What Crowdfunding Means For Philanthropy

Lazar Finker—Crowdfunding and Philanthropy

Whether it’s for medical expenses or to produce an aspiring artist’s new album, the impact of crowdfunding cannot be ignored. The “traditional” avenues of philanthropy—soliciting donations and support through a nonprofit—seem far less effective when individuals can easily set up a page on a site such as GoFundMe and immediately reach an audience. Nonprofits have worked to not only help individuals but the causes of issues that affect them as well, whereas crowdfunding gives interested donors an avenue directly to an individual.

 

It’s certainly noteworthy, but to what extent will these new platforms change existing charitable efforts?

 

I believe that, rather than supplanting traditional philanthropy, crowdfunding fills a distinct niche that can coexist alongside nonprofits. It’s not hard to see why crowdfunding is popular. For decades, nonprofits have struggled to reach potential donors and make them inclined to donate, with initiatives that have sometimes come across as tone-deaf or condescending. Overall, it’s not just about selling the idea of a noble cause, but about the stories that make the cause worth contributing to.

 

Humanizing the people that benefit from philanthropy has become especially important in recent years, something that crowdfunding platforms do well. Nothing is more authentic than an individual personally coming forward to tell their story and request assistance. Add in the power of social media and an instant audience in the form of online connections, and we have a formula that has already raised billions of dollars.

 

With nonprofits, missions don’t always include provisions for individual support. These initiatives are highly impactful, but leave some people seeking other options. Crowdfunding turns this on its head, giving the beneficiaries the oversight over where the money goes and changes the narrative about what donations can accomplish. However, nonprofits aren’t experiencing fewer donations; the numbers have more or less stayed the same. This is a pain point for many of these organizations given that the industry as a whole has not made significant gains in recent years, despite a recent surge of funding.

 

The question of impact also characterizes the differences between these two approaches. Donors, particularly younger donors, display a desire to see the immediate impact that their funds make. This is far more pronounced with crowdfunding, particularly when donation goals can illustrate the collective accomplishments of donors. Savvy nonprofits will take note of these changes and find ways to demonstrate the value of a contribution to their audience.

 

Crowdfunding has also called into question whether these donations should be considered tax deductible. Some people believe that this makes donating more appealing, as any funds will not be filtered through a charity’s ecosystem before being put to use. Others believe that the lack of rules around crowdfunding opens the door for fraud.

 

Whatever the case, the instant support network created by crowdfunding provides a new type of philanthropy, one centered around grassroots movements and the notion that people should give back to their neighbors. This coming at a time when nonprofits try to reinvent themselves indicates that, perhaps, these organizations should focus on their stories—as well as providing transparency about where their funds go. There’s still a place for nonprofits, but this dichotomy of giving may only become more pronounced as time goes on.

 

The Problem With Raising Awareness

The Problem With Raising Awareness—Lazar Finker

What are you passionate about? There’s a lot worth standing up for, and as an individual on the Internet, you may find yourself bombarded with messages claiming that a particular cause is important enough to warrant further action on your part. Sometimes, you won’t even get that. Plus, depending on what the message is, the way an audience is addressed may change; would you make an anti-smoking PSA the same way you’d make an anti-cancer PSA? You’d be hard pressed to find anybody that is pro-cancer, but for the target audience of a hypothetical anti-smoking ad, you may need to use some measure of persuasion. However, regardless of the cause, the recent trend is to strive to raise awareness regardless of cause or message. While raising awareness isn’t necessarily a bad thing, this trend in activism is worth examining to analyze the good and bad that it is capable of doing.

It’s worth mentioning the sheer number of “awareness” campaigns that occur yearly in the United States. The American Journal of Public Health lists almost 200 health awareness days over the course of the year, not counting the time ostensibly set aside for promoting other causes. So, any citizen hoping to be more informed certainly has their work cut out for them.

Let me be clear that I’m not deriding awareness as a concept; it’s often a vital first step to making a change. Sometimes, it’s one of the few steps necessary; in the case of some diseases, education about signs and symptoms can lead to earlier treatment and save lives. Beyond this, some causes can escape the notice of individuals until awareness campaigns bring them to the forefront; for instance, the issue of racially-rooted police brutality would likely have flew under the radar of the public eye if not for the #blacklivesmatter movement. The trouble comes when organizations focus solely on the nebulous goal of awareness without a concrete goal or next step in mind. Charities dedicate large portions of their funding to “education,” something which has earned them the ire of groups that feel that they are addressing problems without providing solutions.

The start to leveraging awareness campaigns to do good in the world is the aforementioned call to action. Promoting discussion is a good start, but the social gestalt is likely to move on to the next issue without affecting meaningful change unless charities turn that interest into action. In order to do this, they must clearly define their desired outcomes for a campaign. For instance, if they are hoping to encourage people to get tested for or inoculate themselves against a disease, it would be wise to give them instructions on how to do so. If an organization is collecting donations, they should strive to be transparent about where the money’s going and the good it can do. Many nonprofit organizations try to quantify the benefit provided by a donation, citing specific progress made to spur on potential donors and make them feel that their money is well spent.

It also behooves any nonprofit to ensure that they’re reaching the correct audience. When an organization is passionate about a cause, it’s always tempting to adopt a shotgun approach to education, informing as many people as possible without regards to whether or not they’d be in a position to help. Additionally, nonprofits can fall into the trap of continually preaching to the choir, trying to raise awareness among individuals that are likely aware enough as it is. While there is value in leveraging an existing audience to take action, it takes careful planning to reach individuals that may not have had prior knowledge and persuade them of the value of a certain cause. The more segmented your audience, the more likely it is that they’ll be willing to act on your campaign. It’s a case of the bystander effect; the more a request for assistance is publicized, the less likely it is that any given person will answer it. Of course, if a campaign goes viral, so many will respond to it that this will seem a non-issue, but improper targeting can waste resources and even lead to backlash against a cause.

Additionally, when planning an awareness campaign, it’s important to create an engaging message that will last in the minds of an audience. This is a gross oversimplification; there’s no one-size-fits-all way for every nonprofit to effectively reach their audience. However, strong campaigns tend to share well-developed, overarching goals and act as a sort of vessel for a specific call to action.

This is perhaps the worst mistake that any nonprofit can make; assuming that a solution that works for one cause will also work for another. The days of fearmongering PSAs have largely passed, and what has developed is a mire of media competing to win the attention of a massive and often fickle audience. In this free-for-all of memes, fundraising drives, and “challenges,” the truly savvy nonprofit needs to recognize that the value of awareness only goes so far and that further steps must be taken to make a difference.

Donations and Determination—Lessons Businesses Can Take From Nonprofits

Donations to Determination

The not-for-profit industry has come under fire as national trust in many philanthropic organizations rapidly declines. The charity sector of the economy is subject to more and more meticulous scrutiny while many of its fundamental institutions are falling by the wayside. Community hospitals are facing closure across the country. Traditional churches and synagogues are emptying their coffers while simultaneously losing membership across nearly every sect affiliation. Moreover, the sector itself hasn’t grown in the last ten to fifteen years, be that with respect to overall revenue or number of employees.

At the same time, it cannot be said that nonprofits are not prolific or motivated. Many have taken lessons from traditional businesses over the years. Though concepts such as strong branding, improved money management, and a robust leadership structure were once taboo among nonprofit organizations, the majority have adopted the conventions of the modern business in order to better deliver on their promises to do good in the world. Now, in an era of suspicion of corporate motives, businesses would do well to learn from the engagement practices of nonprofits.

While the nonprofit sector has not profoundly expanded in recent history, the management skills of the industry have improved exponentially. The stigma behind management, once regarded only as a byproduct of corporate greed, is gone, now exemplifying a commitment to shrewd fiduciary responsibility, especially in a sector where funds are often tight. Therefore, strong financial and logistical planning is generally something that nonprofits do very well, enabling them to focus further on their mission.

With resources scarce, nonprofits must not only rely on effective branding and building strong relationships with stakeholders to gain support. Granted, there’s a big difference between average consumers and the individuals that nonprofits assist, but learning and acting on their needs is necessary for any business.

The difficult part of this process is often finding enough support to effectively complete a mission. In order for this to happen, benefactors will have to care about the cause that the nonprofits are supporting, a tricky proposition with so many charities clamoring for attention. Nonprofits have, as a result, become adept at telling a story. These stories often humanize the community in need of assistance, explain how the nonprofit plans to help, and includes a call to action in which the audience is encouraged to contribute. Even in for-profit businesses, appealing to an audience on an individual level can often drive others to action more effectively than broadly espousing a product or service.

This whole process is about making connections on an emotional level. As nonprofits can rally communities and bring people together for a common cause, so too can businesses create a passion for their products and services that leads to brand loyalty. A consumer should ideally feel that the companies that they support are in turn supporting them; communication is, as previously mentioned, the key to building a significant relationship.

Viral marketing may be one of the latest trends to grace the Internet, but nonprofit organizations codified the process of getting advertising to socially propagate itself. Even on social media today, nonprofit-oriented news stories dominate feeds, encouraging readers and viewers to make some small difference on their own. And this approach works quite well, gathering support through emotions in a way that for-profit businesses stand to learn from.