Will Osama bin Laden be caught before President George W. Bush leaves office? Will Barack Obama win the Democratic nomination?

At Bet2give, an online electronic prediction market, anyone can "bet" real money on the outcome of these events but with a twist - the "winnings" go to a charity of the person's choice.

Prediction markets, which harness the collective intelligence of a group of people, are most famously used to forecast presidential elections. They are also becoming increasingly popular with corporations: Google, the InterContinenal Hotels Group and ArcelorMittal are among those that use prediction markets as a tool to improve forecasting.

Now some are wondering: do they also have a role for foundations and non-profits?

"There is a huge market for online giving and a huge market for online betting, and Bet2give is trying to figure out if there is an intersection between the two," says Emile Servan-Schreiber, a cognitive scientist who co-founded NewsFutures, an online prediction market that last year launched Bet2give. "We are trying to leverage the immense interest in betting to make it a force for good rather than a quick profit."

Since its debut last September, Bet2give (www.bet2give.com) has attracted about 400 traders and donated about $1,000 to charities that include Kiva, the Nature Conservancy, and National Public Radio.

"The charities we end up giving to are enthusiastic about it and some are willing to link back to the site," says Servan-Schreiber. "They see it is a new way of doing fund-raising."

At least three - Big Brothers Big Sisters of Atlantic & Cape May Counties, NEADS (Dogs For Deaf And Disabled Americans), and the Palestine Children's Relief Fund - have links back to Bet2give's site on their homepages.

This is how it works: the trader funds an account by purchasing play money. (The minimum is $5 and is not tax deductible. Bet2give also adds 5 per cent to cover the credit card transaction fee.)

He or she then "bets" by deciding at what price to buy or sell shares that will pay $1 if the event happens and will be worthless if it does not. For example, if Obama is trading at 89 cents on Bet2give's Democratic nomination market - as he was earlier this week - that is what traders are willing to pay for a share that will be worth $1 if he wins the nomination. In this case, the market is giving Obama an 89 per cent chance.

The winner uses the virtual winnings to buy a donation from NewsFutures, which in turn sends the money to the specified charity. Servan-Schreiber points out that the game is not gambling because the trader never receives the winnings.

While Bet2give appears to be a unique concept, there are examples of organisations that have either funded or used prediction markets.

Last year, the University of Iowa, which runs the famed non-profit Iowa Electronic Markets, launched the Avian Flu Market. The goal is to help public health officials collect and analyse information to forecast accurately the timing and extent of a human-to-human bird flu outbreak. The project was supported by a grant from the Robert Wood Johnson Foundation, the largest US healthcare philanthropy.

And San Francisco-based The Long Now Foundation, a non-profit established in 1996 with the aim of encouraging long-term thinking and responsibility in society, has embraced forecasting tools.

Its "Long Bets" site (www.longbets.org) charges registered users $50 to publish a prediction that must be societally or scientifically important. Once the prediction is made, registered users can discuss it and challenge the person to turn it into a bet. Both participants must then put up a minimum of $200, which is placed in a holding account for the duration of the bet (the minimum is two years).

When the bet terms are met, either by a date or a predicted event happening, and the winner is decided, the money is sent to a charity of the winner's choice.

Lucy Bernholz, founder and president of Blueprint Research & Design, a consulting firm serving philanthropic institutions and individuals, believes social issue prediction markets hold "great possibility" for the sector.

"They could be a tool to get an entire community to talk about where public or philanthropic resources should be focused or as a way for foundations to run ideas past people who might be affected by them," Bernholz says.

But she is cautious about charity-driven prediction markets. Bet2give, she says, is part of a trend toward "embedded" giving - "the tendency to stick a gift to a non-profit into any other kind of financial transaction just to draw eyeballs to a site or customers to a store".