Found: Too much donor power

Last week I wondered if there can be too much donor power.

I think I've found a case of it. My Merkle|Domain colleague Naomi Cooper pointed it out: RealityCharity, which bills itself as the first "person-to-person giving platform."

(You can read more in this Washington Post article: Site Promotes Direct Giving Over Groups.)

At RealityCharity, people in need describe their situation and make a pitch for money to help them out of it. Donors who are touched by what they see can give gifts to specific people in need.

Much of the motivation behind RealityCharity seems to be the "inefficiency" of nonprofits. Here's what it says on the FAQ page:

The traditional model for ... charitable giving is extremely inefficient. All of us have read recent news articles detailing incidents of waste, fraud, corruption, high overhead and mismanagement at some of the large non-profit organizations. Some of these are wonderful organizations that perform important services around the world. However, history has demonstrated that while they are good at raising large sums of money when a crisis occurs, they are not as good at disbursing all the money directly in the hands of the actual people who are in dire need in a timely, efficient, or transparent fashion....

Of course, very few nonprofits have a mission of "disbursing money directly into the hands of people in dire need," but the itch is understandable. Many donors want a sense of direct connection with those they help without it getting lost, diverted, or frittered away.

Here's an example of how it works at RealityCharity: "Anne," who needs $5,000 to pay for her wedding and for dental work:

My boyfriend and I have been together 10 years and have always wanted to get married.... My front 2 teeth are almost gone, and I'm in pain all the time. I want to finally get married this June and would love to have my wedding pictures showing a beautiful, healthy smile....

If you're moved by Anne's story, you can go right now and give her a gift.

I can see RealityCharity as a platform for people to do good deeds, but that's about it. It just doesn't deliver the structure and vision we normally expect from a nonprofit. (And the IRS would agree with me on that; these gifts to individuals are not tax deductible.)

1. There's no central vision. No method, no forward progress. We normally expect our charities to bring those things to the party. Otherwise you just have disconnected good deeds (at best), not something larger. When you and I both give to a great nonprofit, 1+1=3 (despite overhead costs). At RealityCharity, 1+1=2. If that.
   
2. While there's some rigor about verifying those seeking gifts at RealityCharity, you have to wonder about quality control. Is $5,000 really going to solve Anne's problems? Maybe she needs a lot more -- or a lot less -- applied in a different way. Is there someone who knows and loves Anne and knows the right ways to help her? No, it's just Anne, alone, hoping to drum up some cash to solve her problems as she sees them now.
   
3. Finally, RealityCharity creates an atomized, market-driven approach, not community. A great nonprofit creates a community around the cause.
   

   To be fair to RealityCharity, a lot of normal nonprofits also fail in these areas. Moreover, inefficiency and fraud in our sector are real problems that donors can't (and shouldn't) ignore.

   But a solution that cuts out the "middle man" and connects donors directly to need with no value added -- that's not donor power. That's a cop-out.

   
   

   Technorati Tags: fundraising, RealityCharity

Comments

[Jeff Brooks]

What most of those kids need is an adult who can help them focus on what they really need in life -- which in nearly every case isn't getting a free ride on their student loans. RealityCharity doesn't offer that. So, in theory, a kid with a great sob story gets something that won't do him any real good -- so useful charity doesn't happen. Of course, it's a little hard to imagine any donor actually giving in these cases. The people at RealityCharity would probably say that's the point: stupid needs just won't get met.

[Becca]

This is outrageous. Let's take "Student Loans", a category on Reality Charity. My friends and I are all in our twenties and need money for compelling reasons; we have big dreams and most of us are paying off student debt. Are we all charity cases suddenly? It floors me that these individuals who wouldn't be caught dead on a street-corner peddling for money find it acceptable to do it online.

As a millenial myself, I can't believe the sense of entitlement that those requesting student loans payouts believe they deserve. Student loans are not a charity case. It's life. Learning how to deal with basic issues and problems, overcoming challenges, is what builds your character. And that's true with the majority of categories and stories on Reality Charity.

If these donors want a sense of direct connection with who they are giving to, maybe they should leave the glow of their computer screens every so often.

[Jeff Brooks]

I think it's worth noting the RealityCharity isn't an otherwise normal nonprofit that screwed up through an excess of donor power. It's an organization that has donor power and nothing else. In the end, what they offer donors is pretty thin.

If an organization brings plenty to the table and has clarity of vision, offering lots and lots of power to donors (including restricted giving!) they'll get more revenue, more advocates, more volunteers, even more ideas. If they have their act together, they won't get hijacked and forced off point by micromanaging donors.

[Holden]

Hear, hear. I'm glad to see you acknowledging that donor power can go too far.

I just wonder at what point you draw the line between restricted donations and something like this. To me, almost all restricted donations - especially those earmarked away from overhead - have all the problems you describe. Donors generally use restriction to "cut out the middleman" and micromanage a charity that should be using its own vision, creating its own synergy, and letting them say yea or nay.

There are many charities whose funding doesn't match the priorities of their mission, exactly because of this problem.