VolunteerMatch and the Social Capital Markets

Greg Baldwin, president of VolunteerMatch, read my article about the social capital markets of 2033 and sent me an email:

I enjoyed your recent article in the Financial Times. I’m surprised our paths haven’t crossed yet.

I don’t know how much you know about VolunteerMatch, but we’ve decided not to wait around until 2033 for philanthropy to figure out it is time for some fresh thinking.

We are working on a growth capital project that is right up your alley.

He attached a “prospectus” for VolunteerMatch’s $10 million “Growth Capitalization Offering” (a prospectus is the word for a booklet describing a for-profit investment offer such as a new IPO):

The purpose of this offering is to expand and enhance VolunteerMatch’s capacity to engage a broad base of volunteers with diverse social purpose agencies throughout the United States, and to build a sustainable enterprise capable of delivering that mission indefinitely.

Units offered in conjunction with this prospectus represent a perpetual interest in VolunteerMatch. That interest is strictly philanthropic, with no provision for cash returns at any time. The investment is intended to: (1) bring material social and economic benefit to communities throughout the country, (2) support broad based civic engagement of millions of Americans, and (3) deliver a significant Social Return on Investment (SROI) in the form of valuable volunteer effort against tasks deemed valuable both by volunteers and the agencies that need them. Investments in these units may be tax deductible.

(1) As of the date of this offering, 10 units ($2,500,000) have been reserved under previous agreement with The Atlantic Philanthropies. $1,350,000 of this total is contingent upon a successful match of a minimum of 6 units ($1,500,000).

(2) Expenses associated with this offering have been pre-paid by VolunteerMatch, with the generous support of the Surdna Foundation. Proceeds will not be used for offering expenses.

(3) In the event of over-subscription, VolunteerMatch may, at its discretion, increase the offering by up to 10 additional units ($2,500,000).

The prospectus then goes on over 45 pages to lay out relevant financial data, the story of the organization, the issue they are focused on, why their solution addresses the relevant needs, the impact they’ve had to date, their competition (their word not mine), their growth plans, their capital needs to fund that growth, risks, and a explanation of how the growth capital funds will be accounted for.

I’m intrigued by the phrase in the summary, “Units offered in conjunction with this prospectus represent a perpetual interest in VolunteerMatch.” At the end of the day, I think that this “perpetual interest” is more a framing of the donation rather than any kind of legal distinction from a regular donation. But I wonder if there might be ways that donor/investors might receive some kind of “ownership” rights in recognition of their support. I do not mean financial returns. If you were to gain a “perpetual interest” in a nonprofit you cared deeply about, what rights and responsibilities would you like that interest to represent?