Nonprofit Chronicles

True to its name, Unorthodox Philanthropy got started with an out-of-the-ordinary proposition.

In 2010, on a crowdsourcing website called Innocentive, the funder announced that it was seeking “novel, unorthodox opportunities for philanthropic investment with the potential to generate extraordinary returns to society.” It promised a prize of at least $10,000 to the best idea.

Nearly 300 people or organizations submitted proposals. The winner was GiveDirectly, a nonprofit that had just been formed by four graduate students to give direct cash grants to the very poor. It was awarded the $10,000 prize,and a $100,000 grant.

That first grant to GiveDirectly was “a watershed moment,” says Paul Niehaus, one of the founders, because it signalled that thoughtful donors would embrace the idea of giving money, with no strings attached, to the poor. Since then, GiveDirectly has distributed about $65m in unconditional cash transfers to poor people in east Africa. [It’s my favorite charity, as I’ve written here and here.]

Unorthodox Philanthropy is the inspiration of Mark Lampert, who is the founder and president of BVF Partners, a private investment firm in San Francisco that specializes in biotechnology companies. Lampert, who is 57, has been investing since 1993, and he sees some parallels between venture investing and philanthropy.

At BVF, he says, “we look for interesting, undiscovered companies and we give them money and we try to help them. A little bit of money married to a really big idea can have a dramatic impact.” His hope in philanthropy is to likewise unearth new and exciting ideas that deserve funding.

On its website, Unorthodox Philanthropy says:

We tend to be contrarians, believing that the opportunities with the greatest potential exist where others aren’t looking. Otherwise, we are sector- and geography-agnostic.

Unorthodox Philanthropy believes great opportunities should drive our funding decisions, not a predefined funding agenda. We seek to foster a system that enables great ideas to flow upwards toward capital, rather than allocating funding downwards from specific issues or causes.

In this regard, Unorthodox Philanthropy differs radically from most foundations, which typically identify and attack specific problems or serve local geographies. The very biggest staffed foundations like to devise grand strategies to curb climate change, or challenge inequality, or promote resilient cities. Some of those approaches work, many don’t, and one problem with philanthropy is that only occasionally do we learn which did which. (Here’s an exception, a smart look back at a seven-year, $32m initiative to improve Detroit’s schools that failed to deliver.) Family foundations are also sector- or cause-specific, as a rule. What made Unorthodox Philanthropy so, er, unorthodox?

To learn more, I spoke with Mark Lampert and Katherine Clements, who oversees his family foundation. giving. Unorthodox Philanthropy operates as a program of the Lampert Byrd Foundation (formerly the Lampert Family Foundation), which is run by Lampert and his wife, Susan Byrd. The foundation reported holding nearly $35m in assets in its most recent IRS Form 990; contributions are made either directly or through donor-advised funds at the San Francisco Foundation and at Vanguard Charitable.

Lampert told me that he got serious about philanthropy in the late 2000s, and spent months asking friends and experts how best to spend philanthropic dollars to make the biggest difference. “Compelling answers were scarce,” he says. This isn’t surprising. Consultancies like the Rockefeller Philanthropy Advisors offer clients advice like “find your philanthropic passion and let it guide your journey,” which could mean giving to a (well-endowed) university, a hometown, a disease charity, a museum, whatever. Lampert was sobered when a mentor told him that he had given away about $100m and wasn’t convinced it had made a lasting difference.

He turned to Innocentive, an open innovation platform that helps businesses and nonprofits solve problems. GiveDirectly won that first competition. “It obviously had huge potential,” Lampert said. Giving the small nonprofit seed money helped realize that potential, as co-founder Paul Niehaus told me by email:

Up until that point we had been a garage band, a group of PhD students unhappy with the way the [global aid] industry worked and tinkering to see if we could engineer some sort of end-run around it. And when Mark and Susan joined, we suddenly had this sense that maybe we weren’t the only ones. Other smart, sophisticated philanthropists might be willing to try something this radical.

One of the things I remember most is that Mark asked what we would do with a big check, and we said “we’d give it to poor people.” And he seemed really struck by that, because he was expecting something about hiring people, building the infrastructure, etc. I think we connected over this idea of learning by doing and staying laser-focused on a simple goal: get money in the hands of the poor.

Several years later, Unorthodox Philanthropy offered a second prize. It went to Evidence Aid, a UK-based nonprofit that seeks to bring rigorous, evidence-based practices to the fields of humanitarian aid and disaster relief. Clements told me: “We liked the commitment to evidence, rigor, transparency and improving how international aid works.”

Since then, Unorthodox Philanthropy has made awards to evidence-based nonprofits including New Incentives, which makes conditional cash transfers to encourage women to vaccinate their children; Development Media International, which uses advertising to promote improved health in poor countries; Graduated Reintegration, which aims to help prisoners successfully return to society; and Strong Minds, which is developing community-led treatments for depression in Africa. [See my 2016 blogpost, Advertising for Good, about Development Media International.]

Says Lampert: “We approach philanthropy with great humility. We are not experts and this need talented entrepreneurs to tell us what to do. Our role is to help them realize their vision.”

These days, Unorthodox Philanthropy accepts submissions at any time. It has developed a network of advisors and collaborates closely with Andrew Stern and his colleagues at the Global Development Incubator to source, vet and support awardees. It seeks projects that can be launched with “a finite amount of philanthropic capital,” explaining that“ideas should have high fixed costs, low or no marginal costs, and a clear path to inplementation and scale beyond our initial investment.” This is a daunting hurdle, but it doesn’t mean that organizations (for-profit as well as non-profit) can’t continue to fundraise after getting support from Unorthodox Philanthropy.

This year, UP is trying something new: It has set a minimum level of annual funding of $3m, and says it if does not find compelling opportunities to spend that money, it will grant whatever remains to GiveDirectly. This gives UP benchmark against which to measure proposals:

With the understanding that all of our annual grantmaking budget could go directly to the poor, our investment decisions must clear that hurdle and provide some justification for allocating resources elsewhere.

Says Lampert: “If our foundation’s capital was held in the accounts of the world’s poorest people, what alternative opportunities would compel us to look for a return of capital.”

Smart. It’s an approach that other foundations that care about global development, or inequality of any kind, might do well to consider.

It’s too soon to proclaim Unorthodox Philanthropy a success, although evidence indicates that it is spending wisely. [GiveDirectly, New Incentives and Development Media International are all backed by meta-charities GiveWell and The Life You Can Save, which seek out nonprofits that can do the most good at the least cost.] But there’s no doubt that Unorthodox Philanthropy is living up to its name.