Going digital: how donors are clicking and choosing new technology

There are two ‘d’s in ‘e-philanthropy’ – ‘digital’ and ‘data’. The combination and application of the two has changed the world, the way we occupy it and the way we relate to each other.

Philanthropy, despite its traditional imperviousness to outside forces, is feeling the dramatic impact of the internet, social media, web 2.0, wikis, applications, tools, webinars, mash-ups (see Essential e-glossary) and the almost daily development in digital software, hardware and behaviours.

These developments are ‘evolving philanthropy’ says Tris Lumley, head of strategy at non-profit think tank New Philanthropy Capital (NPC) and ‘disrupting’ it says Dr Lucy Bernholz, a leading commentator on e-philanthropy and founder and president of Blueprint Research & Design Inc., a strategy consulting firm based in San Francisco. Disrupting Philanthropy, the draft paper Bernholz co-authored with colleagues from Duke University in North Carolina, explores the new philanthropic behaviours unleashed by digital technology.

Digital technology is certainly redefining philanthropy. ‘Citizen philanthropy’, ‘micro-philanthropy’, and the ‘democratisation of giving’ are terms that attempt to describe a new trend that sees millions of ordinary people giving money or time together, ‘aggregating’ their giving to achieve greater impact. This is increasingly happening in new online market-places and on match-making sites; or through ‘flash giving’ responses to emergency appeals, such as Haiti.

Some feel that a clear distinction should be drawn between ‘online charitable givers’, who may give a few pounds, from time to time, often in a short-term response to a high profile appeal; and ‘philanthropists’, who give larger sums, in a strategic way over a longer time.

Jessica Sklair, director of research at the Institute for Philanthropy (IfP) says, “We do need to draw a distinction between low-level, usually one-off donations to charities and disaster relief funds, and the much more engaged, long-term and high level philanthropy of trusts, foundations and individual donors. Strategic philanthropy is by its very nature a hands-on approach to giving, so while they may engage with online giving initiatives, strategic large-gift philanthropists will always need to have face-to-face contact with the charities they support. However, in terms of promoting a culture of giving in the UK – which encompasses all types of givers – these new initiatives can only be a good thing.”

Others say the debate is a waste of time, including Bernholz, “I think the ‘philanthropy v charity’ discussion is mostly junk. Philanthropy likes to claim it is more systemic, more engaged, more strategic than charitable giving. OK. So what? In my experience everyone starts somewhere and every single ‘philanthropist’ also gives charitably, both the institutions of philanthropy and the individual philanthropists. In and of itself, I just don't see it as a meaningful discussion.”

It’s too soon to say whether these online givers are the philanthropists of the future and it will be interesting to see whether those who responded to the Haiti disaster appeal, through text and web, will remain for the long haul and invest in the reconstruction of Haiti, (see Letter from America).

Certainly the aggregated amounts of money raised via digital channels can reach philanthropic proportions: $31m (£20.5m) was raised in $10 donations for Haiti through American Red Cross text messaging alone. The overall total is reported as topping $1bn, much given by digital means.

And there is evidence that online giving is growing. The CAF Disaster Monitor  found while new-media donation methods continue to lag behind TV, they are steadily rising in effectiveness, from seven per cent in 2004 to 17% in 2009 and 2010. Online donating is the most popular new-media way of giving with 15% using the method this year, eclipsing text/SMS giving at three per cent, the survey shows.

A Chronicle of Philanthropy report (Still Growing Strong, Chronicle of Philanthropy, 14th June 2007) shows overall, US online giving climbed 37% in 2006 over 2005, though has slowed due to the recession.

Statistics also show that online donors are not the usual demographic – they are likely to be more generous and a lot younger than the typical giver. For example, the median age of donors at US based online fundraising site Network for Good is 38, with the average between 39 and 40. This is significantly younger than offline donors, who tend to be 60+ according to most studies (Source: Craver, Mathews, Smith & Company).

Based on the money raised and the number of people involved, this new style of giving is worthy of consideration and may become more important in the future as the ‘digital natives’ (those born in a digital age) grow up. The number of digital marketplaces and match-making sites that connect them to global and grassroots charitable projects has certainly grown in the last few years.

Among them:

• Kiva.org, a ‘micro-lending’ concept that has helped more than 670,000 individual ‘entrepreneurs’ to loan more than $120m (£79.7m) to nearly 300,000 individual lenders across 193 countries since its launch in 2005;
• GlobalGiving UK, which connects donors to ‘the causes and countries they care about’ and has reportedly raised £250,000 since it launched in 2008 – the US site is reported to have raised $17m (£11.3m) since its launch in 2004 (see case study);
• Virgin Money Giving, a non-profit online fundraising service, launched by Richard Branson in 2009;
• Localgiving.com, the Community Foundation Network’s pilot online community marketplace which launches nationally this year.

The models for these organisations vary in terms of fees and commissions charged. Not all have proved sustainable. Less than six months after announcing it would revolutionise online fundraising by offering its services for free, website Bmycharity, based in Warwickshire, has announced it is to close after failing to raise enough funds through corporate partnership. At the time of writing, the profit-making subsidiary of the Help for Heroes charity had agreed to take over the fundraising website, with plans to rebrand it as BmyHero.

