Friday, February 15, 2008

Distributed Funding - Some Early Statistics

As the idea of distributed funding becomes more mainstream, it becomes important to settle on some ways of measuring its effectiveness.

Slate recently posted an article on the topic, and points to some early statistics for electronic giving:
To date, sums raised have been relatively modest, though the trend shows movement in the right direction. According to the latest Chronicle of Philanthropy survey, electronic giving to the nation's largest charities, which has been growing at a rapid clip over the last five years, increased at an average rate of 37 percent in 2006. The portals Network for Good and, which allow donors to contribute to a variety of charities, saw increases in giving of 50 percent in 2007. And yet Internet giving still constitutes a tiny portion of total dollars raised—typically between 1 percent and 5 percent of an organization's overall contributions. Donating via social-networking sites (such as Facebook Causes, MySpace Impact, or any number of cause-related networks like or accounts for an even smaller share. The greater promise of viral philanthropy may lie not in electronic check writing, but in increased involvement; 21st-century technology for philanthropos in its most ancient sense.
The fact that electronic giving constitutes a small portion of overall donations shouldn't come as a surprise - it's still early in the game and most established individual contributors aren't accustomed to giving online. In contrast, new donors - younger people who are just beginning to become habitual givers, and those not local to a given organization - are much more likely to use the internet as they look for a cause to support. As these trends become more prevalent, organizations that show up online are much more likely to receive support. A robust presence in multiple locations online will make it that much more likely that your organization will be first in line to receive these new donors.

The key take away though is the idea of "increased involvement" as the most important outcome - check writing is actually byproduct of this primary goal. Engagement is critical for these new donors - and the way to get them engaged is to create an infrastructure in which they can interact with the organization and other supporters. Today, social networking is the best tool available to accomplish that. The tools may change over time, but the underlying trend will not.

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