results from listening to prominent leaders like Deepak Chopra as we do when activists and funders engage in thought-provoking discussions in an effort to generate actionable ideas on how to solve their communities most complex and challenging issues.”

To that end, the conference brought together hundreds of philanthropic funders, nonprofits and other stakeholders to explore how the most promising philanthropic ideas could be scaled up to make a greater impact. In her keynote speech, Carol Larson, President and CEO of the Lucille and David Packard Foundation, stressed the need for what she called “platforms for collaboration” to move us past a program-rich, systems poor environment.

During the event, the key question among the various speakers and panelists was how philanthropic funders can help organizations begin to achieve scaled impact through their endeavors. Several unifying themes emerged:

1. Identify organizations producing clear, evidenced-base results and provide the funds to expand

While it clearly makes sense to put the greatest resources behind the programs that have proven to be most effective, George Weiss, Founder of Say Yes to Education, cautioned funders to be wary of absolute measures, “Make sure that the metrics reflect the net impact of the program by asking yourself what would have happened anyway.”

2. Expand reach through technology

Acumen is an organization that provides free training and education to current and potential nonprofit leaders. By moving courses from a physical location based-approach to an online platform, they have expanded their reach from 317 to 357,000 course takers.

3. Explore for-profit models and mission investing

Among its many impact investments, the Packard Foundation invests in Acelero, a for-profit company that improves the performance of Head Start programs. Elizabeth Carlock Phillips, Executive Director of the Phillips Foundation, reported that they are using endowment funds to extend loans to nonprofits that otherwise would not have access to expansion capital.

4. Participate in funder coalitions

Large donors are funding collective, coordinated efforts to address issues of mutual concern. For example, an organization called Blue Meridian is raising $1 billion from multiple donors to bring the best evidence-based programs in childhood development to scale. The Energy Foundation is taking a similar approach for donors interested in climate change mitigation.

5. Build capacity and infrastructure

In efforts to reward “efficient” organizations with the lowest overhead costs, funders may be unwittingly stripping nonprofits of their opportunity to bring great programs to scale. Investments in leadership depth and technological infrastructure are needed to bring good programs to larger audiences.

6. Think systemically

Our largest social problems rarely have single causes or simple solutions. Solving the high school drop-out problem, for example, may require coordinated efforts in everything from women’s health to early childhood education to juvenile justice reform to youth employment, before you even start to look at school reform. Scores of nonprofits, funders, school systems and government agencies may need to work in coordinated action.

Kimbal Musk, CEO and Co-Founder of The Kitchen Community and Board Member of Tesla Motors, applauds the movement toward more concentrated efforts, saying, “The nonprofit sector is understanding the power of focus, looking to make a bigger impact in a smaller area.” By aggregating these powerful initiatives and combining them in well-coordinated efforts, the opportunity for systemic change may be greatly increased. As Morgan Stanley Vice Chairman of Wealth Management and Senior Client Advisor Carla Harris concluded, “Efforts to achieve large-scale impact through collaboration and collective action are absolutely essential in addressing our largest and most intractable social problems.”

Morgan Stanley Wealth Management offers philanthropic advisory services to wealthy individuals, families, foundations and non-profit organizations. We work with clients to define their charitable interests, identify nonprofits to collaborate with and create opportunities for involving children and other family members in their charitable giving. Start the conversation today by speaking with your Morgan Stanley Financial Advisor or find one here.

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