Who you callin' a donor?

Douglas Smith makes a fascinating case for a capital market structure for philanthropy in his article, "Market Magic," posted in conjunction with the Slate 60 conference.  One of the most important statements in the article is in the subtitle that says, "Nonprofits could access needed capital by turning donors into investors." 

From what I can see, the "donors" are turning themselves into "investors" (though seemingly they would shun either tag) in light of the fact that appropriate structures don't exist to do it for them.  In fact, to understand what is happening in philanthropy, common terminology must be eschewed, and historic frameworks must be forgotten.  The new philanthropists (oops, there's one of those terms again) are just folks who have a lot of money, relationships, experience and brains who want to make a difference in the world.  They don't want to follow someone else's rules, or fit in to someone else's structures or tax codes or charitable vehicles.  What they want most of all is to make a difference--to be effective.

Mr. Smith's idea of creating a structure that allows donors to behave like investors would certainly aid those folks who want to make a difference with their money but don't have the same scale of influence as the the big boys of the world.  In fact, the idea of developing social capital marketplaces is one that Community Foundations of America and others are working hard to explore and develop.  But to be successful we all must remember that all bets are off in the new philanthropic landscape--either we create structures that empower donors to give the way they want to, or they'll find a way to give without the structures, despite our good intentions.

Caroline Heine