Is 2 Percent of Donors Enough?

For years our organization, GivingNet, has been working to “enhance the impact of giving,” through our work with intermediaries to high net worth individuals, specifically with community foundations and financial advisors. In a fascinating discussion on the social capital marketplace yesterday in New York, one such advisor suggested that perhaps only 2% of net worth individuals are ready to do what he called, “strategic giving.” It’s not that these individuals aren’t charitable; in fact, they give a large amount of money to nonprofit organizations. But much of that giving is “checkbook” philanthropy—reacting to invitations or requests of friends, their alma maters, etc.

For the 2% who are “ready” to be strategic givers, that is, to have clear philanthropic goals, have a vehicle (e.g. donor-advised fund, charitable remainder trust, private foundation) in place through which to make their charitable gifts, it seems that good news is on the horizon. Much good work is being done in an effort to connect these donors (“sources of capital” in the social capital marketplace) to high-performing, high-impact nonprofits (“uses of capital”). Check out the work of Alan Benamer and Jeff Tuller on socialmarkets.org, for example. Socialmarkets is combining social science, crowd sourcing, personal relevance and Web 2.0 technology to create a marketplace to “build the foundation for a true social capital marketplace. This is only possible through the measurement of both social good and the risk involved in its creation, asking for the cooperation of both those who create social goods and those who invest in them.”

Perla Ni, founder of Great Nonprofits , thinks that donors should have access to first-hand reports from those most closely impacted by nonprofits; that is, their volunteers, clients, board members and staff. According to the website, "GreatNonprofits is a place to find, review, and talk about great -- and perhaps not yet great -- nonprofits. You already know that reviews by other people who have gone to a restaurant or tried out a doctor are the best way to find out about the quality of those services. If you have direct experience with a nonprofit, GreatNonprofits makes it easier for you to share your knowledge so that other people can discover the great nonprofits that are out there.'

Hopefully the number of donors "ready" to be strategic will increase with the help of these social entrepreneurs who are working every day to connect the sources and uses of capital in better ways.

Caroline Heine