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

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Despite record levels of charitable giving, volunteerism, andnonprofit innovation, it has become increasingly more difficultover the last thirty years for poor and low-income Americans tobecome economically and socially self-sufficient. Socialentrepreneurs passionately believe that "one day, all children"must have access to the basic skills and opportunities required toovercome inequality and immobility, but at current growth rates, itwill take decades for them to address even 10% of our most criticalsocial needs.

Philanthropy doesn't move the needle of social progress formillions of American families because there is a stubborndisconnection between funding and results. Effective nonprofitsaren't rewarded with increased funding, and weak performers don'tlose funding. Instead, the U.S. nonprofit capital markethaphazardly distributes more than $300 billion of charitabledonations among more than two million nonprofits that compete forfunding with almost no consideration given to which organizationscan make the best use of the money. As a result, fragmented fundingfails to marshal vital growth capital that strong nonprofits needto achieve meaningful reductions in poverty, illiteracy, violence,and hopelessness.

In Billions of Drops in Millions of Buckets, StevenGoldberg explores the debilitating financial constraints thatprevent so many nonprofit organizations from producingsubstantially greater social impact, and sheds new light on how thenonprofit capital market should be structured to best allocatefunds in support of high-performing organizations that deserveadditional resources to achieve optimal scale. He presents sweepinghistorical evidence, rigorous economic analysis, and extensive casestudies of social enterprises, venture philanthropies, independentresearchers, and the emerging array of "prediction markets" to showthat the time has come to develop new financial institutions andtools that can consolidate much larger sums of money with much lesseffort, time, and cost, and distribute it in ways that dramaticallymagnify its impact.

Goldberg makes a compelling case for an intelligent capitalallocation system—a virtual nonprofit stockmarket—based on the "wisdom of crowds" to help highly engagedsocial investors efficiently find and fund the best nonprofits,instead of forcing nonprofits to spend so much unproductive timelooking for too little money with too many strings attached. Hispetition for financial intermediation challenges acceptedorthodoxies of nonprofit fundraising and offers an informed pathwaytoward performance-driven philanthropy.

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Product Details

  • ISBN-13: 9780470454671
  • Publisher: Wiley
  • Publication date: 7/7/2009
  • Edition description: New Edition
  • Edition number: 1
  • 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.

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Table of Contents

About the Author.

Prelude: “The Great Recession”.


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.


“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”.

Climbing Off the Drawing Board.

Chapter 9 Crossing the Fundraising Chasm.

Performance Measurement.

Platform Leadership.

Information Retrieval.

We Know.



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