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Frictionless Charity: How the Internet is Disrupting the Way We Give

BY Federico Guerrini | Monday, February 3 2014

A woman shows how she has received money directly from donators (credit: GiveDirectly)

When Facebook founder Mark Zuckerberg announced his Timeline profile design back in 2011, he said it would create a “frictionless experience," making the apps you use, the articles you read and the music you listen to automatically shareable on Facebook. Philanthropy is also taking a “frictionless” route – donating can be as simple as sharing a Facebook post or tweeting a string of characters – but this new trend is disrupting the role of charities and how they interact with donors.

Take Centscere, a web service created by a group of students at Syracuse University, whose mission is to “turn your social media actions into charitable donations.” You can choose how much to donate for each post or like on Facebook, or for every tweet on Twitter, and then select your favorite charity among a list. Your credit card is charged every time you reach $7.99 in donations and your contact information is provided to the nonprofits you donate to so that they can keep you abreast of their latest efforts. The main targets of the platform are millenials.

“The methods that worked on the baby boomers and older generations just won’t work with us,” Centscere co-founder Ian Dickerson tells TechPresident. “We grew up online; it’s part of our everyday behavior. We can’t afford to give as much as older generations, but we would happily give some change here and there. For charities it's also a way to build a relationship early on so that when we do have an income, and can make larger donations, we'll donate to them.”

Centscere is one of the apps and services that are trying to integrate the act of giving into the everyday routine of the donors. Others include One Today by Google, that enables users to donate a dollar a day to their favorite nonprofit; Charity Miles, that allows members to earn money for charities when they walk, run or bike; and Check-In for Good (C4G), in which businesses donate to a charity chosen by the customer every time they check into a shop, restaurant or gym online.

“Two of our co-founders Rob Katz and Christopher Dean, already had experience working with nonprofits and fundraising,” communications director Lia Reich tells techPresident. “So, observing the boom in mobile technology and location-based advertising, they figured out a way for charities to go to businesses and not just ask for a one time donation, but actually partner with them to raise money all around.”

The basic service is free both for businesses and charities, but Check-in for Good takes a 15 cents cut for every donation. Users are also given the option to share their activity with their friends on Facebook, Twitter, LinkedIn or Google Plus, in order to encourage them to give as well, while at the same time acting like “ambassadors” for that particular business.

How Check-in for Good works on your mobile phone (credit: Screenshot)

With philanthropy, as in so many other fields, the wealth of information available on the Internet, together with apps and services built on the top of it, has also redefined the rules of giving. “The biggest change has been letting donors and activists to self-organize,” Lucy Bernholz writes in an e-mail to techPresident. She is a visiting scholar of the Stanford University's Center on Philanthropy and Civil Society and author of the book Disrupting Philanthropy. “We still need institutions… to help people get things done, but institutions are changing how they interact with people and vice versa.”

At the dawn of the millennium, donors still gathered information about nonprofits mainly through world of mouth. Now anyone can use websites like Charity Navigator of Guide Star to check the accountability, transparency and financial health of thousands of charities. Once you find an institution you trust, a smartphone application or an SMS is often all you need to donate.

Technology is therefore changing fundraising, empowering private donors and allowing them to skip the middleman. Donations from individuals still account for the vast majority of the overall donations -- around 72 percent from individuals and 21 percent from foundations or corporations -- and online giving still accounts for a small sliver of the overall donations - 6.4 percent in 2013, according to
Blackbaud. What's new is that online donations are increasingly making up a larger share of individual donations. But this percentage is growing year after year: it increased by 13.3 percent for the 3 months ending November 2012 as compared to the same period in 2011.

Charities, who still maintain a leading role when it comes to using and allocating donations, may also see their roles diminished in the future. GiveDirectly is a California-based nonprofit that uses mobile technology to transfer cash directly from donors to those in need in Kenya and Uganda.

