Philanthropy is broken.
It’s a lament heard from many corners. And yet, now more than ever, our country urgently, desperately needs the philanthropy industry to be trustworthy and effective.
Our entrenched cultural challenges grow ever more complex, overwhelmed by the pressures of a global pandemic, climate crisis, and a boiling point for social injustice.
Government has slowly receded from view as an active, capable solution provider. Corporations are stepping up admirably but in piecemeal fashion. The weight of the world’s problems rests on the shoulders of nonprofits.
Many of these challenges require the cooperation of government and business. The philanthropy sector must be powerful enough to lead and galvanize collaboration amongst multiple institutions.
People are suffering. Causes need championing. Systemic problems need solutions. Charities are anxious to execute on their missions, but they’re underfunded, exhausted, and lack efficiencies of scale Donors want to help, but they’re discouraged at the lack of progress. Every stakeholder wants to see results.
Yet nonprofits are saddled with limitations. We live in a highly networked age. But the philanthropy sector remains decentralized and analog, operating out of fear and scarcity. Philanthropy is too busy begging for its supper to effectively lead during these times when it is most needed.
The solution is so bold that it seems counterintuitive:
Step out of our donor and charity silos and embrace the sharing economy.
Let’s unpack what that means and what this can look like.
People don’t trust nonprofits
While our economy is badly wounded, there remains a rushing river of charitable dollars that flows just out of reach for most nonprofits.
But more often than not, the feeling is that charities aren’t showing sufficient measurable impact from the donations they do receive.
Studies show that trust in nonprofits is dropping. Edelman’s 2019 Trust Barometer Survey found that only 52 percent of Americans have faith that nonprofits will ‘do what is right.’” Trust in institutions overall has been dropping, but even for-profit companies enjoy more trust from Americans than do nonprofits.
What’s going on?
Nonprofits are perceived as ethical, but not competent. A perceived lack of competency undermines trust.
Experts point to many reasons behind the perception of nonprofit incompetence.
For one thing, donors want more transparency about how their dollars are being spent. Typically, people don’t understand how a nonprofit’s money is being spent – only how it is being given. Absent greater insight, it’s hard to interpret the success of nonprofits in achieving impact compared to investment.
Of course, part of what stands in the way of impact is the labor of fundraising.
Nonprofits spend an inordinate amount of time and resources just to keep the lights on. The chase for money depletes resources to address core missions. Even in the good old pre-pandemic days of 2019, a majority of fundraisers felt like beggars.
And herein is the crux of the distrust.
Nonprofits tend to have flimsy transactional relationships with donors. People don’t really feel connected to the nonprofits they’re supporting.
These relationships feel disposable because they’re built on a cycle of solicitations. It’s a tedious dynamic for both the solicitor and solicited. Distrust festers, bonds fray, and it’s easy for donors to move on to the next nonprofit.
That disconnect is eroding the giving landscape.
There’s a disappearing generation of a certain kind of donor: the kind who sit at their kitchen tables writing small checks to their pet charities.
Total giving hit record highs in recent years. In 2019, we saw continued rises in giving from individuals, foundations, and corporations, according to Giving USA.
But much of the total giving has come from big gifts courtesy of rich donors. The share of American households that are giving is on the decline. Even before the pandemic, the philanthropy sector was shuddering at what the narrowed donor field means for the sustainability of fundraising and philanthropy.
The 2018 Fourth Quarter Report from the Fundraising Effectiveness Project raised alarm bells on “disappearing donors.” This included dropping numbers of new donors to an organization; newly retained donors – those who have given a second time to an organization; and recaptured donors – those who stopped giving to an organization but returned and gave again to the same organization within the same year.
“Smaller and mid-level donors are slowly but surely disappearing—across the board, among all organizations,” said Elizabeth Boris, chair of the Growth in Giving Initiative, in reporting last year by AFP. “Philanthropy should not and cannot be just the domain of the wealthy, and the entire sector needs to look at how we reach out to and engage these donors.”
Nonprofits were already having a tough time acquiring and retaining donors when the economy was stable. The downturn means that more nonprofits are competing for a smaller number of wealthy sources.
Ironically, the perception that philanthropy is now the playground of the rich may only deepen distrust of nonprofits and the industry at large. The same trust survey from Edelman that revealed sinking trust in nonprofits found a feeling of inequity and unfairness in the system overall, a sense that institutions increasingly serve the interests of the few over everyone.
This is a destructive, self-fulfilling dynamic. As nonprofits focus on rich donors, orienting their marketing and missions to appeal to the tastes of wealthy funders, they further alienate the masses who could and should be the central pillar of their communities.
The good news is that many wealthy donors have stepped up during our current economic crisis, demonstrating some creative responses in the process.
Recently, five of the nation’s big foundations announced a commitment to an additional $1.2 billion in grantmaking over the next three years to help stabilize and support the nonprofit sector. Separately, the donor advised fund sector has responded to the #HalfMyDAF campaign, which encourages people to give at least half the money in their donor advised funds to nonprofits hit hard by the pandemic.
But these are mere band-aids for a bigger problem.
“While commendable, such moves are, in reality, short-term fixes largely aimed at saving nonprofit organizations,” wrote Lucy Bernholz, in an article about “Reimagining Philanthropy” for The Chronicle of Philanthropy. “These are positive steps within the confines of the old normal.”
