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September, 2012

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Nonprofits have to recognize that they’re businesses, not just causes
(Bill Strickland)

All achievements, all earned riches, have their beginning in an idea.

Don’t wait. The time will never be just right.
(Napoleon Hill)

To date, the level of success of non-profit or so-called third sector and social services rendered by it are difficult to estimate professionally in the absence of the real “market” and clearly established criteria by which one could test the activity of NGOs. It is very difficult to assess the effectiveness of the organization, the quality of social “products”, the impact on the audience and the advantages of NGOs in comparison to one another. Today we can say with confidence that the “classic” charity is not always an effective way of solving the social problems.
Currently, there are tens of thousands of NGOs that are raising tens of billions of USD, however, not all of the information presented by them in the web is reliable in the relation to the expenditure of donated funds. Some specialized web portals, which attempt to collect the info on real operating NGOs and their social activities are trying to solve this problem by examining the actual activities of the organization, its charter and financial documents, as well as analysis of other parameters, for example: an American NGOs rating organization www.charitynavigator.org; as well as a simpler Russian equivalent www.blago.ru. However, they solve the problem only partially because all of the information presented by these “agencies”, although detailed, but “static” – so for a potential donor/investor it is not possible to make a living dynamic picture of the organization’s development for the past years. In addition, these portals, as a rule, work with already big and recognized organizations and therefore prevent new and small organizations (“start-ups”) from receiving much-needed initial financing. The reason is obvious: large and recognized charities “brands” don’t allow appearing of the small but effectively working ones – in order to keep its monopoly in the market of limited financial resources.

MARKET FOR CHARITIES – CONCEPT

Research of the third sector points to a general trend for all NGOs – gaining financial self-sustainability through the gradual “commercialization” of the sector by generating revenue through business ventures and corporate partnerships: consulting, training courses, sales of technology solutions of social problems, etc. Therefore, more and more they use the new term – “social enterprise”. Social entrepreneurship is a new way of social and economic activities, combining the humanitarian mission of “acting for good” with the achievement of economic efficiency and profitability.
According to Bill Strickland, CEO of Manchester Craftsmen Guild,
“Nonprofits have to recognize that they’re businesses, not just causes. There’s a way to combine the very best of the not-for-profit philanthropic world with the very best of the for-profit enterprising world. This hybrid is the signal of the future for both profit and nonprofit companies.”
Thus, social entrepreneurship is now seen as a real prospect of the evolution of the nonprofit sector: for example, the degree of “commercialization” of NGOs in the U.S.A. today is exceeding 60%
Since we’re talking about the uniting of two sectors, profit and non-profit, we want to offer the next logical stage of further development with completely clear and understandable “market” rules. We believe that today it is necessary to create a web-platform similar to the stock market for commercial companies, which will connect potential donors/investors and social entrepreneurs for investment in NGOs and their social projects.
In this “market platform” will be presented NGO’s (sellers) and their social projects (“products”). This platform will also attend potential investors (institutional investors – foundations, commercial organizations, private individuals), which (in view of interested areas, the organization, in its rating and other parameters of the social activity) will choose partners for donations/investments.

SOCIAL STOCK EXCHANGE – BENEFITS:

For NGOs:

  • will give a huge stimulus to improve efficiency and creativity of their work;
  • will greatly facilitate the search for new partners, donors/investors for the ongoing activities, as well as for promoting new ideas, projects, and “start-ups”;
  • significantly will reduce the services for fees provided by professional fundraisers.
“Institutional IPO” (abbr. «initial public offering») and its regular updated rating, awarded by a third and independent (!) party (see above examples of such organizations), will mean that it has passed all the necessary procedures, its activities are legitimate, transparent, effective and, most importantly, has a good dynamic and prospect.

For donors/investors:

• will increase the trust for the organization and for the market of NGOs as a whole;
• will increase the guarantees of reliability of supporting social project and significantly reduce the risks of supporting/investment in inefficient organization or project;
• will remain anonymous by making payments through the service “e-broker”.
We believe that the creation of NGO market and NGO “stock prices” will correlate with time, and even affect the stock prices of commercial companies that support them, as well as the so-called “global index of kindness” will influence over time the stock market index of commercial companies.
In addition, NGO market will create real opportunity to observe the dynamics of NGO’s development, and thus, will allow to make predictions and provide a powerful informational tool about position of non-profit organizations, categorized by activity and regional presence.

MARKET INDEX – “GLOBAL INDEX OF KINDNESS” (KINDEX)

“Index of kindness” (KINDEX) – is the most important indicator of happy life in a social state, since it will show the ultimate dynamics of the quantity/quality of charitable activities of the nation. It will help understand the real level of comfort in this social community.
The global index of kindness will be calculated by the total “market weight” (see below) of all the NGOs divided by the number of participating non profits organizations.
Other factors affecting the index:
General situation in the charitable sector inside the country and abroad.
Macroeconomic factors in the country.
Macroeconomic factors in the world.
Political events as well as other non-economic events (wars, diseases, etc.).

CHARITY MARKET – THE FUTURE

We sure that Charity Market has very good prospects not only as a social project, which will solve many problems of NGOs and radically change the world of NGOs in the next 10 years, but also as a very promising commercial project, which will be able to reach not only financial self-sufficiency by providing consulting and administration services for fees to organizations and projects willing to offer themselves on the electronic exchange platform, but also very profitable to owners through the issuance of shares and its stock price changes.
In addition, it is obvious that the project is naturally develops and organizes social sphere protection, which gives the community an additional resource of stability and prevent social shocks.