Donations to Social Causes: Closing the Loop

[As I was doing some blog spring cleaning, I came across this post, which I had written back in November '08. For some reason, it slipped through the cracks and I never clicked "Publish." At the time, it was just speculation; but more than anything, it's interesting to see how groups like CharityWater are now doing a much better job increasing transparency in charitable giving than what I described here.]

We’ve all seen the ads: “For only pennies a day, you can make the difference in the life of a child.” The thing is, this is absolutely true. Whatever the cause, whether it’s children in Africa or the homeless in your neighborhood, it doesn’t take much to make a difference. So why are so many of us reluctant to take that step, even if we believe it would be money well spent?

I had the pleasure of catching a live speech from Anderson Cooper in October. He summed up the issue very plainly, saying “transparency is the key to giving money.” This may not seem particularly profound, but it’s implications are. The biggest impediments to greater charitable giving as I see them are the following:

We don’t trust the brand. Who would give money to an organization they’d never heard of, no matter how passionate a one might feel about the cause they claim to support? Larger organizations like the United Way and UNICEF attract donations despite the fact that they suffer from (relatively) massive overhead and there is no direct feedback about where one’s donation might actually be going. This is because they have built trusted brands, and donors know that these organizations sacrifice a certain degree of efficiency for trust.
We don’t think it will make a difference if we’re the only ones contributing. A great majority of the decisions we make every day are dependent in a more or less direct fashion on our perception of others’ decisions given the same choices. It’s rooted in our DNA — throughout our evolutionary development, our ancestors were the ones who survived by keeping with the pack, while those who set off on their own more frequently took themselves out of the gene pool. In practice, this is why right now Wikipedia has a graph at the top of every page indicating collective progress towards their fundraising goal of $6 million. To this end, I see services like The Point having a significant impact as they become more mainstream.
There is no money-back guarantee. This is invaluable in making purchase decisions. I may completely trust and even vouch for a brand like Apple, but if they accidentally ship me a faulty iPod I had better be able to get a new one to replace it. Conversely, I might be willing to make an online purchase from an unfamiliar supplier as long as I know I can get my money back if I don’t get what I paid for. There is no equivalent accountability in charitable organizations, but maybe there should be.
We can’t see the direct results of our contribution. Even if I trust the “brand” of an organization, this is the final sticking point when it comes to making an actual contribution. If I knew that I could directly purchase lifesaving malaria vaccines for a dozen children in a developing tropical country, I’d do that in a second — after all, it would only cost me a few dollars. But with most charitable giving, there is absolutely no way to know where my money has gone. As a result, I’m going to be much more reluctant to give than if I can see the direct results.

In my mind, the internet and the many different channels of social media have the potential to remedy most if not all of these inefficiencies and ultimately drive verifiable social change around the world. As I’ve written before, social media creates unprecedented opportunities for the dispersal of messages that are truly actionable. Transparency, in the form of feedback and accountability, is the key to closing that loop.

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