More Than Money
Issue #26

Effective Giving

Table of Contents

“Value per Share vs. Shared Values”

Why Nonprofits Will Lead the Way in Online Giving
By Drummond Pike and Chris Herrara, Tides Foundation

Internet technology has become the global solution. How do you sell cars? How do you buy stocks? How do you earn a college degree? Whatever the question, someone is sure to tell you, "The answer is on the Web."

And much of the time, that is correct. The Internet has connected more people with more information--and with one another--faster than any other medium in history. In the United States alone, more than 110 million adults are now connected online.

One of the latest beneficiaries of this trend toward web-based solutions is the world of philanthropy. Although online giving--or e-philanthropy--is still relatively new, already there are thousands of websites dedicated to charitable giving, community foundations, and donor advised funds. Many are excellent resources for finding philanthropic options, researching issue areas, and locating worthy grant recipients. But for the most part, these sites have focused on how to make a contribution online, as opposed to more fundamental questions like, "Where do you want to donate your money--and why?"


The Donation Industry
In Silicon Valley, developing mechanisms for giving money online has been viewed as an instant growth industry. Fueled by research suggesting that the number of potential online donors already surpasses the number of donors that could be reached through direct mail marketing, there has been a rush to develop instant donation services and launch charitable portals online. Besides that, any reticence about conducting business over the Internet seems to be vanishing: Internet spending topped $24 billion last year.

With all of this online commerce and consumer readiness to accept it, e-philanthropy would seem to be a no-lose proposition. Yet, in the past twelve months, there has already been a rapid winnowing in the field of e-philanthropy, just as in the e-commerce arena. More than a few well-heeled, splashy websites--such as Donor.net and Charitable Way--which were specifically designed to collect and distribute contributions to charities, have failed to produce. Similar sites aimed at this market are already looking for a way to get out. They are finding the "donation industry" too expensive. Their clients are finding it ineffective.

Why has the market failed to properly fill this area of cyberspace that has so much potential? One major reason is that the wrong people have been attempting to do it.

Early on, the charitable giving space on the Internet was ceded to commercial interests. Venture capitalists plugged significant money into such endeavors, expecting an eventual cash return. The business models varied, but the concept was the same: Make money from other people's philanthropic intentions. This has not been successful largely because nonprofit organizations--which are the engine driving the "donation industry"--are based on the economic model of sustainability, not profits. More importantly, they are based on values.

Internet Connections: High Speed vs. High Quality
Organizations that have prior experience in their specialty area find the jump to the online world much easier than those that don't. For example, retailers who know how to run a store, sell merchandise, and stock a warehouse are going to be better at selling goods online than someone who has a great website but no retail experience.
The same is true for philanthropy. Giving money to an organization is a very personal action, and philanthropies and nonprofit organizations know this. Charitable and mission-driven institutions raise money because they make connections with people--connections based either on issues or on personal relationships, or both.

The Internet can foster and broaden those connections, via e-mail contact, targeted information, and technical resources--but the Internet cannot replace those connections. They must come from a sense of shared values.

Instead of creating connections grounded in shared values, online portals have taken the shopping mall approach, focusing on the fiscal bottom line, at the expense of personal values and human connection. The result has been donation portals with little or no identifiable character or vision, other than the ability to accept credit card numbers and search through thousands of nonprofits. In the United States alone, there are more than 700,000 registered nonprofit public charities. "One-size fits all" websites do little to screen potential donors and help them connect to the groups that are right for them.

Mission-Driven, Issue-Based
While some potential online donors relish the idea of researching the track record, political history, and financial status of nonprofits, many do not. Consequently, there needs to be more screened content on e-philanthropy sites. In addition, the sites themselves should be driven by a commitment to an organizational mission--or they should be based on clearly articulated issues and positions. Donors need to feel that they can trust, support, and believe in groups that will receive their donations.

Thus, the challenge is set: to provide online donors with information about effective nonprofits that match their values. This needs to be available from easy-to-use sites that have a defined character (what some refer to as "an attitude"). Clearly, the need for strong nonprofit voices and service providers amidst this sea of dot-coms is vital if online donors are going to fulfill their great potential.

One example of an online philanthropy portal site that is answering that challenge is Give For Change, a partnership between Working Assets and eGrants.org, a nonprofit Internet foundation created by Tides Foundation. On the Give For Change site, donors are presented with a selection of nearly 400 organizations spanning eleven different interest areas. What all the organizations have in common is a commitment to social change. All are carefully screened by eGrants.org, which accepts and processes all donations made through the site.

This gives donors the opportunity to make well-informed giving decisions and ensures that their dollars go to groups that are making a difference. For nonprofits, the site offers the hassle-free opportunity to be included in a screened, giving catalog, along with other like-minded organizations working for progressive social change--rather than being lumped together with the 700,000 other 501(c)(3) organizations in the United States.

