NEW YORK (AP) — Millions displaced by global conflicts. Communities reeling from unusually severe natural disasters. Lives are turned upside down due to health care inequality.
Caught in the middle of these crises are established nonprofits, everyday individuals, and mutual aid groups – all looking for your money to make a difference. But how should you donate now that there is no shortage of charities and the emergence of new donation technologies?
The choices can be immobilizing for those who want to open their wallets. Many value conventional charities. But others — Gen Z and millennials, as well as unmarried and less religious people, according to 2021 research from the Indiana University Lilly Family School of Philanthropy — are into crowdfunding by pooling online donations for people in difficult circumstances.
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The approaches reflect different assessments of impact and reliability. But they are not necessarily against it.
“The question is really: What is the right type of support that an organization, a community or an individual needs?” says Todd Baylis, Chief Customer Officer of Bloomerang, who co-founded a platform that helps nonprofits raise money online. “And being able to tailor that to the individual donor.”
Here are some questions worth considering as you determine which assistance best suits your goals:
What impact do I want to have?
It could come down to whether you want to make a big difference for one person or help bring about large-scale change.
Tiltify is a technology platform that helps nonprofits and individual crowdfunders raise money. If donors want to ensure food gets to communities recovering from disasters, Michael Wasserman, CEO of Tiltify, says a nonprofit contribution is probably best because established organizations already have distribution pipelines and built-up expertise.
But if you want to ensure that a given person can take care of themselves, he says, donating directly to a crowdfunding campaign may make more sense than sending money “through a charitable funnel.”
“It really depends on what your goal is as a donor: whether you’re trying to help someone specifically or whether you’re trying to help people in multiples,” Wasserman said.
According to a nonprofit organization that provides money transfers, you could do both at the same time. GiveDirectly reports that more than $860 million has been sent to 1.6 million people on three continents. Senior program manager Richard Nkurunziza says the idea was initially met with fears of abuse. But GiveDirectly believes cash donations are a worthy way to empower poor people to invest in their unique needs.
In Rwandan villages, he said, recipients have spent donations on household renovations, new businesses and youth education – ultimately benefiting the entire community.
“There is a bit of freedom of choice,” Nkurunziza said. “It gives the recipient the opportunity to make a decision about how to use the money for themselves.”
Crowdfunding could be considered more ‘democratic’, according to Claire van Teunenbroek, professor at the University of Twente, who specializes in online donation behavior. That’s because donors have more control over the use of their gifts when they choose exactly who benefits.
The downside, she says, is that people with the greatest needs are not always the ones with the most success. People tend to support ‘easily marketable’ projects with high emotional appeal. Studies have also shown racial disparities in crowdfunding.
How can I trust the cause?
The most popular reason donors told Bloomerang they were stopping donating was because they didn’t trust contributions were being used wisely, according to the company’s Generational Giving Report. The second most common response was that donors no longer felt connected to the nonprofit they had previously supported.
The answers underline the need for recipients to actively prove their trustworthiness.
Tax-exempt nonprofits must file annual financial information with the Internal Revenue Service, including publicly available information, including executive salaries. Watchdogs, such as Charity Navigator, compile lists of verified nonprofits and review their work.
Crowdfunding may be useful, but it is much more susceptible to fraud. The online sites are relatively unregulated, so the responsibility for protection lies with the donors and the platforms themselves. In the case of GoFundMe, donations can be refunded up to one year after they are made. The company also advises organizers to identify themselves and their beneficiaries and specify their plans for spending contributions.
Online users wrongly associate high donation numbers with credibility, according to Van Teunenbroek. She said risks are better mitigated by ensuring the project description is detailed.
“If a donor wants more certainty, traditional nonprofits are probably better because they have an established reputation,” she said.
ALSAC CEO Rick Shadyac said his charity is working hard to give donors confidence that their money supports St. Jude Children’s Research Hospital’s mission to improve childhood cancer survival rates worldwide by reducing the cost of care and research into treatments to cover.
Shadyac encouraged people to give regardless of the medium and always look for reputable causes. Bona fide charities, he said, provide “a greater degree of trust,” while crowdfunding requires more “due diligence.” But he sees room for both.
“They should actually complement each other,” he says.
“Some of this is more in the area of microphilanthropy, where they may want to help a specific individual because they found themselves in difficult circumstances,” he added. “But if you want to help children with cancer, you want to help cure heart disease, there are charities that have a strong focus on that.”
What will I get out of it?
ALSAC gets nearly a quarter of its annual revenue during the last two months of the calendar, Shadyac said, around the time of year referred to as “Giving Season.” The uptick could come from the generosity around the holidays, he added. Sure enough, a 2023 study found that people in a good mood are more likely to make a charitable donation.
They may also be making their tax plans for the end of the year.
“Not-for-profit organizations give them the opportunity to address some of the issues that are important to them and get tax deductions at the same time,” Shadyac said.
However, crowdfunding donations to individual campaigns cannot be written off against your taxes. But crowdfunding can make it easier to identify with the ultimate beneficiaries of your gift, Van Teunenbroek said.
What about mutual aid?
Mutual aid refers to reciprocal support networks of neighbors who quickly meet each other’s most pressing needs when existing systems fail to heal them. Because of these mutual bonds, participants often describe the act as “solidarity, not charity.”
In the Internet age, these groups often solicit cash contributions through online payment processors such as Venmo, Cash App, PayPal or Zelle. Anyone can scan QR codes, usually posted on social media accounts, to donate. The money goes directly to those affected or helps buy supplies for shared resources such as community refrigerators. Transparency can take the form of a screenshot receipt shared by organizers on their profile.
Tamara Kneese joined several mutual aid efforts to care for her neighbors in Oakland during the early days of the coronavirus pandemic. Kneese, director of the nonprofit research institute Data & Society, said these groups tend to start as an immediate response to crises that acutely harm underserved communities. The idea, she added, is that “out-of-state exit cannot be addressed through charitable giving alone.”
Kneese said the challenges of such bottom-up grassroots groups are that resources are dwindling and people are burning out. Only a limited number of requests can be fulfilled. The organizers’ politics clash.
The benefits, she discovered, are that the support comes from the community and members have direct interaction with those who use it.
“It’s not just a sense of charity, like you make a donation and you’re done,” she said. “There is more of a relationship and it is not just transactional.”
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Associated Press coverage of philanthropy and nonprofits is supported by the AP’s partnership with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content. For all of AP’s philanthropy coverage, visit https://apnews.com/hub/philanthropy.
