Entries in charity (6)

Tuesday
Jul202010

Shared social responsibility: the new double bottom line

The double bottom line has never looked so good. Traditionally thought of profits plus positive social impact, new research suggest that markets can also be structured so that the financial bottom lines of both for-profit and not-for-profit improve with a single transaction.

Ayelet Gneezy from the University of California, San Diego ran a study at an amusement park where vistors were offered the ability to purchase a picture of themselves taken on a rollercoaster ride. She analyzed purchasing habits across four different pricing options. First, she tested the results from offering the photos first for a flat fee and secondly under a pay-what-you-want model. Not surprisingly, significantly more people chose the photo in the second model, but they also offered considerably less money for the photo.

But the next test is more interesting. Gneezy first modified her flat fee offer by noting that 50% of the proceeds would go to charity. The result was a neglible increase in interest. But by instead modifying the pay-what-you-want model in the same way, interest increased significantly and the price went way up from what people "wanted" to pay before.

A summary of the results:

Pricing Model

% Purchasers

Price Paid

Flat set fee

0.5%

$12.95

Pay what you want

8.4%

$0.92

Flat set fee – half to charity

0.57%

$12.95

Pay what you want – half to charity

4.5%

$5.33

 

The impact? Both the amusement park stands to makes more money than it did before and a charity is able to receive a generous donation if this model is adopted.

What human decison making is at work here? I can think of a few reasons:

  • $1 feels about right for what a photo is worth, but giving 50 cents to charity seems so little as to be embarrassing, so people give more to fall more in line with what a reasonable charitable contribution might look like ($2.66, or about the cost of a box of Girl Scout Cookies).
  • A pay-what-you-want scheme seems more in line with a traditional charitable donation construct. Giving half of an amont that a for-profit company set, on the other hand, seems manipulative.

I do wonder about how well these results transfer to other domains that are not using as a base item something (a lame amusement park photo) that most people value at about 0. Pay-what-you-want works much better, I think, for things like theater performances where you might not be able to afford the flat price, but you would go if you could pay just a bit less. I wonder if you valued a show at $15, thus paid that when asked to pay-what-you-can, if you would add to that total if you were then told that half the money would go to charity. I doubt it.

The full story can be found here.

Flickr credit: Rudloff

Wednesday
Jul012009

Socially responsible outsourcing -- Samasource -- a social lending alternative

In our coverage of Kiva, Microplace, and LendforPeace, we have explored the amazing power of these internet platforms to connect lenders to poor entrepreneurs from around the world and make an impact in small, but meaningful ways.

It is worth looking beyond microcredit. Samasource is a start up non-profit that connects companies in need of simple technology tasks with trained workers in poor countries.  Like Kiva, Samasource has field partners on the ground, but instead of local NGOs, it seeks socially responsible local businesses who embrace three things: transparency, community, and progressive labor relations.

From CEO Leila Chirayeth:

Samasource helps talented but marginalized people empower themselves through internet-based work. Our San Francisco team screens and selects high-quality small businesses and nonprofit training centers in the poorest parts of the world, provides them with training and project management tools, and helps US clients outsource work to them. Our clients reduce costs, receive high quality work, and support dignified employment for some of the world's poorest people.

I'm excited to see an alternative, internet-based platform to social lending that still embraces the market as the ultimate driver of growth. The effectiveness of providing loans to the poor to reduce poverty is still uncertain (see David Roodman of the Center for Global Development for a thoughtful consideration of this topic on his blog). Intuitively, there is reason to believe that most poor people are not actually destined to become successful entrepreneurs. In the United States, I would not expect most of the Americans asking for small business loans are going to succeed -- so why would I hold micro-entrepreneurs in Africa to a different standard? The truth is that most people function and work within some sort of structure -- and for most people, that structure is a company.

Samasource supports that structure. By helping the local businesses (run by entrepreneurs, of course) find outsourcing work, Samasource creates jobs for workers who can become trained to perform needed tasks for others. And the model is sustainable over time -- not just for the individual who receives the training, but for the community that now has a viable job center. Companies can turn to Samasource for support with tasks similar to those seen on Mechanical Turk: data entry, application testing, audio transcription.

Again, Ms. Chirayeth:

Sama means equal in Sanskrit. We are a social business helping bright but marginalized people in poor regions find dignified jobs by expanding their access to markets.

You can support Samasource's mission to give work, not aid  here. If you work for a company that needs data cleaning or other basic tech services, consider using Samasource -- you get a good rate and you're supporting the development of sustainable and dignified jobs.

Monday
Jun292009

Mgive lets you text money immediately to your favorite non-profit

Next time you're considering paying a text message fee to vote for your So You Think You Can Dance?  favorite, why not instead text a few dollars to your favorite non-profit?

Yesterday during the 2009 BET Awards Show, Keep a Child Alive raised over $130,000 through the mGive- Mobile Donation Program. During Alicia Keys’ performance, more than 26,000+ mobile donors texted their $5 donations. Keys co-founded Keep a Child, a non-profit organization that provides health care and housing to children with HIV/AIDS in Africa and India.

The model is brilliant. Keys had a captive audience during her performance when she gave a shoutout to her non-profit, but even if viewers were convinced by the cause, how many of them would have then gone home or logged in online to make a donation? Probably not too many. But by suggesting that the audience members text a 5 digit number right that moment ("text ALIVE to 90999") Keys can get 26,000 people to participate.

