NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Scaling social impact and bringing the necessary funds to fuel it are two of the biggest challenges to the non-profit and social entrepreneurship world today. As organizations begin to scale, the risk of inefficiencies begin to lurk. Simaliarilry, as large scale funds for investment and donation begin to accumulate, the ability to give in large-scale amounts can cause more problems than it was meant to solve. When should you give big? When should you give small?

And how can you effectively combine the two together to drive real social and economic impact?

Helmed by Kim Wright Violich and Nicholas Hodges of Schwab Charitable and Alex Rossides of Growth Philanthropy Network, a lively SOCAP 10 discussion entitled “The Future of Aggregate Demand Platforms” provided much-needed thought leadership to this area. With an open circle formation inviting discussion from the group, ideas, obstacles, challenges, and possible solutions were discussed by the active and engaged crowd.

So what is the best method to fuel effective non-profits and social entrepreneurs? The answer, typical to such complex questions, is that “it depends”. On one side, you have large-scale, donor-advised funds, such as those managed by Schwab Charitable, where huge amounts of wealth can create massive change in the world. Obstacles here are the ability to provide a direct link from donor to cause and give the donor true value to the cause they are supporting.

However, as Razoo.com CEO Sebastian Traeger points out, this may be something non-profits need to outgrow. These direct links and personal ties to causes exist in few other industries and if we are going to talk about high-level impact and high-level funding, then non-profits will have to think beyond knowing every interest and nuance of every donor.

On the other side of macro-giving, is the micro donation campaign, such as the massively successful Barack Obama presidential campaign. Fueled by ubiquitous $5 text message donations or small-scale online donations, the campaign was a huge success for Obama, ultimately raising nearly double than his competition and winning him the presidency.

As Kim, of Schwab Charitable, astutely points out, people often neglect the high cost and implementation of these campaigns and the platforms required to operate them. Though potentially lucrative, there is a huge hurdle of investment for non-profits to jump over to scale and build upon these platforms, one that is not only outside of their budget but also greatly outside of their area expertise.

So where do we stand today with the future of aggregate demand giving? My view is that intelligent giving generation is at a crossroads when it comes to giving effectively and scaling impact efficiently.

True collaboration across the non-profit and for-profit world is needed to guide the conversation toward a common, and well understood, solution. The first step would be an exchange of ideas and the ability to leverage IT to build efficient electronic platforms to engage all parties at the table. SOCAP 10 started the discussion, yet the conclusion of this topic is being anxiously awaited, not only by the non-profits seeking capital but more importantly by the people and communities they serve.