This kind of site has not been created by for-profit organizations because for-profit entities have lacked the value commitment and the sustainable economic model needed to make such sites work. It is only through organizations clearly rooted in the nonprofit sector and firmly grounded in their own values that the true potential of online philanthropy can be fully realized. [MtM]

Drummond Pike founded Tides Foundation in 1976. He currently serves as president of Tides Foundation, Tides Center, and eGrants.org. He co-founded and served as associate director of the Youth Project in Washington, D.C. and as executive director of the Shalan Foundation in San Francisco from 1976 to 1981. He is one of the founders of Working Assets.

Christopher J. Herrera is director of communications for the Tides Foundation. Before joining Tides in March, 2000, Herrera was part of a communications firm working exclusively with nonprofit organizations. For the past ten years he has directed communications and public education programs for civil rights and other nonprofit organizations.

Tools for Online Giving
Foundation Research Tools

Google.com
Search engines are ground zero for any Web research. Google is one of the simplest (with no brightly colored advertisements cluttering the screen) and one of the most powerful. Tip: Use quotation marks for precise searches, e.g. "National Resources Defense Council."
www.google.com

Guidestar
This site has a database of detailed information on more than 640,000 nonprofit organizations. It can generate a report on each organization, including mission statement, financial data, key staff bios, and IRS 990 reports.
www.guidestar.org

The Foundation Center
An excellent online directory of more than 1500 foundation websites, including a special section on community foundations. This site also offers useful additional links and a great search tool.
www.fdncenter.org

Council on Foundations
This is the umbrella association for most foundations in the United States and is another good resource for information.
www.cof.org

Online Giving Sites

JustGive.org
This nonprofit site connects people with charities and causes that match their values. It provides resources, services, and tools to donate money, time (volunteering), or goods.
www.justgive.org

eGrants.org
A nonprofit, Internet foundation, this site accepts online donations to nonprofit groups that are working for positive social change. eGrants allows donors to fund social change organizations through portal sites, as well as through direct links to the nonprofits themselves.
www.egrants.org

GiveForChange.org
Give For Change allows donors access to hundreds of progressive nonprofit groups. The site is part of WorkingForChange, a comprehensive website offering resources for people with progressive values. Members and non-members alike can speak out on urgent issues, make a donation, volunteer their time, or listen to online RadioforChange programming.
www.giveforchange.org

Helping.org
Funded by the AOL Foundation, Helping.org is one of the nation's largest donation portals, helping people find volunteer and giving opportunities.
www.helping.org

News and Information Services

Nonprofit Online News
This site offers current information about and for the nonprofit sector. A weekly e-mail subscription is also available.
news.gilbert.org

The Chronicle of Philanthropy
The Chronicle of Philanthropy is the leading print publication on mainstream philanthropy. Though the website offers some of the publication's articles, it requires a subscription for many of its best.
www.philanthropy.com

Philanthropy News Network
This site is another good source for finding giving opportunities and news about the philanthropic community.
www.pnnonline.org

ePhilanthrophyFoundation.org
A new, informative website and charitable foundation, established to foster the use of the Internet for philanthropic purposes.
www.ephilanthropyfoundation.org

Abacia.com
This site provides nonprofit groups, social service agencies, and individuals a place to tell others about what they are doing to serve their community, who or what they represent, and what they want or need.
www.abacia.com

The Nonprofit Matrix
An excellent guide to the broad world of online giving and how nonprofits and Internet-based services are connecting in cyberspace. This site offers the latest on current thinking and services in e-philanthropy.
www.nonprofitmatrix.com

Services to Nonprofits

The Impact Fund
The only foundation dedicated to providing funding, technical assistance, and representation for complex public interest litigation in civil and human rights, environmental justice, and poverty law.
www.impactfund.org

Techsoup
For years, San Francisco Bay Area nonprofits have benefited from the efforts of Compumentor, an intermediary that connects nonprofit organizations with willing technology volunteers. The new Techsoup brings Compumentor's best thinking to the Web, making it available to nonprofits anywhere. Excellent resource for nonprofits trying to figure all this out.
www.techsoup.org

Techrocks
Originally founded by the Rockefeller Family Fund to help its grantees use technology tools, Techrocks now helps advocacy groups better utilize the Internet for their work. Cutting edge.
www.techrocks.org

Issue-based Sites

OneNorthwest
Billed as an "online networking site for the environment," One Northwest takes a regional, issue-based approach to e-philanthropy. Nonprofits can use the site to share information and contacts. More than 1200 Northwest conservation groups are connected through the site.
www.onenw.org/toolkit/online-donations.html

Tides Foundation
The mission-based Tides Foundation partners with donors to fund progressive social change organizations. It also creates funding collaboratives--driven by donor involvement--targeted at vital issues that are typically underfunded by U.S. philanthropy.
www.tides.org