Philanthropy’s Biggest Opportunity Part III

Deyan Vitanov, CEO of Philanthropedia is guest blogging on Tactical Philanthropy this week. He welcomes your feedback in the comments section. Tactical Philanthropy Advisors is currently collaborating with Philanthropedia to help them develop their Expertise on Demand platform.

Read Part I.
Read Part II.
Read Part IV.

By Deyan Vitanov

deyan2In part I and II of this blog post, I explained what an impact-based social capital market is and why it is the biggest opportunity in philanthropy, and elaborated on how we could jumpstart its creation by using a “catalyst” that has certain specific characteristics. In the last two parts, I want to focus on the remaining elements that need to come together to create an impact-based social capital market and answer some common questions and concerns.

An impact-based social capital market will require at least two more important elements:

Minimum scale: It is important to recognize that the catalyst I described in the previous part needs to compile information on nonprofit impact on a sufficient minimum scale in order to attract enough donations that can jumpstart the creation of an impact-based social capital market. What is this minimum scale? Although different organizations might have different answers, for us at Philanthropedia this means covering the most prominent 8-9 national social causes and 4-5 local causes. (Note: we will have this minimum scale by the end of the summer and our research results continue to rise in quality thanks to the hundreds of experts participating.)

Demand: Without a critical mass of donations, the market will obviously not work. As we think about inspiring donors to give based on impact, we need to consider the following:

· Building a donor audience is difficult and costly. That is why partnerships are a key tool in the battle for a better philanthropy because they can expose information to millions of donors quickly and effectively. Fortunately, GuideStar has taken the lead with their TakeAction initiative that we proudly support. In addition, Charity Navigator has announced plans to follow a similar path and I am excited to see how they progress. We should also not forget local initiatives such as GiveMN, which have done an amazing job of mobilizing donors and have tremendous potential if they decide to focus on impact.

· We are currently experiencing a tectonic shift in technology with the advent of social networking and social media. This creates a unique opportunity to leverage the power of personal connections to inspire people to give based on impact.

· Finally, we need to acknowledge that there is a lot more research necessary in order to find effective ways to motivate donors. I am not sure whether the right approach is to utilize Twitter or Facebook, Philanthropedia’s concept of mutual funds, or the many other ideas that I have seen, but I do know that we need to put a lot of effort into finding out if we are to create an impact-based social capital market.

I hope the post above combined with parts I and II gave you an idea of the different elements that need to come together to create an impact-based social capital market. I will use tomorrow’s post to answer some common questions and concerns, describe how you could join the effort of creating this market, and conclude.