Can the stock market make the funding of nonprofits more efficient? Talk about a heavy question, especially since the public still doesn’t think too highly of big banks (if you don’t believe me check out the latest backlash for JP Morgan). However, even with the current public perception problems (or maybe because of them), Lindsay Beck thinks the stock market can make the funding process more transparent and hopefully help make the entire sector more efficient. I think it’s a great idea on the surface and everyone should read these two paragraphs from the NY Times article if you don’t have time to read the whole thing:
“She began examining how to make the nonprofit world more efficient at fund-raising and made it her independent study project. She says she has long believed that charitable money is often misallocated; some of the most effective organizations struggle to raise funds, while some of the least effective charities are allocated millions.
That got her thinking: An exchange, like a stock market, would make the success — or failure — of organizations more transparent, leading to more money in the best hands. On top of that, if donors thought about their charity as an investment, literally, it would transform the nonprofit sector.”
While I think this is a tremendous idea that could potentially change the way we think about nonprofits, I am a little worried about the potential for bubbles. Do we really want to crash the nonprofit market in the same way we keep crashing the equity markets? Still, great idea Ms. Beck. I hope the issues can be worked through and I look forward to seeing the resulting transformation of the nonprofit sector.