How transparent philanthropy can liberate billions of dollars — and do more good

How transparent philanthropy can liberate billions of dollars — and do more good

By sharing knowledge and data, grant makers can make their giving more accessible, equitable, and — crucially — effective.

By Kevin McPherson, Pooja Wagh, Peter B. Kaufman, and Jeff Ubois

In recent years, advocates have sought to address societal problems by making critical information more transparent. Social movements such as open education, open science, open access, and open-source software have led to advances that benefit much of humanity: more equitable access to educational resources; public services such as Wikipedia; and essential medical research, which contributed to the rapid development of a Covid-19 vaccine.

While much of this work has been championed and supported by the world’s leading philanthropies, relatively few have deployed open information approaches in their own work. Fortunately, that’s starting to change.

A nascent open-philanthropy movement aims to make charitable giving more transparent, accessible, and equitable for grantees. Its goal: to increase the impact of philanthropic giving and liberate the billions of dollars of philanthropic capital sitting in donor-advised funds and untapped endowments. The Philanthropy Data Commons, the GivingTuesday Data Commons, 360Giving, Data.org, and Lever for Change’s Bold Solutions Network are all important steps in this direction.

A new collaboration started by our organizations — MIT Open Learning, MIT Solve, the Knowledge Futures Group, and Lever for Change — seeks to build on this work and bring it to the next level. We’re exploring how computational tools and artificial intelligence can help make philanthropy smarter and more effective by streamlining the grant-making process. This includes using technology to assist foundations in evaluating proposals; helping nonprofits find and apply for grants; identifying bias in existing funding practices; and ensuring more philanthropic dollars get to the best projects.

Long-Needed Solutions

Philanthropy has an opportunity to enter a new phase of more equitable and effective grant making. But this will require being open to innovation and willing to experiment with solutions to problems that have plagued the sector for years. Grant makers should focus on three areas where open philanthropy can have the greatest impact.

Reaching more potential grantees. Grant makers typically rely on their existing networks to attract high-quality applicants for funding opportunities and to publicize grant competitions. Yet the same groups often repeatedly apply, while less connected and less well-resourced nonprofits with innovative ideas miss out.

An openly shared database of grant applicants and donor information could help rectify this problem. With sophisticated tools for tagging, searching, and filtering information, an open database could better match promising organizations with grant opportunities that are aligned with their missions and goals. Grant makers could plug in any type of criteria they’re looking for in potential grantees, such as more LGBTQ+ applicants or more from rural areas. Prospective grantees would, in turn, have access to a range of funding connections, as well as narratives and reports from past awardees to evaluate and learn from.

A grant information commons like this is increasingly within reach, but more foundations need to join such efforts. They could follow the lead of grant makers such as the Wellcome Trust, which instituted a data-sharing policy more than a decade ago, allowing it to share funding applications it receives with other foundations.

Taking a similar approach, MIT Solve, Lever for Change, and other donors have also begun to pool their data to help identify elements in grant proposals that reveal which types of funded activities are likely to produce the best results.

Our collaborative, called Philanthrobotics, is compiling such data to build shareable databases based on factors such as budget, financial sustainability, location, and target outcomes. We are also experimenting with using predictive analytics to determine what types of grants can have the most impact and why. We believe these efforts could be a model for larger grant-maker database networks.

Improving the grant application process. The current system often requires nonprofits to wade through confusing portals and processes to find grants that are a good fit. The philanthropy field could lighten the load by allowing an application to one foundation to be shared with others.

Building this more open secondary market for grant applicants would require a baseline set of questions that a collaborative of funders agrees is essential for assessing applications, such as whom the project will help and whether it will include diverse stakeholders. These questions could form the basis of a common funding application similar to the Common App students use to apply to college. The applicant data could then be shared within a group of interested donors.

A good example of this is the Bold Solutions Network, developed by Lever for Change to help applicants to its 11 grant challenges connect to other potential funding sources. As of November 2023, Lever for Change had awarded $737 million directly to organizations that participated in the challenges, but even more — $935 million — has gone to groups that in many cases did not win but received funding when their information was shared with interested donors. In all, more than a quarter of those who didn’t get a Lever for Change grant told us they ended up receiving funding at least partially because of this data sharing.

Clear criteria and eligibility guidelines at the outset of any grant application process can also help ensure applicant time isn’t wasted. MIT Solve, for example, plans to launch a two-stage application in which all prospective grantees answer a small set of essential questions and only those who pass through an initial screening round continue on to complete a full application.

There’s even potential for turning the application process into a learning opportunity by pairing it with online courses that cover key concepts such as how to develop a theory of change or by providing an A.I.-powered coach to assist applicants as they go through the application process.

Identifying greatest areas of need. Pooling and analyzing applicant data can help grant makers quickly identify the areas in which support is needed most. It can also help them pinpoint what future calls for proposals within a particular area should look like.

The Climate Finance Tracker, for example, offers a searchable database of more than $230 billion in grants and private investments to more than 6,000 nonprofits and companies that mention terms such as “renewable energy,” “land conservation,” and “water quality” in their project descriptions. The goal is to help climate donors spot funding gaps and potential opportunities.

Making large collections of applications available to foundations allows them to better understand the challenges communities face and to design grants that more accurately target those problems. This contributes to broader efforts to change philanthropy by orienting funding priorities with community priorities, as well as the priorities of donors.

It’s clear that sharing knowledge and data can bring sharper solutions to global problems. But to do this effectively, grant makers need to be willing to break free of the old ways and approach the world of open philanthropy with an open mind.

Originally published at philanthropy.com.

About the authors:

• Kevin McPherson is a machine learning scientist with the Innovation Information Initiative.
• Pooja Wagh is director of operations and impact at MIT Solve.
• Peter B. Kaufman is senior program officer at MIT Open Learning.
• Jeff Ubois is vice president of knowledge management at Lever for Change.

How transparent philanthropy can liberate billions of dollars — and do more good was originally published in MIT Open Learning on Medium, where people are continuing the conversation by highlighting and responding to this story.