software eats the world
Ten ways technology is transforming philanthropy
Technology is increasing donor expectations while offering new opportunities
Marc Andreessen, who co-founded Netscape (remember? it was likely your first web browser), and now a leading venture capitalist, coined the phrase “software eats the world” to reflect the power of technology to transform sector after sector. Philanthropy is getting the ‘tech treatment’ as well and various facets of philanthropy are being impacted, some in very significant ways.
Specifically, in our research for a client, we identified ten ways in which technology is creating new opportunities for the philanthropic sector which can be grouped in three categories: transforming discovery and relations, making giving frictionless and enabling new giving models.
Transforming discovery and relations
Donors are increasingly eager to fund effective and impact-oriented organizations while developing more intense relations with the organizations they support, moving from a yearly update to a more continuous stream of interactions. There are three sub-trends here
- More extensive use of data when making fundraising decisions and increased accountability through data transparency sites such as Charity Navigator or GuideStar, as well as impact-oriented ranking sites such as GiveWell
- The creation of more intense and personalized connections with donors through philanthropic customer relation management systems such as Kindest, Kindful or NetworkForGood
- Philanthropic portals enabling anyone to build their own “personal giving fund” such as GoodNation or MyTzedakah. These have massive potential to develop into one-stop giving sites combining access to information, nonprofit discovery, 1-1 interactions with nonprofits and social media features (e.g., replicating a friend or celebrity’s giving portfolio)
Making giving friction-less
Online giving almost doubled over the last five years. If further accelerated and grew 21% in 2020 alone and now represents more than 10% of all giving in the US (or more than $40bn in absolute terms). There are four sub-trends worth noting here
- A wish from some donors to give directly to recipients in need is enabled by direct giving platforms such as Kiva (for micro-lending) where donors pick individual recipients and GiveDirectly which select the poorest and most worthy recipients in selected geographies. These platforms make away with most intermediaries and aim to personalize the giving experience to the maximum
- With crowdfunding platforms, anyone can become a fundraiser and tap in their social network to raise money for their preferred causes. The most advanced such as Causematch combine technology platforms, highly advanced social media targeting and a network of professional coaches to enable any non-profit to maximize the potential of their donor network
- The rise of cross-border giving allowing donors in one country to give in another while preserving tax deductibility in their home country. JGive or IsraelGives for instance enable donors in the US, Canada, France and the UK to support hundreds of nonprofits in Israel while making it extremely easy for these nonprofits to open up to new pools of donors
- With the massive rise of crypto-currencies, new intermediaries such as GivingBlock have emerged to help nonprofits accept donations in bitcoins, Ethereum and other blockchain-tracked assets without having to deal with the complexity of these new financial instruments
Enabling new giving models
The above two categories of opportunities incrementally improve existing giving models. The third and most exciting category of trends enables new approaches that simply wouldn’t be possible without technological support
- Workplace philanthropy platforms such as BrightFunds build on the increased corporate social trend in many of the world’s largest enterprises and enables them and their employees to deploy their charitable resources, be it money or time. By connecting directly with payroll systems, these platforms enable employees to direct their own and their employer’s giving (while leveraging company matching funds), recommend grants and nonprofits, access volunteering opportunities and more
- Philanthropic mutual funds such as Blue Meridian or EPIC, like financial mutual funds, invest significant resources to research hundreds of nonprofits in a particular sector – and to select the most worthy ones according to their criteria. In essence, they give anyone a chance to invest as if they had a foundation’s full-time research team on their side to help guide their philanthropy to the highest-impact causes. They use technology to recruit further donors, communicate their impact and build relations – things that would be impractical manually with more than a few more donors
- Volunteering platforms such as Tribu or VolunteerMatch enable nonprofits to quickly recruit dozens of volunteers to join their ranks – and inversely anyone can select the nonprofit most corresponding to their volunteering wishes. These platforms take out the complexity from recruiting, screening, administering and deploying volunteers at scale
Technology is increasing donor expectations while offering new opportunities. Nonprofit organizations would do well to consider these trends and carefully think through which ones they can incorporate in their fundraising approaches.
Michael Bloch has been a Senior Partner at McKinsey & Company where he advised global corporations and nonprofits on their strategy, performance, technology and operations for the past 23 years. In Israel for the last decade, Michael has now co-founded Israel Impact Partners (www.israel-impact.com) to work with leading philanthropists and foundations and accelerate the growth of the nonprofits they love.