Crowd-Sourced Giving Changes Philanthropy

Read Laura Vanderkam's piece for USA Today, "Microphilanthropy is Changing the Face of Charity"

Websites like Kickstarter, Kiva and Giving Tree are changing how people donate money. With what's known as microphilanthropy, individuals, non-profits and even small businesses raise money directly from individual donors. Journalist and author Laura Vanderkam explains how crowd funding works.

Copyright © 2011 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

NEAL CONAN, HOST:

Websites like Kickstarter and Kiva give people the opportunity to donate or loan generally small amounts directly to individuals and organizations, usually for a project of some kind. Now that crowd funding model is being applied to charity. It's called microphilanthropy, and it's changing giving, receiving and maybe philanthropy itself.

If you've donated on these sites, why? Give us a call: 800-989-8255. Email us: talk@npr.org. You can also join the conversation on our website. Go to npr.org, click on TALK OF THE NATION.

Laura Vanderkam covered this phenomenon for USA Today and joins us from a studio in Philadelphia. Nice to have you with us.

LAURA VANDERKAM: Thank you for having me.

CONAN: And how does this work?

VANDERKAM: Well, basically, if philanthropy is the voluntary promotion of human welfare, then microphilanthropy means doing the same thing on a much smaller scale. So it's about establishing a direct connection between donors and recipients, and donors choose which projects they want to support. So instead of, say, writing a check to a charity that I know does clean water projects in Africa, I can choose the exact well I want to support and learn about the people who'd benefit and hopefully get some updates along the way.

CONAN: So this was a model that Adopt-A-Child used to be, the program, but this is very specific, and you get to see this site before you begin.

VANDERKAM: Exactly. There's just so much more information now. My family did an Adopt-A-Child program back in the 1980s, and I used to remember we'd get these very thin sheets of airmail paper in the mail from the child we were supporting, or really the charity we were supporting, had a specific child write us letters. And, you know, you'd wait for these for weeks. I'd write to the child and the child would write back. This would take weeks.

Well, of course, now, you can get updates on what your international friends are eating for breakfast on Facebook. So there's just so much more immediate information. And so people think, well, why should charity be a black box when nothing else is? We will all learn more about how these things work.

CONAN: And this would seem to eliminate a lot of administrative costs.

VANDERKAM: Well, maybe. I mean, the problem is, of course, is that bundling small funds because, with microphilanthropy, you're giving, you know, 25, $50. Bundling small funds has some costs associated with it, but technology does lower that as well. And so because of that, it's not as big an inefficiency as you might think.

CONAN: So if you wrote a check, for example, to the United Way, you have no idea where that money is necessarily going - for good causes, you suspect - but that good cause may be the heating bill at the headquarters.

VANDERKAM: Well, certainly that's true. I mean, all nonprofits do have some need for overhead to run their operations. But generally, you know, this is the way professional philanthropy has worked, is that you trust that the experts who are running these philanthropies know what the most urgent causes are, know what is the best use of your money, and you trust that they will see that it gets there.

And that has worked pretty well, most of the time. There's been some scandals, but mostly it works. But, of course, now these days, people want more information. And so even with established charities - you see places like Goodwill - they now have a calculator on their site showing exactly how many, say, minutes of job search classes a donation of your old Green Day CDs will fund. We just want to know what our donation will buy.

CONAN: And how - who goes and finds these wells or projects in Africa or in Bangladesh?

VANDERKAM: Well, generally, you have on-the-ground nonprofits who do have operational arms doing these projects, and they are just more specific about them online through these massive portals like GlobalGiving. So a small nonprofit that does do work in Africa will post photos of a specific project and ask for donations for those.

There's a little bit of gray area with all this because, in many cases, the money is going to the broad work of these nonprofits because giving to one specific person, for instance, is usually not a tax-deductible event. So there's some gray area with this, but most nonprofits do follow donor wishes and direct the funds toward the project you say.

CONAN: And the social media sites, those - somebody's got to run those sites. That's not trivial. It's not a corporate headquarters, but it's not trivial.

VANDERKAM: No, of course, but the good thing is that, you know, as people share what sort of projects they're supporting, they can get their whole social network involved, and much of this is very grassroots. So if I say I want to give $50 to a particular cause, I can then tell my whole network. Many of these websites, you know, GlobalGiving, DonorsChoose, Modest Needs, Citizen Effect are very much driven by social media. And so I tell all my friends that I thought this was a great project, and maybe many of them will kick in as well.

CONAN: I see. So there is a snowball effect, if you will.

VANDERKAM: Exactly. And so once a project gets a little bit of funding off it, it gets more funding, people say, well, if my friend thought this was a good idea, I bet it's a good idea.

CONAN: Let's get some callers in on the conversation. We'd like to hear if you've donated through one of these sites, why did you do it? 800-989-8255. Email us: talk@npr.org. We'll start with Alicia(ph), Alicia with us from Rochester, New York.

