Wednesday, October 15, 2014
On the March to Efficiency: Millennials & Charity: Water
A concept that I have introduced through scholarly writing and blogged about here is the need for a more efficient charitable market. In August, I commented upon a Vanguard Charitable study that found millennials are more likely to see their charitable giving as a form of investment and thus promote a culture of giving that demands more transparency and accountability, two hallmarks of a more efficient charitable market. A recent NPR broadcast that examined the work of Scott Harrison’s nonprofit, Charity: Water, confirmed just that.
In the segment, Harrison spoke about his dual purpose in forming Charity: Water. First, he wanted to provide clean water to the almost 800 million people globally who lack access to it by building wells. Second, he sought to make an example of how a nonprofit could do its work in a way that would resonate with the next generation of givers. He recounted his own experience of being hesitant to give to charities prior to starting Charity: Water, which stemmed from the absence of information on how a charity would use the funds. Today the nonprofit world is concerned with how approximately 80 millennials make their decisions about giving, and not surprisingly, it is different from the prior generation(s). As stated in my prior post, it is widely accepted that millennials want to view their “donation” as “investment,” and at least one commentator recommends that nonprofits refer to the latter. Another salient point is how technology intersects with millennial giving. Millennials value their time, and as a result, any form of technology that makes it easier for them to invest is preferable. Moreover, the Ice Bucket Challenge that swept through social networks over the summer shows that the desire of millennials to share the details of their lives extends to their giving. In response, Charity: Water is utilizing a birthday campaign where donors can ask their network to donate one dollar for each year celebrated, i.e., $25 dollars to celebrate a 25th birthday. Charity: Water is also placing sensors on its wells, so donors may interact with the impact of their investment in a novel manner. Charity: Water’s innovative approaches are proving successful. They have helped over 4 million more people in twenty-two countries gain access to clean water. Millennials and nonprofits like Charity: Water may just help move giving into the next century and towards a more efficient charitable market.
Thoughtful post. The increase of donor control is certainly an interesting trend, but I want to hear more as to why this is exactly a benefit. For a contrary view, see Ostrander, Growth of Donor Control. You might be right, but I need to hear more to be convinced. I see a couple of possibilities. First, it might increase the share of giving by those who otherwise would be reluctant to trust an organization with their charity. If so, it is instrumentally useful by increasing the share of charity. Great! I’m not sure I’m completely convinced that this is empirically true, but if so, good news.
Second, it might increase the donors’ influence in the organization. This, however, strikes me as not inherently good nor bad, and potentially quite harmful. To the extent that it leads to more efficient transfer of donation into a charitable good by, for example, reducing unnecessary costs, great. And, to the extent you adopt the view that there is some inherent value in honoring donors’ preferences --a perspective that I think would be hard to justify --then the trend is a good one. But in terms of improving outcomes, it is also quite plausible that donors lack enough information to actually make good decisions, and their oversight (or “investment” as some call it) leads to suboptimal results. This could result if, for example, they fail to understand the true needs of the beneficiaries served (whether termed philanthropic paternalism or simply ignorance). Being good at business does not always mean you’re better at charity, and the incentives to invest in information and monitoring for a personal financial investment are a lot higher than making sure donated dollars are properly spent. Further, this pressure can force a nonprofit to cut corners in terms of the non-quantifiable aspects of the mission, or to reduce investment in longer-term results. This can be very bad. You might say, well, donor control can be incomplete and erroneous, but better some oversight than no oversight. Maybe, maybe not. Again, seems like an empirical question. Moreover, I am far from convinced that creating a bunch of new nonprofits (like Charity: Water) in an already crowded field, instead of using existing nonprofit infrastructures will lead to efficiency. Another, more plausible outcome, is that you miss out on economies of scale, and people will start new organizations simply because they desire power. (Final point: The examples you give of fads like the ALS ice bucket challenge suggest, to me anyway, that donors are not necessarily making decisions based on the efficiency of the organization but other, more random reasons.)
I assume you go into all of this in the scholarship you mention; perhaps you could point us in that direction?
Posted by: Joe Mead | Oct 16, 2014 12:34:35 PM