eBay disintermediated shopping. Napster initially did the same for music and Wikipedia for information. More recently it has been Prosper for the sluggish industry of unsecured loans. What paradigm shifting changes has the Internet brought to the slowest sector of them all, the philanthropic sector? The answer might be online giving markets.
These organizations can be loosely defined as web-based, informational and transactional platforms that help donors and volunteers more easily identify and then contribute to or volunteer at high performing nonprofits, social projects or needy individuals. They empower pre-vetted organizations to access a wide and diverse base of primarily individual contributors and volunteers.
DonorsChoose.org has been referred to in the New York Times as “the Wikipedia of hope.” GlobalGiving has been called “The Charity Long Tail.” Fortune Magazine went so boldly as to title its feature article on Kiva.org, “The only nonprofit that matters.” In the United States, these innovative online giving markets have finally started to receive the attention they deserve and have started to shape the future of philanthropy, but the full story has not been told. If it’s not apparent in this blog-post, the sector’s inability to identify and support opportunities for innovation and progress is a great source of personal frustration. The fact that it is taking the philanthropic sector a decade longer than the private sector to identify and support this inevitable and emergent trend is quite disheartening and one of the main reasons why the smartest and brightest young professionals leave the sector (let’s not only blame salaries), but more on that in later blog-posts.
These online giving markets are also part of an emergent phenomenon throughout the world where home-grown but similarly modeled organizations like GiveIndia, Brazil Social Stock Exchange, Greater Good South Africa, HelpArgentina (full-disclosure: I co-founded this organization and am biased) and many more have quickly become important actors in their respective philanthropic ecosystems. Just like Kiva and DonorsChoose, these organizations are harnessing new technologies and adapting business concepts to change the face of philanthropy and increase levels of civic participation throughout the developing world. Each country brings a different history, political system, operating context, tax code, legal system, and most importantly a unique philanthropic culture. Whether or not these online giving markets become as important in the 21st century as community foundations were in the 20th century remains uncertain, but their impact is growing and must be better understood.
I will talk a bit about my organization, but first let me recommend a couple of seminal papers written on the more general phenomenon:
- Monitor Group Paper – “Future of Philanthropy – Online Giving Markets”
- Keystone Reporting – “Online Philanthropy Markets: from ‘Feel-Good’ Giving to Effective Social Investing?”
- Keep an eye out for a soon-to-be-released McKinsey study on the sector sponsored by the Hewlett Foundation
I co-founded HelpArgentina during Argentina’s worst crisis in 2002 and directed it (along with an incredible team) for four years until passing it on to the most able reins of Milagros Olivera. She has since matured the organization into one of the country’s preeminent institutions of which I am proud to still be permitted a seat on the Board. I have much to say about the organization but will reserve the best for later blog-posts and send you to our website for a description of who we are and what we do. Instead I’ll clue you in on a deep, dark secret: giving or philanthropy as we know it is over. Small organizations like Biblioteca Popular San Antonio, off the map in the forgotten Formosa province (ARG), have been able to fund enormously successful sustainable-business initiatives without corrupt government support; they used HelpArgentina to get access and then win the trust, hearts and minds of Argentines living in Madrid, London and New York. Led by social ambassadors like Agustina Blanco, these groups organized fundraisers to support the organization. This experience is happening everyday all over the world. It has no borders and no centralized authority: just HelpArgentina as a facilitator. In fact, last year’s third annual HelpArgentina Nights fundraiser drew more than 6000 people to participate in 191 separate events in 14 countries raising money for 25 organizations. HelpArgentina’s diaspora philanthropy/cross-border donation model is not used by all online giving markets but in some form, each of these organizations is changing the rules. Even politicians are starting to catch hold of this trend. It’s no coincidence Obama is the greatest fundraiser in the history of American politics, his campaign team has simply embraced a networked America whose grassroots are empowered more than ever before. Many organizations have started to harness this newly linked force of people but this is only the beginning. Without the infrastructure in place, we’re still driving horse and buggy.
The exciting thing is not the rise of online giving markets, but rather the implications this new social financial infrastructure will have on civil society and in the end, our way of life. Will it be the push needed to help quasi-democracies fully convert? Am I including the USA in that quasi-democratic category? I’ll leave it up to you to speculate.
Examples of Online Giving Markets (OGM) include:
- Brazil Social Stock Exchange
- Conexión Colombia
- eBay Giving Works
- Give Meaning
- Greater Good South Africa
- Modest Needs
The list above includes the OGMs participating in the Omidyar Network-sponsored annual OGM meetings. For the many that are operating independently, please add yourself in the comments. Thank you and I encourage you to collaborate more with your partners in this space; only together can we create the change our mission so ambitiously promises.
Lloyd Nimetz founded the online giving market HelpArgentina.org. While pursuing his MBA at Stanford Graduate School of Business, Nimetz has focused on for-profit business models that address social challenges. This summer he will launch a payments platform for India’s bottom billion.