Sourcing a Solution

Abstract

First, the good news: In the United States today, there are approximately 40,000 households with at least $25 million of “investable assets” (Brown 2007). At the country’s average annual giving rate of 2.6 percent1 (Giving USA 2008: 48) of adjusted gross income, each household at this level of wealth is capable of making annual philanthropic commitments of a half-million dollars (and many give much more). Collectively, this group has enough members, giving capacity, geographic spread, and diversity of interests to support a “social capital market.”

Now, the bad news: With a few small exceptions, this “social capital market” remains largely unorganized — and hence less able to make the profound social impact that it is capable of.

The fundraising process in the nonprofit sector is fragmented, expensive, and opaque (to donors and organizations). In addition, restrictions placed on how funds can be used often fail to take account of the realities of running a growing organization in a changing environment. And in some sectors, research suggests that true fundraising costs eat up more than 24 percent of funds raised (Center on Nonprofits and Philanthropy 2004: 3) and that nonprofit leaders spend more than half their time fundraising rather than on the organizational and programmatic issues that directly affect impact.

We know there are outstanding nonprofit organizations with the capacity, opportunity, and ambition to increase their impact significantly if provided with adequate funds. At SeaChange Capital Partners, a 501(c)(3) nonprofit organization, our goal is to help develop a market that increases the efficiency with which high-performing nonprofit organizations are able to secure funding from a loose network of wealthy individuals (and associated foundations). The more robust this network, the more it will allow individual donors to come together in support of specific organizations — and make it possible for donors to participate in fundings of a structure and scale that can truly transform high-performing organizations and make a difference in the outcomes the organizations are trying to achieve.