Monday, January 22, 2007

Jacob Harold on Social Capital Markets

Some of the most innovative foundations in the US have been key to the success of GlobalGiving. And while many people think foundations provide only financial support, our conversations, interactions, and collaborations with most of our funders have been equally important. The Hewlett Foundation is no exception.

Last year, Jacob Harold joined the Hewlett Foundation, and with the support of its leadership has begun encouraging the emergence of the broader "social capital market" - something I talked about in an earlier post.

In a recent newsletter, the Hewlett Foundation has an interview with Jacob. I am quoting liberally from it here, since I think he captures some of the key ideas - and talks about how the Foundation is putting its money where its mouth is by funding collaboration between key actors in the market. I predict you will see much more of this in the coming 2-3 years:

We’re interested in what we call the social capital market. Just as there are capital markets to finance new businesses there’s a capital market in the nonprofit world, too. A market is just a place to share information and exchange things for mutual benefit. Most of what we’re trying to do is to build institutions or support existing ones to support that market and make it easier to make good choices about philanthropy.

One way they do this is by helping donors find nonprofits that are effective and doing things they’re interested in. Keep in mind there are more than 1 million nonprofits in the U.S. alone, so identifying the best of them can be a challenge.

Several organizations we support are working on that: for example, Guidestar, with a huge database of financial information about nonprofits nationally, and DonorEdge, which started at the Greater Kansas City Community Foundation and provides programmatic information on nonprofits around the country.

...I want to put all the pieces together, to help the social capital marketplace become better integrated. I envision a situation where donors have everything they need to make the best decisions about how and where to give. So we always try to facilitate partnerships to move that forward.

It’s starting to happen. We recently funded two organizations in an interesting collaboration. Network for Good, an online marketplace for nonprofits, provided the financial functions so that someone looking at a nonprofit on GuideStar could make an online donation directly to that organization. Here’s an example of two organizations offering different services coming together to make each other more effective.

This is exciting work. The stakes involved are huge. The success of the nonprofit sector is so closely tied to the success of the society as a whole.

Read the entire interview here.