We are all familiar with the primary societal structures for distributing resources and addressing human needs: Markets allocate capital (efficiently, they say) and are designed to optimize for financial returns. Governments regulate and provide public goods but are (far too often) constrained by politics, electoral cycles, and a broad aversion to risk-taking. And, Philanthropy, driven by generosity and a “love for humanity,” steps in to fill the gaps.  

What if these definitions, especially of philanthropy, are increasingly inadequate for the scale, complexity, and urgency of today’s challenges?

Philanthropy, in contrast to markets and governments, is uniquely positioned to act where uncertainty is high, outcomes are long-term, and returns — if and when they materialize — can be both social and financial. Philanthropy’s greatest advantage is not generosity or moral clarity — it is the sector’s capacity to absorb risk in service of public value creation.  

As a practitioner sitting at the intersection of money and mission, I believe the next frontier of social impact lies in how philanthropy reimagines risks, time horizons, and incentives to create value that neither markets nor governments can produce on their own. 

From “Doing Good” to “Creating Value” 

Philanthropy’s unique function is not to fill gaps left by markets and governments, but to create forms of value that are not yet visible to either. Philanthropy can and should fund the conditions under which future value — social, civic, and, yes, financial and economic — can emerge. This is especially true for ideas and opportunities where the beneficiaries are hard to define or imagine, the timelines are long, and success cannot be easily measured or owned. 

Yet too often, the sector underutilizes its risk-advantage, opting instead to behave like traditional investors or cautious public funders. It is time to reimagine philanthropy’s role as a market-shaper and systems-catalyst for public value creation.

The Discipline of Risk, Not the Romance of Innovation 

Free from the constraints of financial return, political consensus, and short-term performance accountability, philanthropy can operate as true risk capital. However, there is a tendency today to romanticize risk-taking as bold or visionary, when in reality, effective risk capital is disciplined, strategic, and often unglamorous. This approach requires:  

• Clarity about which risks philanthropy is absorbing (technical, political, reputational, financial) 
• Patience for non-linear progress and learning-driven adaptation 
• Willingness to fund experimentation, and comfort with failure as information, not embarrassment 
• Exit strategies that make room for (and require!) other forms of capital – even if they are designed to generate financial returns 

 Most importantly, funders must accept that their value may be invisible, as they are creating the conditions for others to succeed. 

Making Solutions Possible 

The future of social impact will not be determined by whether philanthropy gives more or even gives better. It will be determined by whether philanthropy fully embraces its role as risk-bearing capital in a multi-sector value creation ecosystem. This requires humility about attribution, rigor about strategy, and courage to fund what others cannot — or will not. Philanthropy’s unique power is not to solve problems alone, but to make solutions possible. The question now is whether we will use that power deliberately or continue to operate below our potential while the challenges we seek to address grow ever more complex.