How “Trickle-up Charity” Can Save the World

By Moshe Hecht

Today’s mega-rich philanthropists – Warren Buffet, Bill and Melinda Gates, Mark Zuckerberg – are putting billions towards advancing our world and solving some of its most pressing problems.

But while huge sums benefit countless people, the facts show that the giant hole of need is actually growing faster than it can be filled. Relatively speaking, to quote Melinda Gates, the billionaires’ “pocket of money is quite small.” Sure, philanthropists are doing their part to “save the world,” but it’s only becoming more obvious that more money is needed.

The question is, from whom?

While we’ve all been taught that those with enormous wealth hold the power to “save the world,” giving trends in the United States suggest a different solution – one that might surprise you.

Statistically, the wealthiest Americans give an average of 1.3% of their income to charitable causes. The middle class gives on average of 3% of their income to help others. The poorest Americans – households earning less than $20,000 – give away the greatest percentage of their income: up to 4.5%, to charity. Could it be? How surprising! The less one earns, the more they give!

Now, before we try to hit rich people over the head and demand that they match the poor in percentage-of-income given, we must also consider this undeniable truth: more money doesn’t always mean more impact. And it certainly doesn’t always mean the smartest impact.

In 2010, Facebook founder Mark Zuckerberg pledged a staggering $100 million to revamp the Newark, New Jersey public school system. But this noble effort saw millions of dollars squandered on outside consultants, analysts and “experts,” each of whom was paid an average of a thousand dollars a day. As Vivian Cox Fraser, president of the Urban League of Essex County, observed to The New Yorker, “Everybody’s getting paid, but Raheem still can’t read.”

Zuckerberg has since acknowledged that he and then-Mayor Cory Booker moved too quickly to do too much, superimposing their own ideas of improvement on a system that really needed different solutions.

Apparently, the age-old adage “money doesn’t solve problems” is even true for altruistic billionaires hell-bent on improving the world.

Besides, the world’s wealthiest lack strong motivators to give more. A wealthy person will often give to earn good PR, gain entry into the “scene,” or earn the very title of “philanthropist.” But they can earn that applause with a mega-donation that doesn’t make any dent in their net worth. This leaves little incentive to give away more than one percent of their income.

And while individual philanthropists are making a huge positive difference in our world, many thousands more are giving well below 1%. And they are not particularly driven to increase that number.

So, where should we turn? How do we create a system of great giving with great impact?

The answer must isolate no one, and empower even the poorest people. It must drive the needy to have more input into how they are helped, which will in turn make nonprofits more accountable for how they use their money. And yes, it must reward major donors for giving more so that resources finally catch up to the actual need.

The answer is crowdfunding.

Propelled by platforms such as GoFundMe, Indiegogo and Razoo, the internet has revolutionized charitable giving. A decade ago, a small donor could not witness the impact of his small contribution. Today for the first time, we are witnessing what I like to call “people power”: millions of dollars raised by millions of people,every day.

Consider the presidential campaigns of Senators Barack Obama in 2008 and Bernie Sanders in 2016. Both went from being political underdogs to raising the largest number of individual donations with the smallest average amounts in history.

In 2015 alone, online giving grew by 9.2 %, proving that one does not have to be rich – or the CEO of a major corporation – to make a difference. As it turns out, the seemingly “sweet” concept touted to us since Kindergarten – that our small acts can indeed make a huge impact – is not only very real, but now becoming a trend that is the new paradigm for making a difference, for changing the world.

Amazingly, crowdfunding is having a massive impact on major philanthropy too. With small givers empowered to give more to causes they benefit from, they ultimately inspire large givers to step up their giving too. The philanthropists are inspired to respond to an army of “tiny givers.”

Let’s call this Trickle-Up Charity – a revolution in charitable giving driven by the poorest people in society. For the first time, $18 donors have the same decision-making privileges as foundations and philanthropists.

Sure, it’s counterintuitive. Most of us thought it would happen the other way around: that the little people would go where the big boys go. Yet, when Zuckerberg announced that he and his wife would give an estimated $45 billion to charity during their lifetimes, the internet’s applause was thunderous for only a fleeting moment. As much as we admire the gesture, we know it’s barely a dent for them. It doesn’t exactly motivate those of us living check-to-check to increase our giving.

It’s people living on the most limited means, who have the power to inspire, inform and influence those with the major giving power. How? By example. When we incrementally nudge our giving upward, the wealthier do too.

So think of the Trickle-Up Challenge as a gratifying way to find out what moves you and gives you a sense of purpose in life, outside of your career and family. Take comfort in knowing that your seemingly small contributions are the new world order for giving. That you are even inspiring billionaires. I invite you to join me and get on board with the Trickle-Up Challenge. If you give 3% of your income to charity now, how about raising that number to 4% or 5% this year? Find charitable causes you care about and reputable charities to invest in.

When we hear the “crowdfunding call” and participate in its deeper “from the bottom up” message, we will create an inspiring environment where more people are giving more, and giving more often. Only in this way can we can all consider ourselves to be on the side of world progress – not just watching billionaires do the right thing. Together we will look back at the growth, healing, and advancement within our communities – and the world at large – and be amazed how all it took was the small yet inspiring contributions from me and you.

Moshe Hecht is chief innovation officer at Charidy. An entrepreneur whose passion lies at the intersection of technology and charitable giving, Moshe personifies the company’s “why” and is a driving force in its vision and success. @moshehecht @wearecharidy