A new breed of philanthrocapitalists are putting tools in place to get a big bang for their buck

We all know that Bill & Melinda Gates and Warren Buffet have created a very exciting new partnership that has the potential to initiate great change around the world. It is becoming increasingly more evident every day that the world needs more great business minds to solve it’s greatest riddles – those, as Mr. Buffet says, “ have already resisted both intellect and money.”

The Economist just coined a new term to refer to social entrepreneurship or venture philanthropy: and it is called ‘philanthrocapitalism’. This mighty big word describes the idea that our today’s mega-philanthropists are taking a new approach to giving. Instead of writing checks to traditional pet causes that merely feel good, they are using more businesslike methods of measuring cost-benefit evaluations of what potential gifts might achieve. It’s all about applying business applications to social issues, and then measuring their success.

Today donors are concerned with the effectiveness of the programs they support and what difference they make on the people they serve. Measuring outputs and outcomes will be the key to successful funding in the future.

Here’s an example. You contribute $20,000 to an organization to print and distribute a brochure to 5,000 people in your community in an effort to raise awareness for dental hygiene. This is the output. The big test will be the outcome – can the organization show measurable results by those who received the brochures and followed the directions? In the end, did your money make a difference – could you see visible results from the distribution of the brochure?Taking this further, the Economist suggests that both donors and organizations make sure that any failures are documented. Changes could then be implemented to get the projects back on course.

For donors who want to ensure that their money is being used to the greatest use, efficiently and economically making this community a better place, this sounds like the solution. Like any successful investor will tell you, an invested dollar should show a good rate of return.