Billions of Drops in Millions of Buckets: Why Philanthropy Doesn't Advance Social Progress / Edition 1

Billions of Drops in Millions of Buckets: Why Philanthropy Doesn't Advance Social Progress / Edition 1

by Steven H. Goldberg, Goldberg
     
 

Despite record levels of charitable giving, volunteerism, and nonprofit innovation, it has become increasingly more difficult over the last thirty years for poor and low-income Americans to become economically and socially self-sufficient. Social entrepreneurs passionately believe that "one day, all children" must have access to the basic skills and opportunities

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Overview

Despite record levels of charitable giving, volunteerism, and nonprofit innovation, it has become increasingly more difficult over the last thirty years for poor and low-income Americans to become economically and socially self-sufficient. Social entrepreneurs passionately believe that "one day, all children" must have access to the basic skills and opportunities required to overcome inequality and immobility, but at current growth rates, it will take decades for them to address even 10% of our most critical social needs.

Philanthropy doesn't move the needle of social progress for millions of American families because there is a stubborn disconnection between funding and results. Effective nonprofits aren't rewarded with increased funding, and weak performers don't lose funding. Instead, the U.S. nonprofit capital market haphazardly distributes more than $300 billion of charitable donations among more than two million nonprofits that compete for funding with almost no consideration given to which organizations can make the best use of the money. As a result, fragmented funding fails to marshal vital growth capital that strong nonprofits need to achieve meaningful reductions in poverty, illiteracy, violence, and hopelessness.

In Billions of Drops in Millions of Buckets, Steven Goldberg explores the debilitating financial constraints that prevent so many nonprofit organizations from producing substantially greater social impact, and sheds new light on how the nonprofit capital market should be structured to best allocate funds in support of high-performing organizations that deserve additional resources to achieve optimal scale. He presents sweeping historical evidence, rigorous economic analysis, and extensive case studies of social enterprises, venture philanthropies, independent researchers, and the emerging array of "prediction markets" to show that the time has come to develop new financial institutions and tools that can consolidate much larger sums of money with much less effort, time, and cost, and distribute it in ways that dramatically magnify its impact.

Goldberg makes a compelling case for an intelligent capital allocation system—a virtual nonprofit stock market—based on the "wisdom of crowds" to help highly engaged social investors efficiently find and fund the best nonprofits, instead of forcing nonprofits to spend so much unproductive time looking for too little money with too many strings attached. His petition for financial intermediation challenges accepted orthodoxies of nonprofit fundraising and offers an informed pathway toward performance-driven philanthropy.

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Product Details

ISBN-13:
9780470454671
Publisher:
Wiley
Publication date:
07/07/2009
Edition description:
New Edition
Pages:
302
Product dimensions:
6.30(w) x 9.10(h) x 1.20(d)

Meet the Author

STEVEN H. GOLDBERG has advised numerous nonprofits on strategic planning and organizational development, including New Profit Inc., one of the founders of venture philanthropy; and Cradles to Crayons, which provides "everyday essentials" such as gently used clothing, books, school supplies, and baby equipment to more than 40,000 poor and low-income children. He is a Senior Fellow at Root Cause, which accelerates enduring solutions to social and economic problems by supporting social innovators and educating social impact investors. Goldberg has nearly thirty years of experience in economics, law, government, and business management, most recently as executive vice president for Business Development and General Counsel at Imagitas, Inc. He coauthored Y2K Risk Management: Contingency Planning, Business Continuity and Avoiding Litigation (Wiley) and has written extensively about nonprofit capital market institutions.

Table of Contents

About the Author.

Prelude: “The Great Recession”.

Preface.

A Word about Scope.

A Style Note.

A Case to Be Made.

Chapter 1 The Disheartening Problem of“Scale”.

“All Children”.

“One Day”.

Transformative Social Impact.

The Funding/Performance Disconnection.

Small Caps and Large Caps.

Mid-Caps and $100 Million Problems.

Making the Most of a New “Golden Age”.

Foreclosing on the American Dream.

Of Drops and Buckets.

A Potential Inflection Point.

Objectives of This Book.

A Virtual Nonprofit Stock Market.

Chapter 2 The American Underclass.

American Social Progress: The Early Years.

The American Dream Arrives.

The American Dream Recedes.

Consequences of Social Immobility.

More Complex Solutions.

Governmental Response Mechanisms.

The Challenge of Producing Transformative Social Impact.

Chapter 3 Fragmentation.

Financial versus Nonprofit Capital Markets.

Organic Growth Isn’t Enough.

Limits of Innovation.

Market Adoption.

Implications of Moore’s Model.

Why Does Transformative Impact Cost So Much?

Moving toward Third-Stage Funding.

The Not-So-Little Capital Market That Can’t.

Chapter 4 Intermediation.

“Better” Philanthropic Choices.

An Economic Approach to Reducing Fragmentation.

Extracting Information about Nonprofit Impact.

“Long-Tail” Economics.

Between the Short Head and the Long Tail.

Intermediation.

“Nonprofit Finance Agents”.

Closed versus Open Intermediation.

Social Factor.

Chapter 5 Growth Capital.

Revenue versus Capital.

Investor Confidence.

Crossing the Funding Chasm.

Making the Nonprofit World Safe for Growth Capital.

Planning for Sustainable Growth.

Accounting for Growth.

Chapter 6 A Performance-Based Funding Market.

The Work of Markets.

The Illusion of Stock Prices.

Market Dynamics.

Financial Value versus Social Value.

Up versus Down; More versus Less.

Collective Intelligence.

Chapter 7 Prediction Markets.

An Illustration.

Behind the Curtain.

New Tools Proliferate.

Kinds of Markets.

Good Enough.

Rank Intelligence.

Chapter 8 The Impact Index.

Designing the IMPEX.

Determining Eligibility.

Ranking Nonprofit “Stocks”.

IMPEX.org.

Climbing Off the Drawing Board.

Chapter 9 Crossing the Fundraising Chasm.

Performance Measurement.

Platform Leadership.

Information Retrieval.

We Know.

Acknowledgments.

Index.

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