People have many motivations for giving directly to each other, whether to a friend, family member, neighbor, or stranger in need. It’s not new that people want to give this way. Really, it’s the oldest form of giving. But crowdfunding platforms, payment applications, and other technologies have made it more accessible — and perhaps more publicly visible — to more people.
Some are drawn to how personal and tangible that kind of giving is. Others see it as an opportunity to quickly change someone’s circumstances without the red tape and overhead costs they associate with nonprofit bureaucracy. Many people say they were raised to give back and are agnostic about whether their contributions pass through a formal charitable organization or not.
Many elements that make crowdfunding and other forms of direct giving attractive to donors also have downsides. The Chronicle spoke to experts about a few of them.
Potential to amplify inequality
Nonprofits need to pay attention. Without understanding the full scope of how and why people give, they may fail to build ties with generous people. Read more:
Research has shown that crowdfunding campaigns tend to amplify existing inequities and biases. An analysis of more than 175,000 Covid-19-related campaigns started on GoFundMe in the first half of 2020 found that 40 percent didn’t raise any money. The top 1 percent of campaigns earned nearly a quarter of all money raised during that time. Campaigns in wealthier and better-educated areas were more effective.
In addition, people often can’t give to those who need it most, says Tyler Hall, director of communications at GiveDirectly, a nonprofit that pioneered direct cash payments in some of the world’s toughest to reach places. “If you want to give to some of the poorest communities on earth, you may need to hand your cash off to someone else,” he says.
Possible scams
It’s easy for anyone to set up a crowdfunding campaign or request direct support on social media or through a mutual-aid network’s spreadsheet. That can be a good thing for quickly channeling money to people who need it with no strings attached, but it also leaves little room for verification or oversight. Unless a donor hands someone money directly, it can be hard to know that the money will reach the intended beneficiary. Of course, while nonprofits are required to have independent boards, financial audits, and other transparency measures, there’s fraud at formal nonprofits, too.
Tech vulnerabilities
Many mutual-aid efforts lean on freely available technology to organize their work. But when people share personally identifying information on Google Docs and other public forms, it’s important to remember that anyone could have access to that data, says Amy Sample Ward, CEO of NTEN, a network of nonprofit technology professionals. Nonprofits, she says, may have more secure systems for storing sensitive information than individuals do on their own.
Challenges to Expand Effectively
With direct giving, the onus is on the donor to identify and coordinate with the recipient, says Hall of GiveDirectly. While some donors choose to give directly to quickly get funds into the hands of people in need, it’s hard to do that effectively at scale. Mission Asset Fund, a nonprofit that makes loans to people who don’t have access to affordable banking services, started a cash-grant program during the pandemic, primarily to support undocumented people who were ineligible for federal coronavirus relief.
“We were really efficient in getting money out the door quickly,” says José Quiñonez, the group’s CEO. “But we did it in a way that was with equity in mind and helping people that would benefit the most.” Direct giving should be celebrated, not discouraged, Quiñonez says, “but we also need the structure, transparency, and scale that formal organizations can provide.”
