Whether or not you’re engage in social networking, there’s a good chance you have come across a crowd-sourced corporate philanthropy contest (such as Chase Community Giving, Pepsi Refresh, or the American Express Members’ Project) sometime in the last few months. These initiatives, in which companies award funding to the nonprofit or nonprofits that earn the most votes via Facebook, Twitter, or the company’s own website, are sparking discussion in nonprofit and philanthropy circles. Most recently, James Epstein-Reeves’ editorial in Forbes outlines the pros and cons of the crowd-sourced corporate philanthropy model. (The June 2010 issue of BCA News [.pdf 873 KB] also covered the topic.) So, what’s the consensus? Is the crowd-sourced philanthropy model the wave of the future?
In some ways, crowd-sourced philanthropy seems like a win-win for both companies and non-profits. For businesses, crowd-sourced philanthropy contests don’t simply promote positive brand recognition, but also stimulate consumer engagement (especially in examples such as American Express and Pepsi, where consumers/participants log on and vote for nonprofits in different rounds, meaning they will keep returning to the company’s website or Facebook page). On the nonprofit side, Epstein-Reeves points out that these contests help level the playing field by allowing nonprofits who previously may have been ineligible for corporate grants access to the funding and branding power gained from association with the corporation, as well as national recognition that typically does not come from the award of a more traditional grant.
However, a closer look brings to light some potential problems with the crowd-sourced philanthropy model. Epstein-Reeves points out that the crowd-sourced model favors organizations with the most motivated voter base, and these organizations tend to be larger and better established. Indeed, if the organizations with the largest customer base, rather than with the strongest mission, are more likely to win, crowd-sourced philanthropy may actually be a detriment to smaller nonprofits operating on a skeletal staff with minimal resources. Diverting staff time from more mission-based activities to building a motivated voter base for such contests might not be the most effective use of resources at such an organization—especially if their efforts are thwarted when the larger organization ends up winning anyway.
This raises another point about crowd-sourcing philanthropy: there’s a reason that corporations (and foundations) have a grants process in the first place. A more formal grants process rewards a strong mission and effective management, not vote count. The idea of democratizing this process sounds nice, but will the money really be used effectively? Program officers at corporate foundations extensively vet potential organizations to fund based on the financial feasibility of their projects and as other factors that contribute to a project’s success, rather than persuasiveness or brand power. Voters’ motivation for supporting one nonprofit over another may be pure, but others might vote based on their affinity for an organization’s logo or celebrity spokesperson.
How do arts organizations fit into the picture? Both the Members’ Project and Pepsi Refresh fund organizations in several fields, including arts and culture. But in competitions where there is no mission-based separation, such as Chase Community Giving and USA Today’s Twitter campaign, can arts organizations compete with nonprofits with a social mission?
Whatever the pros and cons, it seems the crowd-sourced philanthropy trend is certainly gaining traction. We’d love to hear what you think of this trend. Have you voted in any of these contests, or has your organization participated? Do you think they are an effective way for businesses to help the arts and other nonprofits?
Popularity: 24%
Let’s wait and see how crowd-sourced philanthropy will perform in a down trending economy? Only time will tell if the corporate solution will be a help or a hinder.
I’m not a fan of this trend, but understand why it would be attractive to corporate funders as it gets their brand name in front of lots of people tied to an initiative that gives people warm, fuzzy feelings about the brand. My organization is in the midst of applying to the Pepsi Refresh project, and we’ve concluded that what would probably have the most success is something with a “sexy” name that would catch the attention of a younger demographic (which is more likely to participate in something like this) — not necessarily a project that is proven to be effective or developed out of rigorous research. As I’ve researched these programs, I’ve found winning organizations that are so new they haven’t filed a 990 yet. I think it’s important to have funders willing to give seed money, but these new orgs need to be carefully vetted to be sure they’re sustainable and have the appropriate checks and balances in place.
And as you say in the blog, this approach favors orgs with a highly motivated, tech-savvy constituency. Orgs serving older adults and/or low-income/at-risk populations, as well as small orgs that don’t have the personnel resources to promote this kind of thing, don’t stand a chance.
So in my mind, these programs are more about PR for the funder than furthering needed services. I would greatly prefer that those millions of dollars be spent on orgs analyzed and evaluated by a funder’s (hopefully) competent staff.
Crowd-sourced philanthropy is a marking tool, not a philanthropic investment strategy. Like any cause-related marketing, the company is leveraging interest in your organization to align their brand with a good cause, to reach your audience, and to generate buzz about their company – and they get you to do the work for them! Like all sponsorship and marketing relationships, while they provide money and services and goods you need to operate, the transaction is about their needs, not yours.
This is not such a bad thing if you understand and honor the motivation. Sponsorships that meet your needs and theirs, and build a foundation from with to grow are essential to sustaining large organizations and raise your visibility as well as the sponsor’s.
One-time funding activities such as crowd-sourced philanthropy can be a great activity for your supporters to lead, especially if you have a broad social media base from which to draw votes. In the meantime, professional staff continues to develop the long-term relationships with funders and sponsors that lead to financial sustainability.
[...] the most efficient and effective programs receive funding.” And on ArtsBlog, Alison Wade wondered aloud, “the idea of democratizing this process sounds nice, but will the money really be used [...]
Hi Alison,
I think it’s helpful to consider these models in the broader frame of arts funding rather than solely within the context of corporate giving programs. I posted a response addressing some of the trends you mention over at http://createquity.com/2010/08/popularity-contest-philanthropy.html. Here’s an excerpt:
“In my opinion, we need to be careful about throwing the baby of crowdsourced philanthropy out with the bathwater of popularity contest philanthropy. The latter is not synonymous with the former; it is merely a poorly executed version of it. What we need, instead, is a way of broadening out the selection and adjudication process to a greater number of people without sacrificing the qualities and expertise that make professional program officers special. To do this, we’ll still want to access the crowd, but rather than treat everyone the same, we’ll need to differentiate between good members of the crowd – the ones who are generous with their time, consider differing viewpoints thoughtfully, and demonstrate personal integrity – and bad members of the crowd – “one-issue” voters, poorly informed fly-by commenters, and vendetta-carriers. Put another way, we want to give anybody the opportunity to participate meaningfully without having to give that opportunity to everybody.”