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.