Why “mutual funds” of non-profits?

Unless you live under a rock, which these days means you don’t use Facebook or Twitter, you might be familiar with the term ‘Kony 2012’. An organization called Invisible Children launched a great video to highlight a Ugandan warlord called Joseph Kony with the goal of shining a worldwide spotlight on him so that he could be captured and brought to justice. 

Gears

Invisible Children is a human rights organization whose mission is to use “creativity, film, and social action” to bring peace and prosperity to central Africa where Joseph Kony’s LRA operates. In this age where social media is a catalyst for such a cause, it’s easy to see why Invisible Children was immensely successful (76 million views and counting) through this video viral campaign in raising awareness of their cause, and in turn raising considerable capital for their organization. 

More to this story is the “controversy” immediately following the ‘Kony 2012’ viral campaign with critics raising questions over the financial management of the organization. The organization, staying true to it’s policy of being open, put up a fairly detailed response to the critics. The response gives some details on the non-profit’s finances and clarifies some other things. 

Personally, even after reading a fair share of view points on this from both sides of the argument, I am yet to fully agree with either side. This is typically how I feel when I am reading about an upcoming IPO or an individual stock that has caught my attention due to media exposure. In a zero-sum game that is the financial markets, there are folks both long and short on a security. There is no way I can form an honest/unbiased view without hours, days, or even months of detailed financial analysis of an individual security. For non-profits, this “evaluation” is an even more interesting challenge. At Bright Funds, we’re focusing on a simpler solution: mutual funds of the best non-profits.

Financial metrics - in this case those used to criticize Invisible Children - are just one of several gears that keep any organization functioning. Especially important in the social change sector are other factors - other gears that turn the wheels of social change. For example: hours in the field, mouths fed, or vaccinations administered. In more general terms: likelihood of mission success, accountability, and transparency. It is unfair to both non-profit organizations and the individuals interested in financially supporting those organizations to focus on financial metrics alone as sole indicator of satisfactory performance. But the task of analyzing all the possible metrics is not a trivial task, in much the same way that securities pricing in the financial markets is complex.

Financial markets solved the complexity challenge by promoting diversification and hedging through the introduction of mutual funds (as well as index funds and ETFs) to solve the stock picking challenge for the intelligent investor. At Bright Funds, we have incorporated a similar approach to making individual charitable giving most effective by introducing mutual funds of the world’s best non-profits. Our users so far have embraced this idea as it makes intuitive sense. Bright Funds is a simple, sophisticated way to direct charitable giving to funds in all the interest areas that one cares about.

Go ahead, give Bright Funds a try and manage your charitable giving like you manage your investments. We would love to hear your thoughts and feedback.

-Rutul, Bright Funds Co-founder

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