Why Philanthropy Wins in a Web 2.0 Culture

The business world hasn’t yet figured out how to deal with the way that the web makes sharing information incredibly easy. From newspapers, to music labels to anything that can be digitized, the web has destroyed business models that rely on ownership and control of information. Almost all profits comes from the control of certain types of information.

There’s nothing wrong with this. When I say “control of information” I don’t mean some devious withholding. Great musicians have knowledge of how to make great music. Great stock pickers have information about how to pick stocks. Great entrepreneurs have information about an exciting new business opportunity. The incredibly easy sharing enabled by the web means that suddenly only difficult to digitize information is valuable. That facts you learned in high school? Worthless. Your ability to synthesize new data and interpret new situations? Priceless.

Guess what? All this is outstanding news for philanthropy.

I often use examples from financial markets when I write about philanthropy. But there is a core underlying element of philanthropy where financial market framing breaks down. As a for-profit actor, you only care about the returns that accrue to you from an investment. If you have reason to believe that a stock will go up and you share the information so that other investors profit, none of their profits accrue to you.

But in philanthropy, all “returns” accrue to the public at large. If I have information about a great nonprofit, I can share that information widely and if other philanthropists make successful investments in the nonprofit I get just as much benefit from their returns as if I had been the only investor.

This dynamic changes everything.

In philanthropy:

• The best philanthropist is not the one who makes the best grants. It is the one whose activities creates the most impact regardless of who actually makes the grant.
• Sharing information increases your impact by helping other funders act on your ideas.
• A funder who quietly finds a great nonprofit or program, but doesn’t have the resources to fully capitalize it fails unless they attract other funders.
• The top philanthropists of this generation will not be the ones with the most money, they will be the people who are best able to influence where the big money goes. That will be the people who most effectively share high quality information.

Check out the video below (hat tip Lucy Bernholz) and every time you hear the word “science” replace it with “philanthropy”. Social media is destroying long successful business models as we speak. But the issues it raises have the opposite affect on philanthropy.

Have you shared valuable information today?