Why ‘big bets’ matter more than ever: Supporting nonprofits with flexible, long-term, ‘durable’ capital 

The ongoing conversations in our sector about the role and value of big bet philanthropy—making multimillion-dollar investments in a single organization—have taken on new urgency. 

These conversations often center on concerns that the growing cohort of big bet funders, including Lever for Change, are unwittingly encouraging mission creep and unsustainable growth among nonprofits that might be better off with smaller budgets and ambitions.  

This is not the time for timid philanthropy. Our research and experience demonstrate that big bets can do a world of good, particularly when they deliver durable capital. We define durable philanthropic capital as funding that is larger-scale, longer-term, and flexible. Typically, durable capital is an investment in fundamentals that set nonprofits up for long-term stability, growth, and impact, such as funding that allows nonprofits to strengthen their core operations or invest in leadership. 

Our new report, Sustaining Change: Unlocking Durable Capital for Lasting Impact, outlines definitions, benefits, and case studies of seven types of fundamental durable capital designed to build organizational resilience and to help nonprofits weather unforeseen funding challenges and policy uncertainty. Here’s an overview: 

Support traditional scaling 

This is the most common use of durable capital in today’s nonprofit sector: expanding the number of individuals or communities served. For organizations looking to scale their impact through traditional growth, durable capital offers what the private sector calls “growth capital.”  

Invest in endowments 

Most nonprofits are heavily dependent on funding sources that can be unreliable; based on multiple sources, our report found the average U.S. foundation grant is about $50,000 and lasts just over a year. The flow of even small donations to nonprofits is highly susceptible to market volatility. This short-term, unpredictable funding cycle can create instability for the organization, its staff, and the communities that rely on their work.  

Endowments allow nonprofit leaders to engage in long-term planning, rather than chasing funding, and can help them move beyond keeping their doors open to focus on improving organizational effectiveness over the long term.  

Expand service offerings 

Established organizations seeking to deepen their offerings to the communities they serve and maximize their impact need large infusions of cash to make the leap. Such one-time infusions can help them buy new equipment, train or upskill existing staff, or invest in new technologies.  

Strengthen partnerships 

Durable capital can also help nonprofits achieve scale by working with and through the government. Collaborating with the government empowers organizations to work toward achieving systems change, addressing root causes and structural barriers.  

This ambitious strategy, whether aimed at fixing broken health, education, agricultural, or other systems, requires up-front investments in building trust with governments, co-creating solutions, and testing implementation strategies.  

Achieve critical mass 

Nonprofits focused on health and behavior change—such as Mothers Against Drunk Driving, anti-smoking campaigns, or efforts to end female genital mutilation—need a surge of funding to build momentum and achieve a tipping point in public awareness.  

Strengthen financial systems 

Investments in nonprofits’ organizational financial infrastructure often lag behind investments in other systems deemed more “mission-critical.” But poorly developed financial systems can jeopardize a nonprofit’s success.  

Durable capital investments in strengthening financial infrastructure can enable organizations to better track and manage their funds and build the robust financial systems often required by larger funders. This can position the nonprofit for greater growth. 

Support experimentation and evaluation 

While measurement and evaluation should be part of every nonprofit initiative, they’re especially needed at a few key junctures, including when developing and testing their initial strategy and theory of change, iterating on the expansion of new service offerings, and co-creating and testing solutions with government partners.  

There is, perhaps, no better illustration of the need for more “durable” or “growth” capital in the nonprofit sector than today’s funding crisis. It is durable capital, after all, that creates the resiliency and stability that could help organizations weather the current storm. And the next one. And the one after that. For years afterward, it is durable capital that will help organizations build the infrastructure, capacity, and staff to achieve their most ambitious goals and our most heartfelt hopes well into the future. 

Photo credit: Sarah Nasser/Sesame Workshop