Tuesday, February 06, 2007

Giving Carnival - Do Donors Really Choose?

Sean over at Tactical Philanthropy has started a group dialog amongst philanthropy bloggers called a "Giving Carnival" where we individually submit articles on a common topic and they are then linked-to from a central page for interested readers. You can learn more about the Giving Carnival here.

The topic he has asked us to speak to is that of "[Online] Resources For Donors," a perfect subject for a guy who runs the "leading social network for donors"

I hate reading blog posts that are more advertorial for someone's own site or service so while I will certainly explain GiveMeaning.com, the website I started two years ago, I will keep my evangelism of our services to a minimum.

I'll start by talking about my own frustrations as a donor, which was what lead me to start GiveMeaning.

The reality of it is that most of us don't wake up in the morning thinking about where we want to donate our money to. Online giving is not likely to become an online daily habit the same way CNN or TMZ.com (a sad admission of mine) is.

Geez, where am I going to give today?
For me, I'm someone who more often reacts to something I see in the news than pro-actively giving my money away. So three years ago, when I read a series of articles of a murder trial that made me weep with anger and pain, I resolved that I would do something meaningful to try to ensure the circumstances in which this little boy was killed would never happen in this Country.

The next day, I went online and tried searching for nonprofits in my community that were tackling child abuse both from an advocacy and government watchdog perspective and from a counseling and rehabilitation perspective.

Information at my fingertips? Overloaded or underwhelmed
The "first generation" of online donation portals (e.g. Network For Good) frustrated me no-end. Keyword searching brings either too many or too little results and then I'm left to read through pages of information trying to discern exactly what each of these nonprofits do. All in all, searching for "charity profiles" ends up almost always on unfortunate ends of the extreme: either way too much information or way too little.

Undeterred, I decided to "let my fingers do the walking" and placed calls to agencies that I found in the Phone Book. I couldn't get my phone call returned. And here's an important point. There are 1,000,000 nonprofits in the US. Hundreds of thousands in Canada. The ones I'm most interested in supporting are not the national agencies that spend millions of dollars on fundraising campaigns but the small, community-based charities that are often chronically underfunded.

An uneven playing field
Getting my phone calls returned, I later learned, was not because they didn't want to talk to me. It was that because of their lack of resources, the same person doing the fundraising was the one doing the counseling and managing the office. Forced to choose between a donor call that may never go anywhere and a traumatized child in need of immediate care, the decision is simple. But these organizations, the ones that I believe many of us donors want to donate to, if they can't identify themselves to us, how will we know to give to them? The answer lies unfortunately in the professional fundraising industry which presents a charity with the conflicting dilema of having to evaluate whether 40% of a semi-successful fundraising campaign is better than 100% of no fundraising campaign, only to draw the ire of donors who chastize them for high fundraising costs.

So if the "charity portals" under or overwhelmed, and I couldn't get my phone call returned, what then?

But before I tell you what I did, I should articulate my other frustrations, the issues that I believe we all share these days, and ultimately, I believe these issues are conspiring against our generosity at all levels of giving.

"Moving Me Up The Ladder? More like me pushing the ladder away from my window!"
So had one of these organizations returned my call promptly and I had felt compelled to donate to them, experience unfortunately conditions me to expect a never-ending stream of solicitations sometimes blatant and sometimes masked as "donor updates" but which ultimately end in an appeal. Take for example the internationally respected charity that I donated to back in November (by sending them a check in the mail) and 3 days after World Aids Day, I receive not one but two four-color glossy, two-sided post-cards "urgently asking for your continued support." Two days too late, and two too many. While I have all the respect for their actual programs, this kind of waste (a waste of my donation, a waste of paper, a waste of theirs and my time) is turning me and millions of donors like me off.

"Return On Generosity." Where is it?
Maybe it's my days as a venture capitalist but I treat my for-profit investments the same way I do my charitable giving. I demand a "Return on Generosity." Without it, why should I ever give again? Online, this has been addressed by many charities (especially charities focused on international relief or development) by creating "Ethical Gift catalog's" and other "anecdotal" messaging most of which comes with fine-print that articulates that the charitable gifts you are purchasing are not actually the items you are purchasing and that you're just giving to their general activities fund. New websites like ImportantGifts.org are attempting to create portals around this concept, all of which I feel, if these items being "sold" are largely anecdotal, is absolute hogwash. To think that these types of "ethical gift" give donors anything more than a "good feeling" is naive.