Building upon the mobile banking model pioneered in Africa, the mGive platform enables donations without cash or credit card. The $5 donation will be added to donors' next mobile phone bill. Amazingly, donors can even visit mgive.com and download a receipt of their tax deductible donations. The application of cell phone technology in new ways plus the recognition of the power of micro-participation may prove to breathe new life into non-profit fundraising. Participating charities include:

  •   American Heart Association (text HEART to 90999)
  •   Amnesty International (text RIGHTS to 90999)
  •   Doctors without Borders (text DOB to 90999)
  •   Make a Wish Foundation (text WISH to 90999)
  •   Many more... See the full list here
Tuesday
May262009

A free market approach to transforming international development

Drip Irrigation in Sri LankaWe have covered a number of emerging market-based approaches to charitable giving: p2p microfinance, social lending, and prediction markets.

Acumen offers another essentially free market solution to charity: patient capital. Integrating principles of investment banking into traditional donor-based charity, Acumen is seeking to transform the western world's approach to development.

The fund collects money from donors much as a traditional charitable outfit, but then rather than purchase food, mosquito nets, etc. it lends to or invests the funds in local ventures that provide broader social benefits such as internet cafes or irrigation companies.

This approach is much like the Kiva or Microplace model, but writ large. Rather than a p2p connection, Acumen enables direct entrepreneur lending on a much greater scale. Instead of helping a woman with a $500 loan to expand her small livestock business, like on Microplace, through Acumen, you can contribute to a $1.5 million investment in Mumbai to expand the city's ambulance fleet. Acumen also is painstaking in its analysis of exactly where the money goes and the social value that it brings.

In an interview with the Economist, founder Jacqueline Novogratz explains why she believes now is the time for this type of innovation in international development:

“The financial system is broken, yes, but so too is the aid system... a moment of great innovation [could be at hand]."

Ms. Novogratz here hits on the theme that we often try to promote: that while capitalism is currently in doubt, there are plenty of thriving examples of places where free market solutions are leading to plenty of social good.

Flickr credit: zumerzetbill

Wednesday
Apr222009

The unlikely marriage of prediction markets and charitable giving

We have profiled a number of ways in which online mechanisms are facilitating innovations in charitable giving, ranging from social lending to Palestinian entrepreneurs to domestic p2p loans to needy families. Here's a new one: funneling gambling proceeds to selected charities as a means of skirting US anti-gambling laws. At bet2give.com, bettors participate in prediction markets where your online earnings are donated to the charity of your choice. According to founder Emile Servan-Schreiber, since you never see the earnings, this makes the process "not gambling".

Bet2Give is a prediction market site where you can bet on topics ranging from politics to sports to business. Beginning with bets as small as $5 and as large as you want, you can bet real money on future occurences. If you win, then your earnings get donated to your charity of choice; if you lose, your losses get donated to the winner's charity of choice. This promises to offer "the thrill of betting and the power of giving". Thanks to the accounting trick, the site should get more accurate predictions because participants are putting real money on the line. In the end, it all goes to charity regardless, but presumably, participants care enough about their respective charities, to bet as though they were betting for their own gain.

So is this construct being embraced? A few charities have linked back to bet2give, seeing it as a possible fundraising opportunity. I see it as more of a gimmick: charity tagged onto a betting website for the sole purpose of skirting government regulations. None of the markets are socially motivated; I would be interested to see perhaps markets relating to the major charitable players, especially the social lenders and the predicted impact on the welfare of the budding entrepreneurs received loans.

For prediction market enthusiasts, perhaps the bigger problem is the weakness of the markets offered. Today's featured stock is, "A horse leaving from an Even numbered post position will win the 2009 KY Derby" Great! Harnassing the wisdom of crowds to answer a question of pure chance. Not surprisingly, the stock price is hovering right at $0.50.

The marriage seems to be unnatural one: There appears to be only about $5,000 trading on the site currently. Donors moved by an organization enough to want to give it money, don't seem naturally drawn by the prospect of doubling down their bets.  Natural gamblers must get a greater thrill from seeing the money arrive into their bank account than amass on a website where it gets emptied by the end of the month and transferred to various institutions.

Flickr credit: thunderchild tm

Saturday
Feb282009

P2P lending as a new trend in philanthropy

The Boston Herald today cites peer-to-peer lending as a modernizing force in the ancient practice of charity. At a time when the need for non-profit services is higher than ever, direct financial exchange between individuals is emerging as a critical way to connect the haves and have nots. The article explains:

"The Internet has also spurred on peer-to-peer exchange, a movement that has changed the way people think about charity. Many donors – particularly in younger and more progressive demographics like the Boston area – want to feel connected to the people to whom they’re giving, want to understand the specific need and how their gift will impact the recipient.

Sites such as GlobalGiving, DonorsChoose and Kiva allow donors to select a charitable project by topic (children, animals, climate change), geographic region (Bosnia, Zimbabwe, Guatemala), or specific project (classroom supplies, skills training, vaccines). This customized giving has made it possible to help others in ways not imagined just a few years ago."

Research suggests that people give to charity because they want to give back and to feel connected. Internet P2P venues offer an incredibly easy way to make those connections and to make a difference through sums as small as $25 loaned to a entrepreneur through Kiva to as large as you want to provide to help public schools through DonorsChoose. As the article states, charity is also big business --Giving USA puts the 2007 total at over $300 billion-- suggesting that p2p lending platforms have plenty of space to grow.

Flickr Credit: Benevolink