How Challenges Are Reshaping Donor Engagement

Many donors find giving away money effectively to be difficult. As a result, the wealthiest Americans are sitting on $4.5 trillion. Although individual wealth has increased, donations have dropped sharply (by 60%) since the height of the pandemic. Most of this money remains on the sidelines despite the urgency of local, national, and global social and economic challenges because would-be donors have no accessible, trusted, and reliable way to choose with confidence among charitable causes, organizations, and projects.


Open calls for proposals, such as those managed by our team at Lever for Change, help uncover more bold and uncommon solutions to the world's biggest problems, compared to existing philanthropic and government models, according to a new study by TCC Group, a mission-driven consulting firm, and certified B Corporation, based in New York.

The TCC Group recently completed an evaluation for Lever for Change and presented its results at the ERNOP: The European Research Network on Philanthropy (ERNOP) conference held recently in Croatia. Founded in 2008, ERNOP has grown to roughly 250 members from 25 European countries, and its conference attracts a broad diversity of academics.

For those of us in U.S.-based philanthropic organizations, it's helpful to see how academic research on philanthropy is developing in Europe, with its different traditions regarding social welfare, taxation, inheritance, and charity.

Philanthropy and Crises, Roles and Functioning of Philanthropy in Times of Societal Upheavals was the theme of the recent ERNOP conference held at the University of Zagreb. The need to address the convergence of economic, social, environmental, and political challenges and conflicts is as urgent as ever, and how philanthropy rises to meet these challenges is a crucial area for reflection and action for those of us working in the philanthropic space.

TCC's presentation focused on five research questions (addressed in a full paper that will be published later in the fall):

  • Does the philanthropic prize model give donors confidence to invest in larger-scale projects and unlock new capital?
  • Does the prize model incentivize social sector organizations to think in bigger, bolder ways?
  • To what extent are social sector organizations better able to access new donors and large capital after the competitions?
  • What kinds of bias and equity considerations are mitigated or introduced through this approach?
  • How does the competition model compare to traditional models of grantmaking?

TCC drew answers from five years of research conducted by TCC, including interviews with living individual donors, including Giving Pledgers, institutional funders, changemakers/grant applicants, and others in the field known for their close observation of philanthropic practice.

Among the more interesting findings in a paper primarily authored by Lisa Franzen of TCC:

  • As of June 2023, LFC's competition model has unlocked over US$1.3 billion, awarded to competition participants working on various of the world's greatest problems. This funding has come from institutional donors and ultra-high-net-worth individuals, often new to philanthropy. Funding is administered through customized [challenges] and through a secondary market of proposals funded after the competition closes. These findings illustrate the importance of the multi-tiered model for maximizing the total number of dollars unlocked.

  • Donors that engage with LFC in a competition find high value in the services around recruiting and vetting applications and minimizing reputational risk. The model allows donors to vet a large number of applications and to look beyond their existing network with a transparent process. It has also provided donors with insights into ideas or landscapes that were newer for them, allowed them to test different ways of working with grantees, and helped build their brand/name recognition in particular issue areas.
    • LFC has helped donors identify new opportunities, but many are still hesitant to move beyond funding what they already know and what others in the field are funding. Our analyses showed that more traditional projects (those identified by an external panel as more usual for funders) were more likely to get funding, showing an inclination for donors to fund projects similar to what other funders in the field support or are somewhat common ideas. This finding has helped identify some additional ways in which LFC can work with donors to get more comfortable with funding beyond the status quo.
    • Finalists in the competitions were more likely than non-finalists to present bold project ideas, and they were pushed to think in even bigger and bolder ways when working with their technical advisors. External panel reviewers found that finalist applications were 40% more likely than non-finalist applications to present bold ideas. Additionally, during stage two of a [challenge], finalist teams meet regularly with an external technical advisor team, and the evaluation showed that this component of the competition pushed on their big ideas, helped them better tell their story, and assisted them in being able to "put on paper how things would work." These findings emphasize the importance of the technical advising component of the model.
      • Participation in Lever for Change's Bold Solutions Network has unlocked an additional US$744 million, separate from the competition awards. Out of 148 organizations participating in the network, 34% received funding following the competition in which they participated. Our analyses showed three overarching factors that positively influenced an organization's likelihood of receiving additional funding:
        • Competition characteristics (geographic focus, institutional funders as the competition donor, and the presence of multiple funders),
        • Size of organizational budget (small or large operational budgets), and
        • Participation in capacity-building offerings.

  • Reaching the finalist stage is more difficult for smaller organizations; however, the Bold Solutions Network and capacity-building services appear to offer a level playing field for projects from all sizes of organizations. About half of applicants to LFC competitions had never received a grant as large as $5 million. Smaller organizations (0 – 25 full-time employees) were underrepresented in the finalist population compared to the overall applicant population. This demonstrates some ongoing barriers for smaller organizations to present projects rated highly enough to advance to the finalist phase and compete for the larger grants. However, organizations with fewer employees and a smaller budget did receive similar amounts of visitors and time spent on their project pages as organizations with more employees or greater budgets. Additionally, an organization's budget or number of employees did not significantly influence their likelihood of participating in the capacity-building offerings.

  • Applicants from a range of races, genders, sectors, and geographies applied to the competition and generally experienced the [challenges] in similar ways. Additionally, almost all applicants (94 percent) felt the steps throughout the overall [challenge] process were clear and transparent. An equitable experience for all participants will continue to be monitored through the evaluation plan.
    • [Challenge] applicants tend to find the [challenge] criteria and processes clearer than in grant applications. At the same time, those who advance to the finalist stage have more mixed perspectives on the preference of a competition or submitting a traditional grant proposal. Some finalists found the competition model too time-consuming, limited donor engagement, and promoted an artificial competition. In contrast, others greatly appreciated the technical assistance, increased visibility, and the shot at larger funds. Finalists consistently find the biggest benefits of the competition to be the ability to develop their ideas further or set a multi-year strategic plan, the high-quality technical assistance they receive, the increased visibility of their work, the strengthening of teams or partnerships, the validation of their work, the development of a proposal/plan to shop around, the ability to dream big, and the funding they received through the competition (via an award or planning grant).

Knowing the total results from a grant or series of them has never been an option, even for the most diligent observers of foundation activities. But evaluations, well done, can give funders and others some sense of how things are working out, provide some insights about how things might be improved, and help organizations focus on worthy questions.

The full conference paper will be accessible via the ERNOP website. Are you interested in sponsoring an open call challenge with Lever for Change or funding any of the organizations in our Bold Solutions Network? We'd love to hear from you.

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