Giving Compass' Take:

· Writing for Stanford Social Innovation Review, Jeffrey C. Walker addresses the changes taking place in the world of philanthropy and explains how philanthropic funding can increase its impact by taking pointers from the world of private equity investment.

· Not everyone agrees that the private equity model is best for philanthropy? What are the pros and cons? 

· Learn why one philanthropy leaders says giving is not like investing.

One of the biggest challenges nonprofit leaders and organizations face is the gap between the philanthropic aspirations of the world’s wealthiest people and their actual giving. The ultra-wealthy say they want to donate their assets to help solve the world’s most pressing problems, yet worthy programs and projects often struggle to find funding.

The Forbes Billionaire list shows 2,153 billionaires from 72 countries have a total net worth of about $8.7 trillion. If they gave away 10 percent of those assets annually, the flow of funds would total $870 billion a year. Contrast this with the Bridgespan giving rate figure mentioned above of 1.2 percent which results in $104 billion of giving a year. How can we bridge this $766 billion giving gap?

I believe there’s a powerful model available from a different financial sphere—the world of private equity (PE) investment. I’ve worked in PE since 1983, and I’ve seen it grow from a collection of fewer than 50 funds managing some $200 million in capital to a dynamo of more than 2,000 funds managing more than $600 billion—a three-thousand-fold explosion. It happened because wealthy families realized that they needed professional tools and support structures to better manage their investments, and that access to those resources required pooling their funds. The same compelling logic has the potential to transform the world of private philanthropy, dramatically increasing both the moneys available for nonprofit activism and the positive impact of philanthropic giving.

Read the full article about attracting greater philanthropic funding by Jeffrey C. Walker at Stanford Social Innovation Review.