Reasons why you should rethink how charity works

A closer examination of an ethos that has grown to despise mixing financial incentive with social good.

Before we start, it is necessary to clarify: There are bad actors in every society, every sector, every industry. The nonprofit sector is no exception.

The case we present here is not intended to justify any malicious or selfish actions carried out by these bad actors. In fact quite the contrary — we wish to propose a new initiative to change charity fundraising: to place the power in the people, to drive Effective Altruism.

Root of Current Problems: A Destructive Status Quo

Running a nonprofit is challenging. It is even more so when paired with insufficient resources and social expectations to keep overhead costs low.

There has been a long-standing stigma against risk-taking initiatives for nonprofits to drive innovation and greater profits — a polar opposite of what the for-profit sector has been accustomed to. This is partly due to a common confusion on the term “nonprofit” itself.

Nonprofit organizations require profit.

Profits are used to further the operations of an organization itself and ultimately to facilitate the provision of benefit to the public at large. A social stigma against healthy profit generation has been the root cause of several crippling effects that stunt growth.

If a nonprofit invests in a fundraising campaign and it fails, the reputation of the organization is tarnished. But in most cases, failure is an integral and necessary part of innovation.

For-profit businesses can sell investors on their promise for future profits in order to raise funds; such stream of capital would be unthinkable for charities, but the fundamental motives behind fundraising are the same — to further the organization’s mission. A double standard against nonprofits make expansion and growth far more difficult.

Social entrepreneur Dan Pallotta framed this problem brilliantly.

As long as nonprofits don’t embrace risk-taking and innovations, they continue to stagnate while their for-profit counterparts continue to attract talents and drive change.

It is time we seriously question the way nonprofits are run, and the way we view them.

Accessories to a Vicious Cycle: Limited Marketing Spending & Recruitment Budget

Incidentally, as a byproduct of the aforementioned ethos, Donors generally do not like the idea of their money being spent on advertising, or on anything other than directly helping a campaign’s beneficiaries.

This is a groundless double standard — one that causes inefficient allocation of resources and stems numerous problems.

For-profit companies can aggressively expand their market share and scale up sales, but nonprofits are limited to organic growth and ineffective means of marketing, resulting in minimal exposure to the charitable efforts.

Even if we put the marketing issues aside, it has also been proven over and over again this slow movement causes nonprofits to continually face difficulties in talent recruitment and retention.

Donors typically assume human capital in the nonprofit sector can thrive on goodwill and passion alone, but that is far from the truth.

In 2016–2017, only 25% of nonprofits indicate they were successfully attracting talented staff, and “recruiting and retaining the most capable staff in an increasingly competitive marketplace continues to be a significant concern and challenge”.

How can charities compete against businesses in the same talent pool, when they cannot operate at their full potential?

Grace: A New Frontier

At Grace, we dedicate our efforts into empowering and incentivizing individuals around the world, to engage and break the existing social stigma — in a pragmatic manner.

We defined a simplistic but crucial two-point manifesto to characterize a new generation of fundraising initiatives:

To realize a vision for change, we first need an instrument of change.

The Grace platform is the very first step in our mission to revolutionize charity fundraising — a decentralized solution to address the most pressing inefficiencies in the sector, while maintaining the highest level of transparency and security.

With the additional introduction of Advocate Incentive Mechanism, Grace empowers the community with ways to contribute beyond financial means, and allow nonprofits to benefit from exponentially improved exposures that would otherwise be unattainable.

The operation of the Grace platform and Grace network are designed to be largely community governed — a conscious effort to ensure the power stays in the people’s hands.

Learn more about how Grace works at https://gracetoken.org and take a look at our whitepaper.

Join the Movement

Join us on Slack and follow us on Twitter @Grace_Token, we would love to hear from you and are happy to answer any questions you may have.

Our team is super excited to take part in bringing you the future of nonprofits fundraising. Stay tuned for updates and leave a comment below to let us know what you think!