In 2004 we co-authored an article in the Stanford Social Innovation Review that asserted that the social capital market (money that funds the social sector) was woefully inefficient. The vast majority of donors and grantmakers were motivated more by their hearts than by their heads, making giving decisions without good information or meaningful evaluation about the organizations they funded. Consequently, the best nonprofits often were not rewarded commensurately for their good work, whereas les…

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