Philanthropic leverage

Philanthropists want to feel connected to the impact they are making.

This is why our clients often tell us that they prefer donating to smaller charities or local organisations, because they feel they get a better sense of the difference they are making.

But donors can be bold and ambitious by supporting organisations that operate at a higher level.

In this piece, we want to introduce you to something called philanthropic leverage – a way of using philanthropic capital to influence how others (donors, governments or the private sector) give to good causes.

Take the Bill & Melinda Gates Foundation, for instance. The organisation forges coalitions with large international organisations and governments which then in turn can mobilise many more billions of dollars than the Foundation can alone.

And there are plenty of other examples to consider.

Whether you are funding philanthropic programmes, or supporting charities like Client Earth, who use environmental law to help protect the planet – there are ways to support work that improves things systematically and for the long term.

To match, or not to match?

Donation matching, where large donors pledge to match smaller donations, is one of the most popular examples of philanthropic leverage.

But it may not be that simple

A common assumption is that the greater the match value, the more money is raised. But research has shown that donation matching, and even the offer of bigger matching doesn't always increase the total donated to a charity.

Additionally, the opportunity to match funds could move a donor away from a highly effective charity, or neglected cause area, and toward an organisation that is already very well-funded or ineffective.

Rather than just the amount of money a charity is able to raise, it may be helpful for donors to think about which organisations will make the best use of a donation, or achieve a better result.

Tips to make leverage work

• You should be comfortable with risk and uncertainty but also do some research to understand the likelihood of success
• If you are passionate about a specific cause area – for example women’s rights – allocating a portion of your philanthropic capital to charities working to raise awareness or do advocacy work, could allow you to tackle an issue from multiple angles
• Philanthropists are ultimately accountable to themselves for their charitable giving - unlike businesses which are accountable to their shareholders, or governments which are accountable to the public. Some scholars of philanthropy make the case that one of philanthropy’s key roles is to trial new ideas, before they are then scaled by governments. Opportunities for philanthropic leverage therefore get at the heart of what many think philanthropy is for
• You can start off with smaller amounts of funding and pool your money together with other donors.

Remember that you hold the power. You can find out about the organisation or cause you want to leverage funding to, and use evidence of what works and what doesn’t to develop your giving.

Once you know what works, you can celebrate those wins and share inspiring impact stories with your network, to show others how to do the same.

Your efforts and the impact you make has the potential to influence a whole new community of donors who can support causes they care about.