Giving needs a revolution
So let’s imagine a new normal.
Right now, nonprofits operate as silos, self-contained units that can only eat what they kill every day. They’re all competing with each other, jealously guarding their donor lists, and relying on marketing and fundraising wizards to keep them alive amidst the crowded landscape.
The majority of donors will never know these nonprofits exist. Or if they do, they’ll never know why they should care. The silo landscape deprives nonprofits of engaged participants who can help them reach new donors and grow communities that can champion their missions.
Nonprofits require more financial support, but giving alone isn’t the solution. Real engagement and community is the missing ingredient. Philanthropy requires the strength of many individuals to create community power.
Why does community matter?
Communities are made of real people, individuals whose opinions and voices carry weight. Strong communities can be self-sustaining, nourished by passion and engagement.
Nonprofits struggle when they must tell their story on their own, like lone voices shouting from the void.
This sector gets its muscle from the strength of a chorus.
Nonprofits grow from word of mouth support that makes them visible and trustworthy. They need thriving, involved communities of regular people who can be authentic ambassadors.
Edelman’s twenty-year analysis of trends in trust found that trust began shifting in 2005 from authorities to peers. In 2006, the most credible spokesperson for an institution became “a person like me.”
Nonprofits need a lot more “people like me.”
The problem is in how to build and support communities in a scalable way.
Is there a scenario where communities don’t have to be laboriously built by hand, but instead are self-generating?
Is there a scenario where donors big and small can easily become a part of the same community that collaborates behind a common cause? Where millionaires and little old church ladies are connected and cooperating?
Yes. It’s called the sharing economy.
Salvation in collaboration
The sharing economy has been one of the fastest growing business trends in history, with venture capital funneling more than $23 billion into start-ups operating with a share-based model. Collaborative platforms have created opportunities for everything from crowdfunding, peer to peer lending, house rentals and couch surfing, to ridesharing and carsharing, reselling and trading, and knowledge and talent sharing.
Like most sectors, the sharing economy has been badly wounded by Covid-19. Airbnb and Uber, two giants of the sector whose combined market cap was $103 billion heading into this crisis, have faced unique struggles amidst the plummet in travel, vacations, and gatherings. Both companies, like Lyft and others with the sharing model, have faced steep losses and painful adjustments.
But the giant international name brands of this sector, the ones whose troubles make big headlines, are only one representation of the sharing economy.
“There is a form of sharing that starts lower down, in communities, and its aim is to respond to real needs,” said Marta Maineieri, founder of Collaboriamo.org, to Morning Future. “We have all realized that collaboration is a win-win. Coronavirus has taught us that when we collaborate, we are stronger. In care, welfare, and mutual aid, what has always worked was collaboration among peers. I’m thinking social streets, voluntary work, and all those neighborhood support mechanisms based on relationships…Where there is a community spirit, there has been great resilience.”
The sharing economy may be wobbling in some areas, but it isn’t going away. And it offers profound opportunities for connection and community.
Exactly the opportunities that are so difficult for nonprofits to generate on their own from their silos.
Amidst the frustrations within the philanthropy sector, there is salvation in collaboration. It is this insight that drove me to create Givvor, a collaborative giving platform to serve donors and nonprofits.
Philanthropy can become far more robust and self-sustaining through the sharing economy. This is, in fact, the only way for nonprofits to easily engage people in the life of the causes they support. And it’s the only way for nonprofits to achieve the kind of scale that will free them from the crushing toil of fundraising.
Digital platforms play a huge role in driving our community associations.The algorithms of social media platforms like Facebook should not dominate the fate of nonprofits. Through shared collaborative platforms, like Givvor’s, nonprofits have the opportunity to control their own destinies as a united sector. Charities are able to build upon each other’s networks, helping people to find them and engage more deeply.
In order for the philanthropy sector to benefit from the concept of collaboration, it must embrace a counterintuitive truth:
Giving is not a zero-sum game.
We need to aggregate our efforts and transform our thinking about philanthropy into an experience that is collaborative, not competitive.
Sharing donor activity on an open platform expands engagement for all. If one of my charity’s donors discovers your nonprofit, it doesn’t mean that they’ll give less to my charity. With a collaborative model, where each donor is able to easily give, connect, and engage their personal networks, the pie gets bigger, not smaller.
Seeing public displays of generosity inspires others to give. It opens up an ongoing dialogue with nonprofits that breaks the begging dynamic. Donors and nonprofits aren’t on the defensive, and the conversation becomes relational instead of just transactional.
With collaboration, nonprofits have an opportunity to be discovered by new donors. They have a forum to engage people in a conversation over time, demonstrating how they’re spending their resources and generating impact.
This is a fundamentally different dynamic than a one-time annual letter attached to a donation envelope. A collaborative platform fosters interaction, a back and forth that draws people deeper into the daily life of nonprofits.
When people feel more informed and engaged, they’re more likely to give. And when that giving process makes it easy to connect to other networks, more donors find their way into the fold.
In other words, the sharing economy for philanthropy generates many more “people like me.”
The power of community can lead us out of the philanthropy logjam. The sharing economy has transformed other industries; it’s time for the philanthropy sector to embrace collaboration as well.
Alex Huff is the CEO of Givvor, a collaborative giving platform that brings automation and sustainability to nonprofit fundraising.