The following is cross-posted from the Direct Change blog.
Direct Change is a new non-profit designed to use social networking to
help African children through supporting the programs of small,
efficient, local grassroots organizations. There are many
"gates to crash"!
Conventional marketing wisdom is to start with a positive
message. However, after reading marketing guru Seth
Godin's post the other night on "the intuition vs. analysis
conundrum" and then reading yesterday's
story in the New York Times on the tremendous
mismanagement of funds raised for Tsunami reconstruction I decided to
just dive in and get this blog going. Time to stop
planning and just do it, so here it goes.
Yesterday's NYT's covered a
report from the Tsunami Evaluation Coalition, that includes
examples of how aid agencies "displayed 'arrogance and ignorance' and
were often staffed by 'incompetent workers' who came and went
quickly."
Unfortunately, the NYT story does not stand alone in
increasing the public’s cynicism in charities. There are
almost identical stories about the responses to Hurricane Katrina.
Donations to non-profit charities will not be able to
keep up with the need unless the public’s trust in these
organizations increases. While press censorship or repression might
have worked in another era, in the age of the Internet the only way to
decrease the cynicism is to provide better approaches to
charitable work.
Just to be clear, the large charities that responded to the
Tsunami and Katrina and the ones that provide assistance to those
suffering in the world on an ongoing basis, do great work in many
areas. Besides helping millions of people, one of the other
areas that the international aid community has done a wonderful job is
providing self-critique.
In the introduction
to the report from the Tsunami Evaluation Coalition, former
President Bill Clinton lays out some clear recommendations that can
easily be applied to other charitable causes including:
"First, we must do better at
utilizing and working alongside
local structures. With nothing but good intentions, the international
community descends into crisis situations in enormous numbers and its
activities too often leave the very communities we are there to help on
the sidelines. Local structures are already in place and more often
than not the 'first responders' to a crisis. The way the international
community goes about providing relief and recovery assistance must
actively strengthen, not undermine, these local actors."
This recommendation is at the center of the approach that we
are developing at Direct Change. Local grassroots organizations can
almost always deliver services more effectively and efficiently then
large international organizations.
Direct Change will be focusing our own work on providing
assistance to orphans and vulnerable children in Africa. A very
insightful report
from Save the Children UK shows the specific
"Bottlenecks and Drip-feeds" that the international community faces in
channeling resources to local communities in southern Africa to assist
orphans and vulnerable children. To avoid these bottlenecks,
Direct Change is developing mechanisms to bring together donors and
local grassroots organizations that provide direct assistance.
Another reason for the increased cynicism in charitable giving
comes from the growing awareness of the high fundraising and
administrative costs. Estimates that I have heard from several
current and former officials involved in international aid efforts
range from only 8 to 15 cents of every dollar raised actually making it
to help the intended recipients. Finding better ways to
leverage the Internet is one clear way to keep these costs down.
Non-profits have embraced the Internet enough so that when a
disaster happens and the public is highly motivated they go to an
organization's web site and make a contribution. This process does
dramatically drop the fundraising costs and a higher percentage of the
funds get to the intended recipients.
However, for the most part the non-profit world has not
embraced the power of online social networking (also known as
Web2.0) to transform the way they raise money.
Starting with the Dean Campaign, the political world has been embracing
these techniques which decrease fundraising and overhead
costs.
The best example of such an approach is ActBlue, that if
my reading
of their recent reports is accurate, appear to be raising over $1
million a month for Democratic candidates at no cost to those
candidates.
The approach that most non-profits have taken to embracing the
Internet is to apply the direct mail paradigm - build a big
list, send email appeals to the list, measure success by keeping
acquisition costs lower then list development costs and count on a
large enough percentage of the donors to give again to fund
programs. If an organization only views its supporters as
donors then this approach makes sense.
However, if an organization is willing to let its supporters
be "connectors" and give them the freedom to build support in the way
that they see fit, then that organization has the potential to
dramatically cut fundraising costs and focus a higher percentage of
their revenue on actual programs. Such an approach will be at
the center of Direct Change's outreach effort.
Over the next few months, Direct Change will leverage social
networking to offer a simple inexpensive concept of
fundraising combined with a simple mechanism to deliver these funds to
the needy through small, efficient, local grassroots organizations.