09.22.08
IPO, Prospectus, Philanthropic Equity… Are we talking nonprofit fundraising?
Two weeks ago the Economist ran a story on nonprofit capitalism called “An IPO with a difference“, which highlighted a recent “IPO” offering from the nonprofit DO Something (which promotes volunteerism by teenagers). At its core, this IPO is really a fundraising campaign to raise $8 Million, which will help DO Something double their activities by 2011. There is an IPO ‘prospectus’ on the campaign, with overviews of the organization, its activities and goals – including campaign-specific ones.. What is interesting, of course, is the accountability reporting for “shareholders” – including quarterly reports and a conference call with management..
While I know this story has gotten a lot of mentions already (I caught it several times in my various emails and blogs), I thought it was good to include here as well because it speaks to some of the trends we’ve been following and the questions we’ve been asking. For example, the emergence of ‘nonprofit IPOs’ raises interesting questions about ‘exits’ — and not as much for the orginal investors (as there are no returns and no return of capital with a nonprofit investment) — but rather for the nonprofit organization.. If Do Something successfully raises $8MM in its IPO and doubles its activities by 2011 – could a foundation then act as the sole investor for the ‘next round’ – after the initial IPO holders have made the “riskier” first investments??
But back to the article.. In some ways, the Do Something IPO is very similar to the one run by Homeward Bound in CA which we discussed here last spring. It is also similar to the ‘growth capital’ campaigns run by organizations such as Teach for America, College Summit, and Volunteer Match (some with the help of people like Chuck Harris (Seachange) and George Overholser (NFF Capital Partners). In those cases, the accountability reporting is integral to the deal – and George Overholser specifically has written on both this type of capital raising and the accounting (their process/system is called SEGUE). He also wrote a great piece on ‘buy vs build capital’ for nonprofits which is well worth the read.
One final note: this article made reference at the end to “joint stock philanthropy in 18th century England”, which I of course had to Google to see what this was about.. In doing saw, I saw it referenced in a talk on philanthrocapitalism year with Matthew Bishop (Economist) who – while discussing his upcoming book with Michael Green (Department for International Development) – notes that there have been golden waves of philanthropy (we’re in the 5th) in which the philanthropy practices of the day mirrored the business practices of the day (and thus in 18th century England there was a joint stock philanthropy practice… although those “stock owners” actually had voting rights (I need to learn more on this)). Their book comes out soon on Amazon. Enjoy…
