Donating like a startup investor: Hits-based giving, explained

Abstract

Just as some investors in startups take the risk of funding projects with great potential but uncertain success, the philanthropic sector can also apply a similar logic: an approach known as “hits-based philanthropy". Donors, using the statistical concept of “expected value,” fund projects that are risky but have a high potential for social or environmental impact, which requires diversifying the grant portfolio and, in general, abandoning the requirement to back up decisions with solid evidence. This approach has yielded remarkable results in the past, such as the development of high-yielding wheat strains that fueled the “Green Revolution” and the research that led to the development of the birth control pill.