FUNDRAISING BULLETIN!

“An enterprise blockchain cryptocurrency company just funded every classroom project request on DonorsChoose.org.”

Yes, I realize that half of that sentence wouldn’t have made a bit of sense five years ago.  It may not even make full sense now.  So let’s break it down.

Ripple is the name of the enterprise blockchain solutions company (yes, the post title is a pun; are you retroactively laughing?).  They have created a cryptocurrency (like Bitcoin, but not Bitcoin) called XRP to help send money globally.

DonorChoose.org is a crowdfundraising platform.  It allows teachers to post projects they would like funded in their school.  The request goes out to donors, who can fund all or some of the project.  As you browse the site, you’ll see some strong behavioral science techniques, including goal proximity, endowed progress, set competition, and matches.

That’s interesting in and of itself.  Focusing on this one major donation, however, there are two important, intersecting trends: 1) the changing role of corporations in philanthropy and 2) the move to create donor control over donations.  (No, the issue of “blockchain” isn’t important.  I know only enough about blockchain to know that no one knows enough about blockchain.)

Corporate philanthropy.   I see a trend where corporations are moving to “safe” causes or running their own philanthropy efforts, for a few reasons:

• Damage control. If you are Nike, you would rather have your swoosh on your own foundation than on Tiger Woods’ or Lance Armstrong’s when those athletes were at peak radioactivity.  Hence their focus on the Nike Foundation and adolescent girls’ development around the world.  This is an extreme case, but picture insurers who partner with nonprofits. They laud the advocacy these organizations can do to prevent societal harm, but can be in conflict with those same organizations when they advocate for individuals to get payment from (wait for it) their insurance companies.  Other for-profits can find themselves on opposite sides of political issues from the organizations they support. It would take some effort to get angry about a company funding underfunded teachers’ wishes for their classrooms with no underlying advocacy.
• Message control. Look at AT&T’s “It Can Wait” campaign.  They’ve been the largest U.S. effort to prevent texting and driving.  The campaign also frames the debate about texting and driving: we are looking at AT&T as a proactive part of the solution, not like we would look at a cigarette company or corporate polluter looking to purchase indulgences.
• Awareness.  AT&T reports a 11-29% increase in Net Promoter Score (an imperfect measure, but it’s what they use) among customers who have seen the “It Can Wait” campaign.  This seems to be a strong reason for Ripple to try to create ripples (see, I did it again!) in the philanthropic pond, raising awareness about itself and blockchain.

All these are reasons why DonorsChoose.org’s corporate partner page is rivaled by only a few other organizations.  Personally, I see more of them working to start their own corporate giving arms because of the reasons above.

Increased designation.  The entire DonorsChoose.org platform is set up for donors directing their donations to specific campaigns.  In DonorVoice’s testing, we have always – every time – seen donors prefer being able to direct their donation (usually with a “use where needed most” option) than having no flexibility.  This is backed up by research here and here. And DonorVoice’s Dr. Kiki Koutmeridou has shown how donor control (in this case over communications) can get people to opt in.

This is a great and terrible thing.  “Great,” because I’m in favor of most things that would get people to take more of an interest in philanthropy.  If seeing a discrete impact of their gift on a designated community helps people take that step (and it does), so much the better.

“Terrible” because while crowdfunding can be efficient in distributing gifts, it isn’t changing systemic issues.  DonorsChoose.org does a great job – I’ve been and will be a donor – of helping teachers get needed supplies.  But it isn’t going to address “why” those teachers haven’t received those supplies to begin with.  A crowdfunding site can raise funds for a needed surgery.  It does not address why the surgery was so expensive or why insurance did not cover it.

As Dr. Martin Luther King, Jr., put it, “Philanthropy is commendable, but it must not cause the philanthropists to overlook the circumstances of economic injustice that make philanthropy necessary.”

This is especially true when crowdfunding reflects and reinforces structural issues.  Looking at Kiva, a crowdfunding site for microloans, researchers found that people who were one standard deviation…

• More attractive had an 11% shorter time to get full funding.
• Heavier had a 12% longer time to get full funding.
• Darker in skin color had an 8% longer time to get full funding.

For perspective, asking for 10% more money increased the amount of time to complete the loan by 13%.  So, being more attractive and thinner than the average was the same of getting almost 20% more money.

Blaming the crowdfunding site for this is like blaming my mirror for what it shows me in the morning (when I really should be blaming the mirror, right?  RIGHT?).  We are hardwired to give to those where there is minimal social distance.  That means supporting “us” more than “them.”

That is why it’s important for us to walk a tightrope, allowing donors to designate their gifts as they wish, but encouraging them to give to an organization that can create systemic change and not relying on a picture when assessing fundworthiness.

Nick