I just saw an interesting piece in The Huffington Post. Dennis Whittle writes, in "Markets for Philanthropy":
"Did you know that about 6% of non-profits in the US attract four-fifths of the resources?... The problem is, as Paul Brest puts it in his most recent Hewlett Foundation President's Letter , most donors "simply lack the necessary data to support informed decision making." This means that the philanthropy marketplace does not function well, and resources don't get allocated to their highest-impact uses.It also means that big organizations can get bigger based on their marketing and branding rather than on their results. And the little guys, regardless of how good they are, usually have trouble attracting the attention of donors...As Paul says, "diverse philanthropic investments do not have a single common measure [of return]." To that, I would add that diverse "donors" do not share the same measure of returns. As a result, no single set of data or information can or should inform - or motivate - all philanthropic decisions. The question is how to provide a mosaic of data suitable for different philanthropic investments and donors..."
So - what about the "little guys" who are not attracting the donors, because of all of the competition in the marketplace? Is the competition really telling us that the marketplace is too crowded, and some of these organization should go out of business or merge with others?
I think one flaw in Mr. Whittle's premise is that philanthropic investors do not necessarily make their decisions based on measure of return. Lots of people give to charities because they know someone who works there or has been helped by the charity, they are honoring a loved one, their parents/grandparents gave there, etc. People just don't make philanthropic investments with the same analytical minds that they use to make personal financial investments.