GlobalGiving UK’s Shareth Jeevan believes these new marketplaces will grow the giving cake, connecting as they do with new younger audiences and ‘lowering the barriers’ to philanthropy, as Joe Saxton, of non-profit research consultancy nfpSynergy says.

Though the data to test that is not yet available, “it has to be the aim” says NPC’s Tris Lumley. “If you take the combination of factors – overall giving appears to be at best static or at worst in decline; traditional fundraising methods and charity brands appeal to older, not younger generations; and younger generations increasingly living and working online – then the online (include mobile in that) world is going to be where a great deal of giving happens, and is the only real hope for growing the overall size of the giving cake.”

These sites also reportedly facilitate higher levels of Gift Aid collection and cut fundraising costs. Ben Brabyn, managing director of Bmycharity, says they had secured extra millions for charities as a result of savings and believes the possible annual savings for UK charities could amount to more than £140m.

David Erasmus, a digital entrepreneur (see My philanthropic journey) who is involved in philanthropy on many levels, highlights another benefit of digital philanthropy; how it addresses one of the major barriers to giving – acting quickly in the moment of inspiration.

Erasmus, who has helped found a number of online social enterprises based in South Africa including clickego.com, and NoPc.org.uk, and runs a social impact business start-up incubator, called Cubate.com, says: “Many donors today want to give where and when the moment of inspiration hits them and mobile technology allows them to do that. We are used to sharing information and opinions immediately through social media sites such as Twitter and Facebook via our mobiles and we want to carry that through in our philanthropy.”

Cutting the time between thinking about giving and the ability to give could be crucial to increasing the number of donations, he says.

 “From the work we have undertaken in the commercial world, we see a correlation between the number of clicks it takes to complete a sale and the sale conversion rate; the fewer the clicks, the greater the number of sales. This could be applicable to giving – the shorter the time lag between inspiration and action, the greater the likelihood of a donation,” says Erasmus.

How slick could the giving journey become? Erasmus talks in seconds. Amazon, the online bookseller, has cut its selling time to around 20 seconds using digital processes, taken from the moment a person receives a book recommendation to the moment they make a transaction. Translating those processes to philanthropy, Erasmus describes a scenario where a person inspired by a charity poster campaign could use mobile technology to photograph a barcode printed on it that would take them straight to a donation page in a matter of seconds.

Digital technology is clearly increasing the speed of giving. It can also be used to create a sense of urgency to give. The Big Give’s matched challenge funds offer donors a short window of opportunity in which to make donations and have them matched (see case study) and adds an impetus for donors to act. Its first matched challenge raised £2m in 45 minutes. Helen Cable, The Big Give project manager, says, “By having a set time limit, donors know they need to act straight away in order to take advantage of matched funds.”

Of course, there is some nervousness around the ‘give and go’ style of giving that online and mobile media promote. It raises questions over levels of donor engagement. Even Bernholz muses in her Philanthropy 2173 blog on whether the long-term effect will result in what she calls ‘Donor Attention Deficit Disorder’.

“Just because we can now give $5 from our mobiles, while walking down the street, doesn't mean we can think any faster than before. That people all over the world can be so instantly engaged and moved to donate is certainly a good thing. But does it come with costs?

“Does the ability to give instantly and painlessly (mobile donors won't even see a charge for the gift until they get their next phone bill) make it extra easy to give and move on? Will ‘donor fatigue’ be replaced by ‘Donor Attention Deficit Disorder’?” she asks.

Migratory models

Like Erasmus, Bernholz believes that the digital behaviours we use in our everyday lives, such as online banking, shopping and the reservation of theatre tickets, restaurants and hotels, will continue to migrate to philanthropy.

Bernholz says, “What Haiti showed was the speed with which behaviours can go from cutting-edge to commonplace; mobile giving became a norm within 24 hours and we saw philanthropic expectations change.”

An example of this borrowing from daily digital behaviours is illustrated by GlobalGiving’s recently introduced peer-review facility, borrowing from sites like ‘Top Table’ that encourages user-generated reviews of restaurants. It allows people who visit GlobalGiving’s listed projects across the globe to digitally post back their findings.
Other examples include the Charities Aid Foundation (CAF) and Coutts Philanthropy application of online banking principles to philanthropy through their online charitable accounts that can be viewed and administered online alongside donors’ bank accounts.

The expectation is that our everyday digital behaviour will become more sophisticated as new applications, websites and technology evolves and so will expectations in how we give

“Applications that we regularly use in daily life, such as the one I use to check in real-time how far away my bus is, will be applied to how we give in the future, because that will be the expectation,” says Bernholz.

Erasmus’ soon to be launched GetGiving application is perhaps an example, offering a low-friction way for donors to make micro donations on Apple Iphone, Blackberry or Windows Mobile to selected charities in seconds. “We are empowering the individual with the right resources on a macro level,” says Erasmus.

It’s too early to know if digital technology will lead to a new type of philanthropy or whether it will only ever be a ‘virtual charity bucket’, but if it succeeds as a way to raise funds that do good, does it matter?

With a recent report by Forrester Research projecting that there will be 2.2 billion internet users across the world in the next five years, it’s likely charities will continue to leverage the internet and social media to meet more donors online.