What I disagree with is the idea (familiar from product markets) that deviation will induce arbitrage (i.e. that an increase in price will induce greater supply of new activities that result in certificates). This is generally untrue in the short term for markets where there are large stocks being held. Money is a classic example; during some periods, precious metals and diamonds were as well. The stocks act as a shock absorber.

Why is it important that deviations in price induce production? It seems like the current behavior is the efficient one.

The validity issue is similar. I'm not concerned if a specific certificate turned out to be false. What would be a systemic risk is the perception that many certificates are false. That would lead holders of certificates to dump them on the market, so that they can reinvest their philanthropic capital into something worthy. (Remember that trustees have a fiduciary duty to protect the finances of the charity, so they can't just shrug and live with it like you or I might.)

Again, this seems like a feature to me, as far as it goes. The risk of collapse should be factored into the price of a certificate or the desirability of making a grant. And if philanthropists think a fall is not justified, they should be happy to continue holding (and buying more aggressively as prices fall); I suspect if anything that the prices are a (very slightly) better medium for figuring out whether everything is bogus, than a public debate without prices.

Without leverage or diminishing marginal returns for certificate-holders, I don't see why a systemic risk is any worse than a bunch of idiosyncratic risks. The only novel characteristic seems to be price signals letting a crisis of confidence spread faster, which seems like a special case of letting information spread efficiently and encouraging donors to act on transparent information rather than any defensible guess. I don't yet see the reason to think this is bad on net.

Independently of the system used, if people no longer thought charities were doing good work, it would be hard for them to raise money. If people were right, that would be good, if they were wrong, it would be bad. So the question (in this case) seems to be whether we think the system is better or worse than the status quo for getting the right answer.