Tuesday, February 20, 2007

Collaborative giving

Collaborative giving is the Wall Street Journal's (subscription required) term for donors working together. Unleashed by Warren Buffet's gift to the Gates Foundation the trend (with an "n" of 2) was created when The John and Mary Cain Foundation made a by a $100 million gift to the John Motley Morehead Foundation to expand the scholarship program it runs at the University of North Carolina.

This is the kind of leveraged philanthropy I wrote about in Creating Philanthropic Capital Markets. The idea is simple - one set of staff researchers develops strategy, builds relationships, does due diligence, and monitors progress. Their analysis and research are then available to many donors (or to inform larger endowments, as in the Buffett/Gates and Cain/Morehead cases). Here's how it works now. In any specific area you have, say, 20 program officers each analyzing the same organization for 20 different grants. In a leveraged structure, you would have one set of research that would be available to inform 20X the funds it would otherwise have advised. Its less work for the grant recipient, lower cost for the grant makers, and makes more efficient use of the information. Optimistically, there is a potential increase in grant funds available if duplicative costs (staff, research) are eliminated.

Does it lead to group think? Not if criteria and strategy are available for review - donors can "buy in" or not to certain standards, goals, and review processes. Think of it as akin to the industry and company research that independent firms sell to investment banks (and, ultimately, investors). Quality and credibility distinguish good work from bad, strategic from sloppy.

Grantmaking through existing private foundations is one way to do this. Pooled funding through community foundations or federations is another. Global Giving, Network for Good, or Give2Asia, which provide online marketplaces of nonprofit organizations, vetted for donor interest and compliance, represent a third way. Global Greengrants represents another structure - freelance, local advisers identify and monitor organizations that donors from other parts of the world can support. GiveWell, which just launched, is a new approach - community-driven, transparent analysis for donors by donors.

Its exciting to see these kinds of developments, which I've been writing about since 1995, becoming viable through advances in technology, changing donor markets, and entrepreneurial approaches to information sharing. They are a critical step toward creating more efficient and transparent philanthropic capital markets.

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