Further to the answer above, KCBS Radio in San Francisco called me to ask the same question. So, here is the transcrip from our discussion, a bit better organized for reading. Enjoy:
Q: Some crowdfunding sites are for-profit organizations, which may cause discomfort for people looking to give and give off the uncomfortable image that these organizations are profiting off of disasters. Is there a potential conflict there? How do you resolve that discomfort?
CHARLATAN v SAMARITAN:
Sure, let’s start with the good part because there will always be profiteers. But one of the key attributes of Crowdfunding is TRANSPARENCY. And the frenzy of a major crisis may cloud our ability to detect CHARLATAN from SAMARITAN. That is precisely where reputation of the agency needs to be visible front and center, and where ties to real people can only help
much like how people often look to Linkedin to see who they know that knows you, or look to Yelp to see what their customers say, reviews from real people.
The very nature of a CF platform only allows so much room for detail, and most people make their mind up by whatever is on the first screen of info. But with legit charities, if they’re smart they’ll have legions of
followers, repeat givers, success stories with real testimonials, or a recognizably trustworthy spokesperson.
If I’m a reasonable sample, after 20 years living on the internet, I have a pretty good "BS sniff test”. Without those categories being satisfied, I’m highly unlikely to trust
Q: By giving to a relief organization like the Red Cross, the money gets pooled together and then dispensed by experts in order of need.
The very nature of that question to me implies bureaucracy, and often inefficiency. Larger charities with massive national headquarters are by nature less on-the-ground in real-time, making them perhaps better, in my opinion, at addressing systemic, persistent humanitarian issues such as with food, housing, education and training—things that help strengthen communities so disaster relief is less critical an issue when it inevitably arrives.
Like many charities, the CROWDFUNDING PROFESSIONAL ASSOCIATION (CfPA.org) is also
a non-profit business, but I like to remind people that it’s still a business and has to run efficiently, or waste will eat away at the impact it was designed for.
So, ultimately it’s the test of time that will reveal if newer charities (unproven businesses) can actually deliver the impact they promised. And like all things Internet, everything is permanent—so I like to say that one fraudster will have a very difficult time swindling people twice. Your reputation follows you (and even precedes you now) in this new world.
CHARITY+IMPACT CF: ESTABLISHMENT:
I suspect that much of why charitable giving and impact investing are such growing categories within the Crowdfunding universe can be attributed to many Americans losing faith in establishment anything. I mean, in just the last 20 years we’ve seen wholesale collapses in Insurance, Banking, Utilities, Automotive…And GOVERNMENT ITSELF which we saw reaction to in the last election. And I’m fairly confident we’ll see it even moreso in the next.
Q: Is there a concern that some people might be at a disadvantage if people start shifting to crowdfunding sites and away from traditional non-profits?
I was not sure about the breakdown of gifts that large orgs collect, but suspected much came from corporate donations and wealthy families. I think most of the CF-based charities, like any CF campaign, rely on personal connections (last I checked only 7% of funds pledged on CF campaigns were from people just “browsing” for something to support). So, it is my assumption that more of the
money in national charities is national, and more of the local charity money is from neighbors and friends, locally.
Q: ARE people giving to crowdfunding sites instead of traditional non-profits or is this shaking more money from the tree so to speak.
I’m not sure if those stats are available yet on the meta, but when you add in the fact that
“community” is no longer a geographic term, raising funds for a particular cause relevant to
individual affinities I believe should add more donations, not less. And I would cite my own preference affirms this assertion.
LOCAL + TRUST = ACCOUNTABILITY
And much like how many cite that real politics happens at the LOCAL,
disasters happen locally too. So, I suspect that as many of what we had previously considered fundamental anchors of society were exposed as vulnerable and required bailouts, emergency crises enjoy no such relief—when it comes to actual survival—life and death—there may be a strong resistance to putting that level of faith in any bureaucracy not truly tangible, down the street, with a door they can knock on, a person accountable.
And when it comes down to needing immediate help from real people to save homes or lives, the value of contributing as a matter of self-satisfaction is
far more rewarding when a neighbor says thank you than the value of a standard thank you letter in the mail once a year.
SELF IDENTIFICATION + NARROWING DEMOGRAPHICS:
So luckily, as we face this lack of faith in many legacy institutions, many of the functions that used to require a national entity, and national media, are now in the hands of potentially
billions of stakeholders now dispersed in less geographic ways across the internet, forming interest groups on the fly, banding together by narrower affinities than ever, and exercising their buying power in ways that have conventional industries scrambling to accommodate them—from identifying with new affinities that consumers demand connection to, to the actual logistics to deliver on their promises. Time will tell with many, and all those efforts will be recorded in perpetuity...and hopefully shared with those of us generous enough to give.
Scott E. McIntyre: President, Board of Directors
Crowdfunding Professional Association
7 Times Square, 23rd Floor; ℅ Brian Korn
New York, NY 10036
Regarding Confidentiality: This email may contain confidential and/or private information. If you received this email in error, please delete and notify sender. Thank you.