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With the non-profits it backs, ranging from Kiva, a microfinance website, to the Sunlight Foundation, which promotes open government, Omidyar Network practises “venture philanthropy”—developing a non-profit start-up in the same way as a new business venture, except for not expecting it to make money one day. Typically, foundations have given funds for a specific project rather than to build the capabilities of the charity itself, which makes it hard for the charity to hire and retain talented people. In contrast, the network not only provides money for its charities’ general budget, it has a human-resources department that helps them find good staff. This service seems to be universally appreciated by the charities Mr Omidyar backs, some of which say it is more valuable than the money they get. Although there are several other successful venture-philanthropy organisations, such as New Profit Inc (which helped develop the Teach for America charity), none comes close to the scale of Omidyar Network, which makes it the crucial test case for the idea.

The moneymaking counterpart to venture philanthropy is “impact investing”: aiming to turn a profit while doing some social or environmental good. But Mr Omidyar thinks most so-called impact investors are being too risk-averse. He has concentrated on trying to build viable businesses that sell to the very poorest consumers, where costs must be pared to the bone. Some of these already look promising. D.light, a provider of cheap lamps that absorb solar energy during the day and dispense light at night, in place of dangerous and toxic kerosene lamps, is now shipping 500,000 units a month, in India and Africa. Bridge International Academies now has 200 schools providing poor children in Kenya with a decent education for $5 a month. MicroEnsure, a firm that gets mobile-phone companies to provide free life-assurance as an incentive for loyal subscribers, now serves over 4.5m people in Africa and Asia, up from 600,000 in 2010.

Big enough to make a difference

To be judged a success, Omidyar Network will need some of these promising start-ups to grow far bigger. To encourage this, it is seeking ways to co-ordinate its investments in for-profits and non-profits so as to accelerate the growth of an entire sector. So far it has succeeded only, to some extent, in microfinance, where it has invested in for-profit lenders and in non-profits that provide the “ecosystem” for the market, such as credit bureaus and consumer-information services, for which there was no viable commercial model. Can Mr Omidyar do the same in education? Or health? Or indeed journalism? His media venture is in a similar spirit to his other projects, seeking a new business model for the investigative journalism that he sees as a crucial underpinning of democracy. Years more of work will be needed before it is clear whether his mix of impact investing and venture philanthropy can deliver social change on the scale Mr Omidyar dreams of.