Future Foundation: The digital donor – digitally evolved philanthropy

Karen Canty, Future Foundation, explains why the traditional charity bucket will soon look a little old hat as the digital revolution takes hold…

The digital revolution is making charitable giving a more convenient and transparent process as well as an increasingly engaging, social experience.  And as consumers develop ever-closer relationships with socially networked digital devices and online environments, charitable organisations are presented with new opportunities to engage people with worthy causes.

According to the UK’s Charities Aid Foundation and its Disaster Monitor report (2010), disaster relief donations made by UK consumers are increasingly likely to be made via the internet and mobile phones.  Indeed, the proportion of donations made via online methods to major catastrophes abroad (such as the 2009 Asia-Pacific disasters) increased throughout the 00s decade. The majority of charitable organisations now accept donation pledges made online.

However, the digital realm offers much more than just another channel through which to collect charitable donations.  In this article, we explore a number of innovative services that marry the tenets of the online space – transparency, social networking, convenience, group commerce – with the charitable sector.  From micro-finance schemes that allow groups of donors to target funds to particular individuals, or projects to apps that open up the possibility of giving-on-the-go, we are presented with a nascent but intriguing template for the future of charitable giving.

Pick your own cause

Consumer attitudes towards transparency in the charitable sector are clear; the more open a charity can be about its operations and its efforts to see that resources are reaching the end cause, the better its chances of sustained revenues.   In fact, according to the UK’s Charity Commission, 42% of adults agree that “ensuring that a reasonable proportion of a charity’s income reaches the end cause” is the most important single factor influencing their trust in the charitable sector. Nearly all (96%) agree that it is important to them that “charities provide the public with information about how they spend their money”. (Source: Public Trust and Confidence in Charities report 2010).

“I would be more likely to donate money to charity if I could track exactly where my money was being spent”

And as we can see from the chart above, taken from Future Foundation’s proprietary research resource nVision, the majority of consumers  (60%) say that they would be more willing to donate money to a charity if they could track exactly how and where it was being spent.  Transparency is key in an ever-more savvy world.

A number of innovative charitable micro-financing initiatives – online marketplaces that effectively match-make donors with grassroots causes – address this demand for transparency and proof of reach by allowing people to personally select specific causes and individuals to support (either through traditional donations or charitable micro-loans).  In all cases, donors/lenders are able to track exactly how donation/loans will be spent, with regular updates delivered via the internet.

A great example of this new world of charitable match-making comes from US-based online charity DonorsChoose.  The charity claims that US public school teachers can spend up to $40 of their own money every month on classroom “essentials” – so to ease the burden, it invites people to donate money to classrooms in need of new equipment. Teachers post funding requests on DonorsChoose.org to which donors can contribute (usually pledging a small proportion of the total funding). Once a project reaches its funding goal, the charity delivers the materials directly to the school.

Donors receive updates on the project they have supported as well as a thank you letter from the teacher. In an attempt to illustrate the process’s transparency, donors are given a “cost report showing how each dollar was spent”.  As an added incentive, those donating over $100 also receive a hand-written thank you letter from school pupils; a unique and lasting memorial to mark your charitable act.  Launched in 2000, by 2010 the charity claims to have raised $57 million in materials, reaching 3 million pupils.

Turning to China, innovative online micro-finance service Wokai – which translates as “I Start” in Chinese – connects donors from around the globe with entrepreneurs in rural China.

The site gives donors the rare opportunity to personally manage where funds are directed.  Borrowers have profile pages complete with information about how they will use the loan and lenders can spread funds across several borrowers. Progress is tracked over time by field partners and once the money is repaid, lenders are invited to re-invest funds with other individuals.

In summer 2010, 350 rural Chinese (typically farmers requesting funds to buy feed for livestock or to expand their business locally) were receiving loans from international donors, a figure the organisation hopes to raise to over 5,000 by 2012.

The expanding world of digital donations

In the digital world, barriers to giving are rapidly disappearing ; in a matter of clicks, people can transfer funds to any number of charitable causes, situated in their locality or further afield. Charity aggregator sites make the act of giving, even to very specific causes, an incredibly straightforward and convenient procedure.

Some examples:

• Founded in the UK in 2007, theBigGive.org.uk is a not-for-profit online portal which helps donors find and support the charities which particularly interest them. In October 2010, the site featured over 7,000 international charities. The Big Give is free to registered UK charities (though the Charities Trust receives 4% of donations to cover administrative costs) and it hopes that by featuring on the site, charities can save fundraising resources.

• Virgin Money Giving (launched in 2009 as a not-for-profit) connects people with a vast array of charitable causes that they can support either through a simple donation or by setting up a special fundraising event. Charities are charged a fee to appear on the site and the organisation takes 2% of donations to cover running costs. Charities also pay fees to appear on JustGiving, another online service providing access to individual fundraisers and established charities.

• LocalGiving.com (not-for-profit) invites people to “make a difference in your local community” by supporting charities in the local area; visitors enter their postcode to find charities in their immediate area.

• Finally, smartphone apps such as GetGiving hope to provide a “low-friction way to make micro-donations on your iPhone”.  However, this largely depends on smartphone operators (Apple included) allowing “direction donation” apps to be published; a step they have so far been reluctant to make.

The Digital Donor: The shape of things to come

The collection of (albeit niche) initiatives we present here speak to a number of key consumer trends for the new decade, ranging from growing interest in corporate transparency and local issues to the relentless growth of digital living and expectations of convenience.

A strong theme running through is that of donor incentive and reward. More than making a simple financial contribution, digital donors are incentivised by the offer of unique relationships with those they are supporting (via personal messages and regular feedback), an altogether more personalised charitable mission and, in some cases, the opportunity to share news of charitable behaviour through personal social networks (earning valuable social capital in the process).

How will digital donors of 2020 be incentivised? Can we envisage the offer of webcam chats with charity field partners on the ground? Will gaming mechanics soon permeate the giving process so that charitable acts are rewarded with digital badges, achievement-recognition and personalised rewards? When will popular social games such as Farmville spin off as real-life charity games? Will we soon put our real-time Wokai/Oxfam/Kiva/JustGiving “Personal Charity Score” on the e-CV?

The future, we suggest, will be also one in which charities increasingly leverage digital technologies and social media to complement digital behaviours and to meet consumer expectations of charitable best practice (hyper transparency, guarantees that funds reach recipients, due diligence, impact assessment, etc).  As digital living becomes second nature to consumers across the globe, the dynamics of charitable giving are likely to undergo significant modification. Will the traditional charity bucket soon look a little old hat? We suspect so.

Digital donors defeat geography and, in their own way, accelerate globalisation. The importance of our trend thus stretches beyond the charitable act itself. For millions of donors will growingly recognise that they can engage in what we might call their own webcam diplomacy – checking the here-and-now impact of the money they have given or the causes they support without too much intermediary static from bureaucrats or politicians. This is a story of deepened consumer empowerment as much as a story of cyber-solidarity.

Increasingly, we will not have to wait for news agencies to dramatise the cholera in Chad; or learn how well the primary schools in the Rift Valley are progressing or the farm cooperatives in Uganda. The integration of the supporters of a charity such as Medecins Sans Frontieres on Facebook and Twitter (MSF has over 300,000 people on its Facebook page) is just one example of just how much real time update and exchange on a charity’s issues-of-the-day can take place.

Giving becomes a much less passive endeavour in a much more inter-personalised world.

The article is an extract from an nVitro feature, Future Foundation’s bank of nascent and emerging trends.  For more information about this article, or about Future Foundation, please contact Karen Canty on 020 3008 4889.