That's why Kiva, GlobalGiving and DonorsChoose are all high atop my list of respected online giving options, because they indicate exactly where your money is going.

But what are the costs?
DonorsChoose charges a "fulfillment fee" ranging between 15% to 25% on each project funded through its organization. GlobalGiving states that between "85-90% of your money goes directly to the project you choose to support." Kivadoesn't appear to charge fees currently but says that it intends to become self-sustainable by 2008 through "the implementation of a number of income streams which may include optional transaction charges to lenders and low debt capital fees to Field Partners."

I'm amazed at how off-putting even modest transactions can be to many donors. I think the word "admin fee" has become such a dirty-word, tarnished more often by outrageous fundraising expenses (which are distinct from administrative fees) such that many potential donors believe that any intermediary charging anything other than the basic credit card fee is highway robbery.

The problem of the $5 Philanthropist
Whether you have $5 or $5,000,000 to give away, you won't solve the problem alone. Pierre Omidyar's wife loved collecting Pez dispensers. Prior to eBay, finding other Pez dispenser collectors to trade with was near impossible. Prior to GiveMeaning, finding other donors who wanted to support the same initiatives as you was just as difficult.

GiveMeaning's response to donor frustration

I created GiveMeaningin response to these frustrations. Here's what we do. We allow anyone to create a fundraising page to achieve a specific charitable goal. The "founder" of the project submits a little write-up of what they want to achieve, and why they think it should get funded. Some of these projects are started by charities fundraising for specific projects that they've identified but the majority of them are started by people unaffiliated with an organization. What we've created is the beginning of the web's first real online marketplace for charitable giving. I say this because someone can come along and post a project and then GiveMeaning will go and find an organization qualified, willing and able to accomplish the goal(s) that has been defined by that project. With over 800 projects on the site that span the globe and the gamut of causes, we've never had a problem finding a suitable organization for any project.

The Power of Plenty
The project page concept brings together like-minded donors to pool their donations together. We call this the "Power of Plenty." Donors (many of whom have never met each other) pool their money together to accomplish the specific project. And whether I gave $5 and many others gave $500, the feeling I get in seeing the project accomplished is just the same as the donor who gave the most.

Anonymity and Return On Generosity
Our privacy policy is dead simple: We won't and we don't. We will never share your information with the charity that receives the money (unless you specifically ask us to) and you will never be solicited by GiveMeaning. As for a Return On Generosity, the only requirement that we impose on organizations that receive money from us is that they upload photos, video, blog updates, etc to their project page so that donors (if interested), can track the progress of their project.

GiveMeaning does all of this without charging any transaction fees, even covering the credit card fees associated with each transaction. We can afford do this because corporate sponsors who buy advertising on these project pages to align their brand to these specific accomplishments (without ever allowing "disingenuous sponsorship.") For our sponsors, a project page is like sponsoring a golf tournament or dinner except that instead of their brand value being forgotten after desert, their brand is intimately connected to this specific outcome for the months of fundraising and then many months thereafter as donors continue to check-in on their projects.

Who's in charge? Donors need to be empowered.

What bothers me about the vast majority of options that exist to facilitate online giving is that they are providing the donor a menu of choices to chose from as opposed to a breed of solutions that empower the donor. In other words, the majority of these services is still driven by a fundraising agenda as opposed to what the donor wants to fund. For those who hope to target only the "consumer philanthropists," who are content to buy Water Buffalos that don't exist, this might be good enough. But what I'd love to see is a crop of donor-centric services that smartly use the power of the internet (and associated technologies) to bring about a whole new donor-lead revolution in giving. For as long as all that we (the online charity services) are doing is giving the donor a choice of pre-selected donation options, we are not serving them properly. The internet has the potential to be a disruptive force that changes the charity sector for the better but as long as the online services mimic the status quo, this opportunity will be lost.

GiveMeaning has started to move this way by allowing literally anyone to start a project with the promise that we will find the charity best qualified, most willing and able to carry-out the specific goal as defined by that donor but this should be just the beginning.

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Thanks for the thought-provoking post.... just FYI, the 15 - 25% "fulfillment fee" at DonorsChoose is optional. Donors decide whether or not they want to pay it.
Great post Tom and a great start to what is an amazing tool for widely scattered individuals of few resources to come together and make a difference! Sorely needed: better findability, and feedback to donors giving visibility into the impact of contributions. Go get 'em.
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