How Can Philanthropic Dollars Be Spent Most Cost-Effectively to Combat Climate Change?

Open Access
- Author:
- Cohen, Zachary Austin
- Area of Honors:
- Finance
- Degree:
- Bachelor of Science
- Document Type:
- Thesis
- Thesis Supervisors:
- Dr. Brian Spangler Davis, Thesis Supervisor
Dr. Brian Spangler Davis, Thesis Honors Advisor
Dr. Michael Mann, Faculty Reader - Keywords:
- climate change
capital
efficiency
nonprofits
private foundations
grants
grantmaking
philanthropy
philanthropic - Abstract:
- This paper seeks to answer the question: How can philanthropic dollars be spent most cost-effectively to combat climate change? It analyzes the funding strategies of the major grantmaking private foundations involved in climate change and evaluates the organizations’ financial health and effectiveness. Though the private sector’s and government’s contributions to climate change efforts often receive attention, the focus of this paper is on the nonprofit sector and its increased role in solving societal problems. The thesis is that foundations must pursue strategies that align with their philanthropic goals, be transparent in their evaluation process, and limit political influence to most efficiently allocate capital. The research in this paper incorporates rigorous financial analysis endorsed by Guidestar, a leading database of IRS-recognized nonprofits, and the Nonprofit Finance Fund (NFF), a financial organization that provides loans and guidance to nonprofits. By comparing a nonprofit to its relevant peers in key metrics through a systematic process, a better understanding of the organization’s financial health and efficiency is gained. This information is then used to create an analyst scorecard like those used by equity researchers for the basis of investment in private companies. The purpose of the scorecard is to provide potential donors and organizations a better idea of where there money is going. By allocating capital to the best financially managed organizations, resources can be better utilized to combat climate change.