Lucy follows the money

I have to admit, when I read Lucy Bernholz's Philanthropy 2173 blog, it can be pretty dense reading and I don't always understand everything she is saying.

But yesterday, she made a point (on one of her favorite topics) that was so clear, it stopped me cold in my online surfing tracks. While trying to answer the sources of funds for public benefit and social good, she makes this observation:

Compare the $295 billion in overall giving in the US in 2006 (Giving USA) to the $2.29 trillion held in accounts managed in accordance with socially responsible practices. Hmm. Suddenly the first number doesn't seem so big anymore.

And the $2.29 trillion is only part of the story. And the value of fair trade. There is $180 million managed by community development venture funds. And $2 billion in foundation mission-related investments (which will grow to $12 billion, if the Meyer, Heron, and Casey Foundations are successful in their recent challenge). And carbon markets. And microfinance investments....

Another way to put the numbers in perspective is to imagine that 40 foundations made a half billion dollars worth of grants to the environment one year. That would be big news. Well, according to VentureOne/PWCMoneyTree, the total value of venture capital deals in Clean Tech (alternative energy, pollution and recycling, power supplies and conservation) was $451 million in Q2 2007. Nearly half a billion dollars in one quarter.

As a nonprofit fundraiser, my first reaction was to think that there is a difference between donors who give money with the sole expectation that society will benefit and socially responsible investors who are looking to increase the public good AND earn a return on their personal investment.

As the focus for evaluating effective philanthrophy shifts toward outcome based measurements and away from simply making the donor feel good... then this line is not only blurred, it may become totally irrelevant.