Large-scale donors, such as wealthy private individuals and institutional funders, have the resources to track the effectiveness of their donations to nonprofit organizations.

Individual small-dollar donors, though collectively forming the "base of the pyramid" for many nonprofit organizations' budgets, do not have the same transparency into a nonprofit's activities -- whether because of lower political clout (e.g., I'm not the Ford Foundation) or because it's not worth my time to check up on the $25 I sent to the Red Cross last December.

What about a website on which:

* nonprofits can pledge to hit certain goals publicly (say a simple platform of 4 major strategic goals for the year);

* small-dollar donors who care about accountability can put their donation into an escrow account that rolls over to the nonprofit when the targets are hit

* if targets are not hit in the timeframe specified, the money is returned to the donor.

I think it would be important that the money is in escrow, i.e., actually paid out by the donor on the front end, rather than just a pledge. This is to make the payout psychologically more concrete for the nonprofit and to avoid the hassle of tracking down pledges later, which adds cost.

The nonprofit would be free to post whatever strategic goals and commit to whatever reasonable timeline it wants to. Even if an org tries to "game" the system by ratcheting down the bar for what it hopes to achieve, there would still be greater transparency than nothing at all. And presumably real stretch goals that are still in the realm of possibility would receive more donations. Wouldn't you be willing to pay a premium to see a nonprofit reach for a really awesome goal that may or may not be hit? This should select for the risk-taking, entrepreneurial nonprofits.

Third-party verification of targets hit would be an issue, but interest accruing on the funds held could probably pay for this.

You can imagine other bells and whistles (such as escalating/recurring donations automatically deducted from a credit card if a nonprofit hits targets in consecutive years or achieves "add-on" bonus goals) that could make this even more worthwhile for the nonprofit organization.

Note that no nonprofit is obligated to participate or post on this website, and the nonprofit has full control over what it posts (as opposed to any sort of democratic-wiki-voting on an annual plan, which would probably be untenable for effective nonprofit management). This would complement and not replace existing fundraising mechanisms and charity rating/evaluation services. The idea is to increase the funding pie, not add onerous constraints.

One major issue that I can't figure out is how even a third party evaluator could determine if the nonprofit was directly instrumental in bringing about the achievement -- obviously a huge issue in the nonprofit sector to begin with! The requirement that these be verifiable achievements might skew the goals towards output/activity-based goals rather than outcome goals. Anybody have thoughts on how to address this?

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