ALICIA: Hi. I think this is a great topic for your program. And I have donated to Kickstarter. I've done breast cancer research online, you know, so that whenever we donate funds for that certain team, they show up on our Facebook page. And I do it for that reason because I think as a kind of middle-income earner, it's good for my friends, who maybe say they don't have money and I can't donate to charity, to see that someone like I can do it because then they say, oh, no amount is small enough, so to speak.

And so the other reason I do it is because I get so discouraged when I donate money to Doctors Without Borders or Smile Train or there's something I donate to that had to do with women and micro-financing, and they send me Christmas cards or they send me address labels. And I don't need those. And I want the company or the, you know, nonprofit to save their money and not make those things and send them to me. They're nice thank yous and they're nice enticements, but I think the kind of pride you get on virtual media and social media makes up for those.

CONAN: Pride. That's an interesting term.

ALICIA: Thank you.

CONAN: I just wanted to probe that one term a little bit, Alicia, pride.

ALICIA: Pardon?

CONAN: You used the word pride.

ALICIA: I did. And I think that's what I mean. You know, if the enticement before was, I mean, who are we kidding if we don't say that social media is a little bit about bragging and a little bit about pride and doing good and a little bit about pride and who you are as a person? And, to me, that's a, you know, better enticement as far as really saving funds for the nonprofits than the calendars or the bag or the coffee mug or the - whatever they use to send and still tend to send. So...

CONAN: We ought to try that in public radio. Coffee cups, you say? Tote bags?

(SOUNDBITE OF LAUGHTER)

ALICIA: Well, I do. I think if there's a big difference. I think, you know, 20 years ago, it was the coffee mug. It was the embroidered tote bag. But I think FedEx and below, we're satisfied with just a kind of, you know, shout-out on our Facebook page.

CONAN: Alicia, thanks very much for the call. We appreciate it. And, Laura Vanderkam, that sense of ownership that I think she was talking about, that is much more direct than the - she suggested the check that she may also send to Doctors Without Borders.

VANDERKAM: Yes. People definitely want to feel a connection with the recipients of their money. They want to know they're doing good. And I think Alicia was getting at something great there with, you know, social media enables us to give in public, that in the past, you know, you write your check privately and maybe your name is in the newsletter of a charity, which is fine. That's great that they do that. But with social media these days, you give and you can tell all the people that you actually care about. And it shows up on their Facebook feed. And that is very fun. And it hopefully encourages other people to get involved as well.

CONAN: Let's see if we go next to Trey(ph), Trey with us Moncks Corner in South Carolina.

TREY: Yes, I've given to an artist who's a friend of my brother's. He had some Kickstarter campaigns that he has done just to help get some art projects off the ground. And he's done, you know, little incentives here. You give this much, you get original pieces of artwork from the project and things like that. Most I guess have given because I'd like to see his projects go through. They're generally interesting ideas, and I'd love to see an artist succeed.

CONAN: That's the Kickstarter project model that we were talking about in the introduction, and that's a little bit different from this - the microphilanthropy charity. But, Laura Vanderkam, it's the same kind of crowd-sourcing or crowd-funding model.

VANDERKAM: Yes. I mean, it's the same force at work. And technology democratizes things, and it establishes direct connections between people. And so whether that's a donor and a recipient who's got a new well in Africa providing clean water, or whether it's an artist making an album and not having to go through a record company, just crowd-funding it instead, the same force makes transferring small amounts of money more efficient. And it multiplies information, and so it helps us establish direct connections.

CONAN: And how is it changing the big philanthropies?

VANDERKAM: Well, as I was saying earlier with places like Goodwill now have calculators showing exactly how many minutes of a job search class your donation will fund. And certainly, charities such as the Red Cross or the United Way want to make people feel the same level of connection that these new players like GlobalGiving and DonorsChoose and Modest Needs will do. It's changed the way they've marketed themselves because they realize that donors who feel connected are happy donors, and happy donors are more likely to be more generous in the future.

CONAN: The scandal a few years ago when the Red Cross was raising money on the appeal for victims of this specific disaster, and it turned out they were using a lot of that money to, well, pay for all kinds of programs, not just that one, this avoids that kind of disconnect.

VANDERKAM: Well, to a degree because let's say all nonprofits walk a fine line with this, that giving to one specific person is not a tax-deductible event. And so when you're saying we'll support Geoffrey Lubega(ph) in Uganda and his needs, giving directly to that man is not something that we generally can deduct. So you are funding their programs. And most are very clear about this, but certainly the new ones such as DonorsChoose say, well, we will direct the funds this way.

I mean, they - I think they do a point system, rather than sheer dollars so it seems even more like you're voting for the cause rather than supporting it particularly with a specific dollar amount. But, you know, it is true people don't like that. They think it seems a bit, you know, untransparent to raise money for general funds, like when the Red Cross was doing that based on the emotional appeal of a certain disaster. We do like to know that our money is going where it is, and I do think that this microphilanthropy revolution has been making the nonprofit sector more transparent. It makes it more accountable as people see where their money is going. And that's a good thing because, I mean, we're in tight times, and if - I think that transparency has helped keep the level of individual giving at a pretty high level, even as some major philanthropy support has declined from foundations.