GiveDirectly says that the idea of giving money straight to recipients, avoiding intermediaries like charities or nonprofits, was inspired by the success of governmental programs like Brasil’s Bolsa Familia and Mexico's Oportunidades, which transfer donations directly to beneficiaries that meet certain requirements, such as enrolling their children in school or regularly attending medical checkups.

GiveDirectly, however, does not attach conditions to the donations, allowing recipients to spend the money in any way they want. The assumption is that poor people know better than anyone else what they need. A recent study published by MIT, but co-written by one of GiveDirectly's former founders, argues that unconditional giving allowed poor households to save more than those in conditional giving programs, as well as increase food consumption by 20 percent.

Technology also plays a big part in GiveDirectly operations. The recipient's houses are identified using a mix of census data and satellite imagery: if the images show that a house has a thatched roof, this is almost always an indicator of poverty since those who can afford to do so purchase metal roofs, which do no collapse or leak.

Kenya's mobile money system M-Pesa allows the charity to transfer money to anyone in the country with a mobile phone. However, this does not mean that everything is automated. The staff members still visit people's homes to explain to them how the program works, make sure they receive the money and prevent fraud or misuse of the donations. A large part of a traditional charity's overhead costs, from hiring managers to design aid programs to employees who deliver clothes or goods to the beneficiaries, is absent or reduced to a minimum. This helps address one of the most common criticism related to NGOs, especially large ones: of being elephantine and bureaucratic structures that use a large part of donations to sustain themselves, instead of the needy.

A farmer in Kenya invested in livestock using donations received directly from users via the GiveDirectly website (credit: GiveDirectly)

It's an open question whether in the near future this stripped-down, no frills model pioneered by GiveDirectly could become some kind of benchmark for charities in general.

“I think in the long run there will be a big shift towards direct transfers as the evidence sinks in and technology improves," confirms the director of GiveDirectly, Paul Niehaus, in an email to techPresident. "But there will definitely still be a role for organizations. There are lots of collective problems in developing countries that one person with money won't easily solve; the problems of infectious disease or governance, for example. I'd like to see organizational resources more focused on tackling these kinds of problems.”

For all its benefits, the “technologization” of giving does not come without potential side effects. A sensitive topic, for instance, is that of user data. What if users prefer donating anonymously or do not like the idea of their data being shared with third parties?

“We've become much more aware of the potential (and peril) of our digital trails; of the privacy issues associated with doing things online and the ownership issues around ‘who owns the data’ than we were a few years ago," writes Bernholz. "Nonprofits and philanthropists need to get much smarter about the legal and ethical issues associated with digital data. Nonprofits rely on trust. We need to think about building and maintaining ‘data trust’ over time.”

On the other hand, the Internet itself can become a disabling middleman to charities that rely on cultivating relationships with their donors. This is one of the reasons why some charities do not feel completely at ease with Facebook's recently launched “donate now” button. It might be a great tool to quickly collect money in an emergency, but the social network does not share the donors' information with the nonprofits. This makes it difficult or impossible for charities to reach out to givers and establish an ongoing relationship with them or educate users on the end-results of their donations.

“We need real research to know what the opportunity costs of making giving 'invisible' are," explains Bernholz. "Early research on environmental behavior shows that those who buy products marked 'environmentally good' tend to counteract those actions with environmentally wasteful behaviors."

Bernholz also explains, "Embedding giving into everyday actions, at micro scale, may well have the unintended consequence of causing people to volunteer less or give less.” Indeed, the entire millenial generation has been slapped with the nickname, "slacktivists," since millenials can now feel as if they have contributed to a cause simply by clicking their mouse rather than engaging in the much more difficult field work often required to bring actual change. Other studies have disputed this notion; an Intelligence Group study reports that 65 percent of millenials "would take a pay cut to work somewhere that is positively changing the world."

Dickerson takes the more positive view. “These new tools can only make our efforts in accomplishing philanthropic goals more efficient," he says. "I believe people generally want to do good and make the world a better place. Technology can’t kill that drive in us."

Personal Democracy Media is grateful to the Omidyar Network and the UN Foundation for their generous support of techPresident's WeGov section.

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