A New Business-Charity Model Could Help Philanthropists Invest Their Money More Effectively

Nearly every philanthropist asks the same question when reviewing the impact of their giving: How can I do the most good for the most people? It’s the right desire. Whether someone gives $100 or $100 million, they want their generosity to go as far as possible.

But that’s easier said than done. Charitable giving is notoriously hit or miss. Nonprofits often fall short of fulfilling their noble missions, while foundations face limitations on permitted activities. Social Programs That Work, a website administered by Arnold Ventures that tracks nonprofit effectiveness, has found that most social programs do not “produce the hoped-for effects when rigorously evaluated.”

For philanthropists, these findings aren’t exactly heartening. Hoping for the best is not an ideal donation strategy. Yet that’s the nature of a lot of charitable giving. Philanthropists searching for a better way find it difficult to innovate outside well-trod but often ineffective giving paths.

A new method is clearly needed. The answer may lie with an approach that fuels the nonprofit I lead, Roivant Social Ventures. The organization was spun out of a private health care company, Roivant Sciences, to address growing interest among employees, and society at large, in addressing health inequities. It is structured as a charity, not a corporate foundation, which allows it to invest outside donor dollars in promising social programs while drawing on the company’s expertise.

Rather than feeding into the long-running debate about whether nonprofits should act more like businesses, this approach simply brings the resources of a private company to the charity, including a ready and willing base of volunteers from the business, advanced technology, and IT support. I believe it has the potential to transform philanthropic effectiveness.

How We Work

Here’s how it works. A company establishes the charity and gives it a mission connected to the company’s particular industry. It can receive long-term support from the founding…

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