CONAN: We're speaking with Laura Vanderkam, author and journalist, who wrote a piece called "Microphilanthropy is Changing the Face of Charity" last year in USA Today. She's with us from Philadelphia. You're listening to TALK OF THE NATION from NPR News. And let's get Christine(ph) on the line, Christine with us from Cincinnati.

CHRISTINE: Hello.

CONAN: Hi, Christine. You're on the air. Go ahead, please.

CHRISTINE: Hi. I wanted to just say that I have donated in the past to CHIVA and to Oxfam, and the reason I enjoyed donating to those organizations so much is because I feel as though not just donating money. I'm donating a way for this person to sustain their lifestyle. You know, it's a gift that kind of keeps on giving if you give them an irrigation system or livestock or something like that. So, for me, it's very satisfying in that regard.

CONAN: So the specificity, a water pump to allow a farmer to irrigate his soil, that sort of thing.

CHRISTINE: Right. Right. Instead of just giving flat out money, and actually giving them more of a way for them to build their, you know, create their life in the fashion they wish through my gift.

CONAN: And do you also get feedback - this is the way we used your gift?

CHRISTINE: I do a little bit, but I mostly just trust that I'm probably giving something to someone that really could need - use it and needs it.

CONAN: And thanks very much for the call, Christine. And, Laura Vanderkam, we have to remember that people have different levels of engagement. Everybody - a donor, of course, but different levels of engagement. Some people want that intense connection. Some people, every once in a while is OK.

VANDERKAM: And it's good to have it on offer. And, certainly, DonorsChoose, which is an organization that Charles Best, a teacher, founded to fund classroom projects, I believe if you give over a certain amount, about $100, you get thank you letters from the children. And so talk about motivational, that's definitely something that would keep a donor engaged.

CONAN: Let's go next to Evan, Evan with us from Kansas City.

EVAN: Hi, how's it going?

CONAN: Good. Thanks.

EVAN: Yeah. I just want to talk about donating to Kickstarter. I actually got involved with a local business through a friend who writes for a beer blog and works for a liquor distributor and involved in the industry. And he told me about a local business that was looking for private funding to start up a local brewery. Being Kansas Citian, we're proud of our local brewery boulevard, but we don't quite have the beer market size that say cities like St. Louis do or Portland who can do their own local beer week.

So the idea of getting involved in a local business that was going to allow me to start a new Kansas City brewery, expand our beer market and also get involved in a project really meant a lot to me. I spread it around to a lot of friends. I got a ton of people to donate. And ultimately, they barely made their goal.

CONAN: So this was a campaign to get enough money to buy the equipment to get started, what Kickstarter is all about. Was this in a donation or an investment?

EVAN: This was a donation. They gave prizes, but actually, it ultimately ended up being an investment because I'm trying to be a home brewer myself. I ended up meeting them. They offered to let my friend and I work with them and teach us how to do stuff, so ultimately it became a life investment for me.

CONAN: Interesting. Evan, thanks very much for the call.

EVAN: Thank you.

CONAN: And, Laura Vanderkam, we were talking in the context of the charitable donations. We tend to think of there is that gray area when you're talking about projects on Kickstarter that aren't donations to help artists to develop a project or even a brewery in Kansas City.

VANDERKAM: Well, I love this, that this is changing the lines between things that often you are giving with the goal of creating a community that you want to live in. And sometimes that means helping to fund local businesses that are creating that community, in this case, to have a local brewery. So there's a much gray area between philanthropy and investing. Currently, you can't invest for equity through many of these crowd-funding sites, though there's actually a bill in Congress that would change that at the moment. But, yeah, we view giving often as about, you know, giving to some destitute person or a cause like animal welfare, but it can also be about creating a thriving community. And so that's what Evan was getting at.

CONAN: And grouping together with your friends, as he said, they barely made their goal, but they did get started, and that's the whole idea of the project. As you look ahead to this, is this the future, at least as far as we can see, for philanthropy?

VANDERKAM: I really think it is because when philanthropy - when charity relies on big donors, you are always subject to the whims and to the market forces that affect us, the donors, so when they have bad years in the stock market, that funding can dry up or if they're focus changes, that funding can dry up. But when you have a broad base of donors and people who are engaged in what you are doing, they are more recession resistant, and so it's a more stable source of funds in the long term.

CONAN: Laura Vanderkam, thank you very much for your time.

VANDERKAM: Thank you for having me.

CONAN: Laura Vanderkam, author of the forthcoming book "All the Money in the World: What the Happiest People Know About Getting and Spending." She joined us from Philadelphia. Tomorrow, Gabrielle Giffords' husband, Mark Kelly, on their new book together, "Gabby." Join us for that. I'm Neal Conan. It's the TALK OF THE NATION from NPR News.

Copyright © 2011 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and Terms of Use. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

Support comes from: