By Todd Cohen
America needs a new charitable marketplace that is fair, open and free of the heavy hand of the philanthropic-industrial complex.
Abetted by nonprofit trade groups and consultants that peddle their cramped ideas in return for their financial support, foundations operate with little government oversight and must pay out only 5 percent of their assets each year in grants.
And charities, hooked on grants, will not challenge foundations’ natural monopoly of the marketplace.
Yet while the market’s scales are loaded, some charities and foundations are testing new ways of doing business.
Through grants and other creative financing, these foundations have invested in helping charities improve their operations, fundraising, service-delivery and policy work.
And charities, seeing funders’ commitment, take the risk of improving themselves.
Now, building on ideas they have piloted, these funders should join forces to create a new marketplace to replace organized philanthropy’s monopoly.
Social progress depends on philanthropy that devotes more assets to improving charities’ effectiveness, and keeps its financial investment in sync with its social mission.
Organized philanthropy, which owes its power to inherited wealth and weak regulation, has outlived its welcome.
The future belongs to philanthropy that can create a charitable marketplace that fosters risk and innovation.