Billions of Drops in Millions of Buckets: Why Philanthropy Doesn't Advance Social Progress [Hardcover]

Steven H. Goldberg (Author)

Book Description

Publication Date: July 7, 2009 | ISBN-10: 0470454679 | ISBN-13: 978-0470454671 | Edition: 1

Praise for BILLIONS OF DROPS in MILLIONS OF BUCKETS

"Billions of Drops in Millions of Buckets provides a bracing and original look at philan-thropy that offers a much-needed corrective to conventional wisdom. Steve Goldberg combines a resolve to understand why so much philanthropy accomplishes so little enduring social change with a timely and serious proposal to reinvigorate nonprofit capital markets through the simplest of insights: getting more of the money to where it can do the most good. This book will change how forward-looking philanthropists, foundations, and policymakers think about the relationship between charitable giving and the transformative capacity of social entrepreneurs."
—Jerr Boschee, founder and Executive Director, The Institute for Social Entrepreneurs; Visiting Professor of the Practice in Social Enterprise, Carnegie Mellon University

"Goldberg's arguments are logical next steps in the rapidly evolving discussion of social capital markets. He offers ambitious proposals informed by the reality of current practices and focused on an achievable set of goals. He fully recognizes the potential for restructuring that is inherent in this time of financial hardship. Real change relies on big ideas, and Steve Goldberg offers us several."
—Lucy Bernholz, author of Creating Philanthropic Capital Markets: The Deliberate Evolution

"When I first heard about 'evidence-based medicine,' I thought: 'you mean it isn't?' Read this book and that's how you'll feel about 'performance-based philanthropy.' Goldberg takes some of the best current management thinking and applies it to social enterprise, illuminating both the encouraging successes of social entrepreneurs and the barriers they face. Even better, he presents compelling ideas for making the social sector vastly more effective."
—Christopher Meyer, Chief Executive, Monitor Networks

"Goldberg calls for more 'performance-driven philanthropy,' where nonprofits are rewarded based on their results, in place of the current dysfunction. It is an important call and a valuable contribution to discussions about how to improve nonprofits in the U.S. and internationally."
—Martin Brookes, Chief Executive, New Philanthropy Capital

"Billions of Drops... is a must-read romp through emerging fields of social entrepre-neurship and nonprofit capital markets."
—George Overholser, founder and Managing Director, NFF Capital Partners

Editorial Reviews

From the Inside Flap

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.

About 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.

Product Details

• Hardcover: 302 pages
• Publisher: Wiley; 1 edition (July 7, 2009)
• Language: English
• ISBN-10: 0470454679
• ISBN-13: 978-0470454671
• Product Dimensions: 5.9 x 1.1 x 9.1 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 4.0 out of 5 stars  See all reviews (5 customer reviews)
• Amazon Best Sellers Rank: #164,338 in Books (See Top 100 in Books)
  • #74 in Books > Politics & Social Sciences > Social Sciences > Philanthropy & Charity

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Most Helpful Customer Reviews

6 of 7 people found the following review helpful

5.0 out of 5 stars Excellent Insights! July 29, 2009

By Loyd E. Eskildson HALL OF FAME

Format:Hardcover

"Despite record levels of charitable giving and volunteerism, it has become increasingly difficult for low-income Americans to become economically and socially self-sufficient," says author Goldberg in his introduction. Philanthropy doesn't move the needle of social progress for millions of American families because there is a disconnect between funding and results. Effective non-profits aren't rewarded with greater funding, and weak performers don't lose funding. Instead, the non-profit capital market haphazardly distributes over $300 billion of charitable donations each year among over 2 million competing non-profit charities.

The recently increasing number of non-profit organizations picking up donations in my neighborhood got me thinking that there must be a lot of duplicated overhead. Goldberg reinforced the point - in 2007, the Christian Science Monitor reported that Des Moines, Iowa had 330 non-profits working on education issues, San Francisco had over 125 organizations addressing homelessness, and Portland, Maine had over 450 children-focused charities.

The average grant among the 100 largest foundations is $50,000, and 95% are for only one year - too small and too short-lived to support development of robust and enduring non-profits capable of achieving scale and consequential social impact. More than 90% of non-profits have annual budgets less than $1 million, less than two dozen exceed $20 million. McKinsey and Co. found for-profit companies spend only $2-4 for every $100 capital raised, while non-profits spend $10-24, 22-43% when administrative costs are factored in. Clearly, small scale is a problem among non-profits.

