A market in which volunteers decide which not-for-profit organisations are most worthy of our donations may sound like Waitrose's green token scheme gone mad. But that is what Steven Goldberg, the chief operating officer of one US not-for-profit group, has proposed in this month's edition of the Harvard Business Review.

Mr Goldberg believes that money could be better directed at charities and other not-for-profit organisations using a Wikinomics, wisdom-of-the-crowds-style marketplace to grade those organisations that achieve the highest social returns.

“Well-designed information markets that aggregate the best guesses of large numbers of informed people have predicted the results of elections, movie releases and sporting events as accurately — and sometimes more accurately than - experts.”

It is an approach that many forward-thinking businesses are already using. Another article in the same edition of the HBR outlines how volunteers can help companies with everything from marketing to production. It says that companies as diverse as Honda and Unilever have created methods for using people's contributions in ways that are useful to them and others.

The systems can be simple: Hyatt, the hotel chain, has launched an online concierge service in which volunteers provide, and rate, local travel tips. This improves customer satisfaction and saves on staff time and costs. Or more complex: Honda has launched a GPS device that aggregates traffic-related data for use to subscribers. The scheme saves the company money and raises revenue through subscriptions.

Mr Goldberg says that the not-for-profit sector should take note of the trend. He suggests that secure virtual trading markets could be established using specialist software. The market could list virtual stocks in the form of questions. These would ask whether organisations would deliver on the specific promises they had made — whether to hire thousands of volunteers, save acres and acres of Amazon rainforest, vaccinate hundreds of babies in Africa or build half a dozen new playgrounds for children in Kent.

“Traders could place bets rating each stock from zero (it will never happen) to 100 (absolutely certain).”

Trading would then drive the prices up or down depending on whether traders considered the stocks to be over or under-rated based on the information available including news of grants and sponsorships, staff changes and published data about performance.

“By revealing the consensus judgment of potentially millions of donors, employees and volunteers in the non-profit sector, the market could forecast the relative success of organisations competing for donations,” Mr Goldberg, chief operating officer of Cradles to Crayons, writes.

“If collective intelligence could index non-profits' effectiveness, social enterprises would have an incentive to collect and report perfomance data to improve their rankings. Performance-driven philanthrophy might then elicit real growth capital from donors looking for the most promising investment opportunities.”

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