MIT Philanthropy Research & SeaChange Partners

It seems like everyone is talking about philanthropy these days. Before Freakonomics was published, no one would have guessed that economic theory could generate a series of best sellers. I wonder when the Tipping Point or Freakonomics of philanthropy will hit the scene?

Today we have Ed Boyden, a professor at MIT speculating on philanthropic capital markets:

One possibility is that if there were an open market for philanthropy, which would connect dollars with ideas, then you might be able to find researchers working on the problems you care most about, evaluate the investigators and their approaches, and empower them directly with funding. As resources pool, naturally, the most widespread and severe problems would receive the largest sums of money, providing a sort of free market for research philanthropy.

About 60 million Americans currently fit the criteria for obesity, which puts them at risk for diabetes (and dozens of other medical conditions). If 5 percent of these people desired to pool their resources to study ways of tackling metabolic impairments, and thereby improve health, and each contributed just $1.25 a month to researchers who focus exactly on the problems of most pressing interest, that would be $45 million a year. While that may not seem like much, note that the American Diabetes Association gave out about the same amount–$46.4 million–in research dollars in 2006.

You can read the whole thing here.

Ed is talking about a system similar to the public for-profit markets. But for-profit markets also depend on a system of private equity investors. Cheryl Dahle suggested after her interview that foundations should be engaging in private equity-like behavior. Now we have Goldman Sach’s funded SeaChange Capital Partners trying to do just that. From the NY Times:

An organization founded by two former Goldman Sachs partners is using Wall Street methods to help charities raise money to finance expansion.

“Our goal,” said Charles T. Harris III, “is to create a nationwide donor network of wealthy individuals and family foundations that we can mobilize with other existing sources of funds to provide growth capital for entrepreneurial organizations.”

Mr. Harris and Robert K. Steel formed SeaChange Capital Partners, which sounds like a hedge fund but is a nonprofit financing firm.

You can read the whole thing here.


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