USA: Charities issue shares on the stock market

Donations are decreasing, families are in crisis and the not for profit sector issues shares on the stock market.

In an America besieged by bank crashes that have sown panic in Wall Street, the USA’s third sector has decided to swim against the tide. Using the techniques of brokers and merchant banks as example, America’s non profit sector aims to make up for the losses in “giving” by cultivating the “turbo capitalist” seed known as Ipo (Initial Public Offering).  Ipo is the public offering to sell one’s own shares to find resources for development. Homeward Bound is a local association from Marin county, in California, that helps homeless people find homes. Last year the charity launched a 700 thousand dollar Ipo, which even gained them the support of finance tycoon Warren Buffet.

Following in Homeward Bound’s footsteps other charities have also issued shares on the stock market: Volunteer Exchange from Silicon Valley, Teach for America, Volunteer Match (a kind of eBay for the voluntary sector that has also published 45 information pages on their financial figures). According to George Overholser of Non Profit Finance Fund the USA’s associations have collected more than 200 million dollars in just a few years thanks to this financing system.

A new kind of fund raising? Not really. What changes is the company model, the presentation of its balance sheets (exhaustive and transparent) and who their bosses are, leaving the door open to new types of investors. An example of this is the last public offering launched by Do Something, one of the biggest youth volunteering communities  and that has let new shareholders in to its board. These new shareholders are chosen according to the money that they are willing/disposed/ready to invest. The objective of the Ipo is to collect 8 million dollars, promising in return an exclusively social result.

“We carry out a real business” says Nancy Liblin, Do Something’s CEO, “but instead of selling cars or sweets, we sell hope and leadership”. Hope that is worth 80 shares costing 100 thousand dollars each. An offering for medium and large investors, not for small ones. The donor automatically becomes a shareholder, entitled to participate to meetings and to vote on decision mechanisms. The floating of the share that has been bought depends on the company’s economic trend. Stock market and not for profit are considered as two opposite, incompatible and conflicting fields by many observers. Today the relationship seems to have changed. The debate is taking place in Europe too. In Italy, Stefano Zamagni has proposed to launch a social enterprise stock market; it now looks like the issue of charity participation is at the centre of the debate.

Translation by: Cristina Barbetta

 

Find out more: www.dosomething.org