​​Welcome to the giving layer of the Internet

March 29, 2017 • By TAB team

The giving layer of the Internet. That’s how GoFundMe founder Rob Solomon describes his creation and its swelling congregation of peers.

The giving layer of the Internet.

That’s how GoFundMe founder Rob Solomon describes his creation and its swelling congregation of peers.

‘Social giving’ platforms enable non-profits and individuals to raise money from the crowd and direct it to people in need. But can this mash-up of e-commerce and social media really revolutionise charitable giving and drive meaningful social change?

The numbers speak for themselves. 22% of American adults have contributed to an online fundraising campaign and 3% of American adults have created their own online fundraising project. Rewards-based crowdfunding accounted for an estimated $5.5 billion in funding in 2015. For major charities and foundations, these statistics are impossible to ignore.

Crowdfunding enables non-profits to break through the noise and cultivate brand awareness with donors via engaging content that is emotive, fun and sometimes downright bizarre.

But it’s not all smooth sailing. Non-profits are still getting to grips with this new arena.

An ever-growing number of charities are competing for donations and keeping hold of donors is becoming ever more difficult. Furthermore, contributions made via crowdfunding tend to go to individuals in need. 68% of people donate to help an individual facing some sort of hardship or financial challenge. Charities seeking to attract donations to address universal social issues are now competing for attention and capital with a raft of personal causes.

The democratisation of philanthropy risks undermining traditional institutional relationships between charities and government. Funds previously collected and distributed via established channels – with considerable expertise and oversight – are now going straight to those who need them. 87% of crowdfunding donors believe platforms help them feel more connected to the projects they support. Great good will come from disintermediation, but much abuse, too.

As a consequence, donors are seeking evidence that their contributions are being used appropriately, demanding a kind of social impact R.O.I. Leading non-profits, like The Bill and Melinda Gates Foundation, have been at the forefront of this movement. A recent letter to Warren Buffett thanked him for his magnificent donation to their foundation and reassured him:

“Philanthropy isn’t like business. We don’t have sales and profits to show you. […] But there are numbers we watch closely to guide our work and measure our progress.”

But others have been slower to adjust to new standards of transparency and accountability. Freshly launched platform DonorSee aims to exploit this deficit to transform the way people support charities through transparency. Co-founder Davis Bae explains:

“With large charities, you give, and you get a thank you email back […] With DonorSee, shortly after giving, you receive a video showing exactly how your money was used to change someone’s life.”

This is a good start, but video isn’t enough. Charities and social giving platforms need to evolve a new market standard for transparency and accountability. In time, an entire ecosystem of companies could and should spring up to evaluate the efficacy of charitable giving.

In truth, charity crowdfunding isn’t just changing how individuals and non-profits approach fundraising for worthy causes. It’s changing how people perceive the act of giving.

This trend towards greater transparency from individuals, charities and platforms requires data – both quantitative and qualitative – and better and more engaging ways of communicating that data to donors. Crowdsurfer is doing pioneering work in this field. Our platform makes it easy to track and analyse activity in charity and rewards based crowd finance.

Crowdfunding is a huge opportunity for charities and the world at large. Social giving should be seen as an expansionary force that’s growing the market for charitable giving on both supply and demand sides rather than stealing market share from traditional approaches.

In time, charities will adapt to and fully adopt crowdfunding, learning how to consistently raise large volumes on a sustainable basis. This will require a deeper understanding of ecommerce, social media and the complicated ways that people use technology to make themselves feel more human.

In turn, the world of social giving needs to learn from established players in the charitable sector, adopting the same standards of accountability and rising to the challenges posed by disintermediation – namely transparency, accountability, measurable impact at scale. The global regulatory response needs to be proportionate, adept at balancing the risks and rewards posed by crowdfunding in the charitable sector.

This learning process depends on access to global information and data on the crowdfunding market. Here at Crowdsurfer we’re working to address this urgent need, making the crowd finance market easier to understand and navigate for charities, foundations and regulators everywhere, nurturing the giving layer of the Internet.