Concept: Success Cap

For-profit companies have a market capitalization equal to the number of shares times the price.  Non-profits however do not issue equity.  However, market capitalization is an important concept. Especially, since most indexed portfolios are market-cap weighted.  Market-cap weighting means that when you buy into a total market index  you are buying more of the largest, most established companies and less of the more risky startups.  Non-profit indexes would benefit from this as well, since we would want to naturally contribute more money to organizations that have a proven track record of efficiency and getting results attacking the most pressing global causes.

So, for non-profits it may be better to consider the concept of a  “Success Cap”.  This could be measured by the amount of funds successfully deployed to past projects.  Thereby an established non-profit should have a larger “Success capitalization” than an unproven company raising funds and carry more weight in indexed portfolios. This also creates a motive for less established players to become more efficient at raising and deploying funds.