Rethinking the Status Quo
We’re all familiar with donations and have probably given or received one recently. Some of us donate to the local little league team for new uniforms, some contribute during mass every week, and some buy Girl Scout cookies for that minty chocolate goodness once or twice a year. So much of daily life operates off of the donation model and the capacity to donate allows us access to the more meaningful experiences and amenities.
Beyond social programs and neighborhood initiatives, donations actually fuel some of our cities’ most important assets as well. Urban parks for example, and the conservancies built around them, operate almost exclusively off donations and fundraising-oriented activities. There is typically very little direct investment from city governments and parks operate independently with only a degree of logistical support such as trash removal. It is also generally misunderstood that major public assets have a big-bellied and deep-pocketed board of directors clinking champagne and writing person-sized checks. Sure, the Guggenheim or the Getty has an easier time attracting the rich and famous, but the vast majority of local initiatives don’t have anything near this level of support.
In 2018, there was an estimated $410 billion that was donated from private citizens up to corporations for non-profit causes. Donation platforms like GoFundMe and Facebook Donate have generated a much more seamless experience in donating, donating more, and donating more often. There is an unmistakable and universal desire to donate towards good causes, and these new resources are being put to good use for that end.
But despite the major strides that these applications have made for certain aspects of the non-profit sector, there are a number of inherent flaws to the system and the limited impact it has on urban spaces and places. Some are issues with the nature of donations themselves, some with the current state of the social media-driven ecosystem, and some simply prevent non-profit models today from properly sustaining our most valued places. And… you’ve probably guessed it by now, we’ll be exploring those gaps in today’s article.
Also important to note, in the context of this article, ‘non-profit’ refers to all business models with a 501c(3) designation including public parks, museums, libraries, and more.
Unengaging, Unsustainable
One of the most glaring issues is the rapid fall-off when it comes to donation consistency and interest. The willingness to donate comes from an empathetic impulse towards causes you align with or people and places you which to support. Unfortunately, there is rationally little incentive to continue to donate over time and most first-time donors rarely follow-up with a second contribution.
This is what platforms like GoFundMe and Facebook Donate understand quite well, thus designing their donation pages in a way that only expects and encourages a momentary engagement. Overall, this works quite well for short-term and finite social efforts i.e. fundraising for an operation or local uniforms.
But this is obviously terrible for organizations and long-term efforts that need much more than a one-time contribution from their supporters. In these cases, five $1 donations from an individual are much healthier than a single $5 contribution since it denotes long-term and committed support. But most people simply don’t have the loose cash to support a cause for longer periods of time. Organizations try to mitigate this issue by encouraging newsletter signups, pushing renewing memberships, special seasonal events, and tirelessly creating new programming to re-attract their core base.
We Only Take Cash, Sorry
Financial support is obviously the priority when it comes to nonprofit activities and social programs. After all, someone has to pay the electric bill and office salaries. Not profits thus become a cycle, racing for the next donation pull against their expense sheet.
But there’s a lot of sharing that pure money cannot facilitate, and frankly, the effective receiving of other non-financial resources would help in the long-term, even to reduce internal costs dramatically. Beyond donations, non-profits have a dire need for resource and knowledge sharing whether it be regarding best practices within the company or further expertise to keep organizations relevant. As non-profits are inherently non-scalable with a lack of business models, they’re stunted by the inability to bring in diverse new talent and expand on the impact of their current work. These organizations have no way to effectively scale their operations in marketing, programming, technology, engagement, and more. This all leaves non-profits stunted and starved for resources beyond the financial contribution.
Obscured Use of Funds
We’ve all heard distasteful stories of how non-profits are used or how they themselves mismanage their resources, both scenarios putting well-intentioned public money at risk. In many cases, there isn’t transparent money flow and even if things are done properly, there is an estimated $100 billion is lost on inefficiencies. Again, since non-profits cannot easily scale or contract further work, those holes are much less likely to be patched. Lastly, we also have no idea if an organization is well beyond their needs and if your money could actually be contributing to a core mission elsewhere rather than being a cherry on top.
And the above are just common circumstances. In the worst case of scenarios, the cause can be completely illegitimate. GoFundMe’s most recent scandal this year when $400,000 was raised to support a homeless man and turned out to be a total sham. Whether intentional or unintentional, there is little accountability to ensure the proper use of charitable funds.
Donations Need an Incentive Structure
So we’ve laid out three core and inherent issues in the modern donation system — they’re short-term, purely financial, and obscure the funding process. The nature of the current system is suitable enough for certain genres of the non-profit industry but stand as a detriment to the needs of urban development and cultural assets. These need long-term commitments, contributions that are beyond just financial, and transparent models that use funds efficiently and with accountability since they have the potentially longest-lasting and irreversible impact on our lives. To realistically achieve all this, a new donation model with an incentive structure is needed.
This might sound counter-intuitive at first, but within the structure of the most successful nonprofits, bigger incentives equal bigger results and impact. Raffles, auctions, and other types of exclusivity introduce a reason for people to stick around and pay attention. Again, donating ‘for a good cause’ rarely works beyond an emotional impulse and momentary contribution. If we want contributors to do more than simply pull out a bill from their wallet or push a Paypal button, there need to be more core reasons to come after work, or on weekends, or correspond regularly with the other stakeholders.
What will a contributor get if they offer an hour of their time to lecture or train your organization? How will you attract pro-bono support for your latest campaign or volunteer effort? Where will you source the expertise to renovate your park or conduct a building survey on your community center? Do you have the capacity and know-how to plan for the next 5 years of development? While the world’s corporate and capital model has given birth to the initial growth of non-profit initiatives and public goods, it seems inefficient in sustaining a high level of impact.
What is really needed is a system that facilitates incentives and rewards to move easily between organizations and contributors. Since money is always tight, Venmo-ing tips back and forth isn’t going to be an option. But maybe we can design a different type of point-based economy that can truly establish a reason to stay and scale up the support capacity of any institution.
Maybe… just maybe…
Maybe we just might have designed something worth trying to impact the current world of donations with. Follow along as we gear up for a new generation for donation.
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