The Philanthropy Exchange

New York Stock Exchange

Just before heading to India, I stopped in New York to attend the inaugural celebration of something that may well become an important new institution for charitable giving: The Philanthropy Exchange.

The event was held, fittingly, in the magnificent Board Room of the New York Stock Exchange. The worlds largest marketplace was playing host to an exciting new concept in open market structures: nonprofit organizations seeking donor funding, whether in tiny individual contributions or large program-wide sponsorships, could become “listed” on an exchange.

The idea of a philanthropic exchange is the brainchild of GiveIndia, an organization that has been working for nearly a decade to bring transparency, financial accountability, and best management practices to India’s enormous nonprofit sector. As GiveIndia’s Pawan Mehra explains, “The concept of the exchange will work exactly the same in the charitable context as it does in the stock market. Donors and investors are looking for interesting opportunities, while nonprofit organizations and companies are looking for funding. The exchange allows the parties to find each other. At the same time, nonprofits, like their corporate counterparts, are naturally incentivized to conduct their operations in ways that will attract investment.”

The parallels with the capital markets are quite broad. For example, a wide array of ancillary structures and services may arise to support the exchange. Just as the Securities and Exchange Commission regulates the markets, an umbrella organization may develop to govern the practices of the exchange and to develop standards for nonprofits that wish to be listed. Organizations like Guidestar and others will perform the critical function of analysis and rating. Just as mutual funds aggregate investment dollars for distribution among comp[anies their analysts find attractive, donors could entrust individual charitable decisions to mutual funds that select from exchange-listed organizations.

From a donor perspective, the exchange concept addresses the two principal barriers to giving: ready access to information about a wide variety of nonprofits who are doing interesting work and confidence that their contributions will produce a “good return on investment.”

For reasons I still cannot fathom, I was asked to speak at the NYSE celebration. My own experience in the nonprofit world has always steered wide of anything having to do with money, focusing instead on personal engagement through acts of service. To borrow from the words I penned more than seven years ago when helping to draft the Guiding Principles of CharityFocus:

Money is an indispensable tool of philanthropy; and [I salute] those who give generously to nonprofit organizations. But [I esteem] the commitment entailed in service above all else. Volunteerism is a transforming experience in a way that financial contribution is not. Giving of oneself is both intimately personal and inspirational to others, setting in motion a ripple effect of awareness, compassion, and beneficence that extends far beyond the gift itself.

But if my personal philosophy made me an awkward choice to speak about financial giving, it was nothing compared to the extent to which I was outclassed by the quality of the other speakers in the panel discussion, which was moderated by an old acquaintance, Hari Sreenivasen of ABC News. Arthur Wood represented the stunningly successful Ashoka, which has been finding and investing in the some of world’s most innovative social entrepenuers for more than a quarter century. Judging from the fact that I understood just about nothing that Arthur said, I’m guessing his background is in finance.

The other two panelists were people I’ve wanted to meet for many years. The first, Charles Best, is the CEO of the ground-breaking organization Donor’s Choose, which matches specific needs of public schools and with donors. The program grew from Charles’s own experiences teaching in an alternative public high school in the South Bronx, and has raised more than $7 million for student projects and underfunded curriculum. The second, Dennis Whittle, is the Chairman and CEO of Global Giving, which connects individual and institutional donors to interesting social, economic, and environmental development projects around the world. Because the giving directed through Global Giving is targeted at projects, rather than organizations, donors can see exactly where their money is going. It is no exaggeration to say that Charles and Dennis are among the smartest, most charismatic, most compelling people I have ever met. They are to philanthropic giving what Nipun Mehta is to voluntary service.

In retrospect, I think Pawan put me on the panel so that, sandwiched between Charles and Dennis, I could have the best seat in the house from which to absorb their comments.

To learn more about the Philanthropy Exchange model, GiveIndia has an excellent synopsis on its website.


1 Response to “The Philanthropy Exchange”

  1. 1 Nipun 19 December 2006 at 6:08 am

    An interesting factoid about Donors Choose is that they let the donors select how much commission Donors Choose should get. It ends up being a little over 13%.

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