100&Change: Legal Lessons Learned
September 26, 2017 | Perspectives | 100&Change, 100&Change Funding Partners

Imagine being general counsel to a private foundation that announced a competition to make a $100 million grant to solve a single problem, open to organizations around the world, that could span any issue. Needless to say, such a scenario presented a host of fascinating legal issues that made 100&Change extraordinarily interesting as we sought to address how to protect the Foundation and make sure the process was fair to all applicants.

We began with rules that we sought to make as clear as possible, even though we could not predict the subject matter of applications. We also provided a general overview of the more pertinent legal guidelines and potentially applicable Foundation policies, such as our intellectual property and human subject research policies. We aimed to avoid any surprises to applicants and lay out what a successful applicant could expect, including the key terms of our grant agreement.

We thought the rules were clear, but learned valuable lessons about how we can provide even greater clarity. Areas where some applicants were confused included the requirement that the proposed budget be $100 million and the need to provide applications and exhibits in English. We were comfortable that the rules adequately covered these elements, but we intend to make necessary changes to be sure in future iterations of 100&Change we minimize any confusion.

We thought the rules were clear, but learned valuable lessons about how we can provide even greater clarity.

We also sought to ensure that applicants understood at a high level the legal rules applicable to private foundations, including that the project furthered a clear charitable purpose and there would not result more than incidental private benefit to private parties. Although we provided an overview of the private benefit rules applicable to private foundations, the concept of private benefit can be a difficult concept to grasp and is dependent on the facts of a given situation. Regrettably, a number of for-profit organizations applications did not sufficiently address these requirements and could not advance past our administrative review. We will examine carefully our materials to see if additional explanations are warranted.

Another challenging area were efforts by organizations to collaborate on applications. We encouraged organizations to collaborate or find worthy partners to strengthen a proposal. We emphasized, however, that we needed to identify a single organization that would have discretion and control over the grant funds. This required organizations that were collaborating to provide a memorandum of understanding (MOU) reflecting the party's agreement to these terms. This was not always an easy task as some parties were early in their relationships, but many made significant efforts to submit an MOU.

In sum, given the legal challenges associated with such a novel competition, we were most grateful to our semi-finalists willingness to adhere to the rules and respond to our questions. We hope that their efforts and compliance will make their projects attractive to a wide array of potential donors.

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