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Google to the Rescue?

One of the biggest challenges facing successful non-profit start-ups is getting the capital they need to grow to the scale at which they can achieve the sort of massive impact delivered by successful for-profit start-ups, such as Google. Creating a new way to connect these non-profits to philanthropic funders with the capital they need to grow is the goal of the Growth Philanthropy Network, which held an inspiring summit meeting at the Carnegie Corporation on April 14th.

Despite the economic crisis, which one speaker said had reduced every foundation’s assets by at least one-third, the meeting was well-attended, and enthusiastic about GPN’s plans to network together many of the philanthropic intermediaries we write about in the book, in our chapter on “Virtues Intermediaries”. If anything, the economic shock seems to have jolted the leaders of the philanthropic community into thinking some hitherto unthinkable thoughts, such as that they may need to concentrate their now scarcer dollars on scaling up proven non-profits if they are to make sure they being efficient and effective in their philanthropy.

The fact that the Obama administration seems keen on creating a marketplace for non-profits to get growth capital, and has apparently even provided some seed capital in its new legislation encouraging volunteerism, added to the sense that this is an idea whose time has come.

Marketplaces don’t just happen, they have to be created by people or organisations committed to making them work, Matthew pointed out during a panel discussion at the GPN summit. One frustration is that some big companies with a lot of expertise in things that are crucial to markets, and whose bosses are committed to philanthropy, aren’t using that expertise to bild a philanthropic growth capital marketplace. Moreover, in these tough times, when corporate giving budgets are under pressure, there is an opportunity to give instead by applying corporate expertise to thorny problems – all the more so as the economic slowdown has left many firms with underused capacity.

In the book, we point out that one of the main sources of innovative philanthropic intermediaries have been Wall Street investment banks (an observation that inspired one reviewer to describe such efforts dismissively as “Lehman Brothers to the Rescue”, though Goldman Sachs alumni have been the primary creators of such institutions, including research firm New Philanthropy Capital and philanthropic investment bank SeaChange Capital). However, there are plenty of other sorts of firm that have relevant expertise that could be deployed. As Matthew pointed out, a key ingredient of a successful marketplace is an abundance of accurate information. Finding and organising information is something Google is expert at, yet despite even having a philanthropic arm, Google.org, it has not done much about improving the quality of information about philanthropy and non-profits.

Another speaker noted that Bloomberg has a huge business built on providing market infrastructure, as does Amazon, yet neither has so far opted to deploy this expertise in their philanthropic efforts. Now would be a great time for them to start.

0 replies on “Google to the Rescue?”

I must confess I find myself vigorously agreeing with this post by Michael Green. Observers and commentators think that markets will just wish themselves into existence and this is not the case. It takes a considerable degree of time and effort.

It is depressing that those with some expertise in this area do absent themselves from it. The good side of this is that it has left a gap for folks like us (via http://www.clearlyso.com) to try to see if we cannot try to begin to make one happen ourselves.

There are many efforts now underway and these should eventually bring a social inevstment marketplace into existence. Perhaps in time, as the space gets defined, Google or some other will just buy their way in by acquiring those who have made some headway. An even better use of their resources and expertise would be their investing in some of these nascent networks–and by investment, I mean cash as well as expertise. that would be most welcome!

Rodney Schwartz

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