Goldberg also points to several well-respected education non-profits and points out that the funding market has failed to build their resources anywhere near the point of filling the demand for their services. "Teach for America" was launched 17 years ago, and is well-regarded by both principals and school researchers - yet, it is only able to target 3.3% of the 13 million pupils facing "educational inequity." Similarly, "Knowledge is Power Program" (KIPP) pupils demonstrate excellent performance on state exams, but also is quite limited in size.

Goldberg proposes to substantially boost funding for successful programs by using the "wisdom of crowds" - ranking by a diverse set of individuals that is used to guide funding to where it will do the most good.

All good thoughts. However, there are two problems: 1)It is unlikely that teacher unions would tolerate substantial expansion of programs threatening their grip. For example, they already are moving defuse the threat from charter schools by organizing those teachers. 2)There is amazingly little agreement on what constitutes quality education, health care, or even good economic policy. The good news, however, is that with larger programs (per following Goldberg's suggestion on rewarding programs held in highest regard), it would become more feasible to document outcomes and incorporate that information into evaluations.

Finally, while not part of the scope of "Billions of Drops," it cannot be emphasized enough that U.S. social and economic problems will continue to grow until major limitations are implemented on job outsourcing and illegal immigration.

5 of 6 people found the following review helpful

2.0 out of 5 stars Here We are Again November 1, 2010

By Keith Kerber 2

Format:Hardcover

It's familiar argument repackaged: Too many non-profits doing similar things via low performing ways while spending too many resources vying too little money to go around. The answer: with performance driven metrics - Goldberg's IMPEX) - the "crowd" will invest in the best performing ngos on the basis of their "performance."

It is an interesting idea. However, the IMPEX presumes that, before donors give their money to an ngo, they want to evaluate all ngos with the same metrics always looking to the one that most efficiently, cost effectively, and on the largest scale delivers their service irrespective of other motivations (religion, social circle, guilt, desire to give back, etc.).

I have to ask...with the explosion of social media, available information, giving circles, philanthropy advisors, etc. can't wise philanthropic investors determine if the charity he/she gives to is performing? Mr. Goldberg asserts that his idea would diminish the `strings' often attached to philanthropic dollars. I disagree. The IMPEX evaluation tool simply changes the type of strings. Instead of a name on a building, a pet program or dinner with a celebrity the strings simply become the metrics chosen for the IMPEX.

Maybe the argument is familiar because the system has worked pretty well for a long time and new players, in the ngo territory, like Mr. Goldberg, simply feel compelled that the 3rd Sector should look and feel more like the 1st and/or 2nd Sector territory with which they are familiar.

4 of 5 people found the following review helpful

3.0 out of 5 stars Billions of Drops--A drop in the bucket October 27, 2009

By Michael Klonsky

Format:Hardcover

If the social entrepreneurs like Gates and Broad, and agencies like TFA, New Leaders and NewSchools Venture Fund, where to be evaluated on the basis of performance or results--the way schools are--they would flunk the test. This, despite their access to tons of money, tax incentives, and efficient management styles. As least that's the conclusion drawn by author Steven Goldberg in his book, Billions of Drops in Millions of Bucket: Why philanthropy doesn't advance social progress.

For example, writes Goldberg,

Since 1998, NewSchools has raised and deployed tens of millions of dollars for educational innovation at dozens of charter-management and school-support organizations. It states that "over the next several years, the organizations we support will run more than 200 charter schools and serve nearly 75,000 students, making NewSchools' national portfolio comparable in scale to a mid-sized urban district. After 10 years of exceptional work and highly sophisticated financial management, the aggregate result (at least of the charter school portion of its portfolio) amounts to one school district that performs at the level to which the entire country aspires.

But Goldberg--who buys into most of the premises of the ownership society--and I, reach totally different conclusions from all this. He thinks the big foundations need even greater centralized power, have to become even more top-down, more efficient and results-driven by "scaling up" and replication.

I think the problem is they've become too big, ill-purposed, and anti-democratic.

But Billions of Drops is still worth the read.