What Drives Direct Giving and Why It Matters to Nonprofits

Maria Smith Dautruche says she was raised to be a giver.

During her childhood, her mother always bought twice as many school supplies as her daughter needed. She put the extra notebooks, pencils, clothing, and girls’ hair accessories into a barrel to send back to Jamaica, the country from which she and Dautruche’s father emigrated. When the family visited Jamaica, they often brought an extra suitcase of items along. If family members in Jamaica had everything they needed, Dautruche’s parents gave to neighbors or to the church or school that her mother had attended as a girl.

As an adult, Dautruche has learned terms like “remittance” and “mutual aid” that describe her family’s approach to giving, which she carries on. “These are all new languages for me but not new practices,” she says. “We are not wealthy people; there’s just this ongoing sense of community support and being open-hearted and charitable.”

In recent years, Dautruche has supported bail funds and increased her political giving. During the pandemic, she began to use Cash App and Venmo to quickly transfer money to people she believed might not otherwise receive help in an immediate or direct way — Black trans people who lack secure housing and TikTok creators, who generally don’t get paid for their work but who brought her joy during lockdown, to name a few.

“That’s been the most convenient and useful thing I could have done, hunkered down in a pandemic,” she says.

In her day job, she directs the Westchester Center for Racial Equity and has previously worked to attract corporate and foundation support for groups like the National Urban League and the Smithsonian Institution. She’s made plenty of gifts to nonprofits like her alma mater, her church, and the food bank where she lives in upstate New York. But she’s donated less to these kinds of formal charities over the past 18 months, she says. “Giving to a nonprofit during the pandemic is less interesting to me right now.”

Dautruche’s approach to generosity is not uncommon. And yet it hasn’t been a major point of conversation for nonprofits. Taking stock of what’s driving direct giving will help organizations better understand the motivations of all donors and increase giving.

People have always given directly to other people, whether to a friend, family member, neighbor, or stranger in need. It’s the oldest form of generosity. But crowdfunding platforms, payment applications, and other technologies have made direct giving more accessible — and perhaps more visible — to more people.

In response to discrimination and problems accessing the social safety net, Black, indigenous, immigrant, and other marginalized people have long pooled resources to support one another. The pandemic and an increased sense of collectivism raised the profile of this kind of grassroots organizing. Experts say these ways of giving and coming together are all part of an expanding landscape of how we show generosity.

Person to Person: What Nonprofits Need to Know About Direct Giving

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:

• Mutual-Aid Groups Ponder What’s Next
• A Big Example of Direct Giving
• Many Attractive Elements of Direct Giving Also Have Downsides
• Diverse Donors Led the Shift to Social- and Racial-Justice Giving in 2020, New Report Says
• Crowdfunding Continues to Gain Traction as a Fundraising Tool
• What Big Philanthropy Can Learn From the Citizen Networks Helping Us Survive Today’s Crises

And direct giving isn’t going away. Whether its popularity is a sign that nonprofits aren’t winning the trust or hearts of some portion of the giving public remains an open question. But it’s critical that nonprofits pay attention and take all kinds of giving seriously — including that which doesn’t pass through formal charitable structures.

If we’re going to understand the nonprofit world, “we really need to understand why and when people choose to give directly or give via a crowdfunding platform and not to a nonprofit,” says Lucy Bernholz, director of Stanford University’s Digital Civil Society Lab and author of the forthcoming book How We Give Now.

“By continuing to ignore it, the nonprofit sector becomes more and more isolated from the many choices people are making.” Without understanding the full scope of how and why people give, nonprofits may fail to build ties with generous people.

A Dearth of Data

Bernholz is part of a growing cadre of leaders who argue that it’s shortsighted to see nonprofits as the primary structure for efforts to change the world.

“The definitions of giving that we incentivize in this country — where money goes to a nonprofit organization and a tax incentive is attached to it — is one of many kinds of ways that people use the things they control to make the world a better place,” says Bernholz. “It’s just a very incomplete picture of how we as people give,” she says. “It’s not the only way.”

The book makes the case for a broader definition of generosity that takes into account activities including political donations, peer-to-peer giving, and how people give away their personal data. “We don’t really even conceptualize all those acts as giving,” she says.

Bernholz suggests that now might be a good time to rewrite the rules and reconsider the norms that govern the nonprofit world. “We created this system and we could change it if we want,” she says. “Our whole understanding of how people try to make change in the world has been so captured by the big business that is foundation philanthropy that our imagination is completely stifled. We could expand the definitions. We can certainly change the tax rules.”

Until recently, there hasn’t been much of a fact base to quantify the scale of direct giving.

Justin T. Gellerson, The New York Times, Redux

“It’s been invisible to the mainstream nonprofit sector,” says Tyrone McKinley Freeman, associate professor of philanthropic studies at the Indiana University Lilly Family School of Philanthropy.

The lack of good data on giving that doesn’t flow through the tax system has meant that “it’s just not on the radar screen in the way that we think about philanthropy, the way that we research and track the data on philanthropy,” Freeman says. “It misses these kinds of social economies that are on the ground and embedded in communities.”

Recent survey data starts to paint a fuller picture of generous behavior. GivingTuesday’s October 2020 survey of 5,153 American adults asked participants if they agreed with the statement, “I prefer to give directly to individuals in need and not via nonprofit organizations, platforms, or websites.” Seventy-six percent of people age 18 to 34 and 46 percent of those age 50 and older agreed.

Twelve percent said they had participated in a mutual-aid network in the past 12 months. People who did not donate at least $50 to a charity in the past year were more likely to have started a crowdfunding campaign.

A September 2020 survey of 1,535 adults by the Lilly Family School found that roughly one in three donated to a crowdfunding campaign in a typical year — an increase from less than a quarter of people who said they had done so four years ago. More than half gave in response to appeals made by a family member or close friend.

That survey also found that Black Americans are more likely to help and give money to strangers in need. Seventy-six percent of Black donors said they had given to strangers compared with just under 50 percent of donors overall.

Freeman says direct forms of giving gained more visibility during the pandemic because of the failures of government.

“The government response to the pandemic was slow and very fraught, and people found themselves on their own,” he said. “They’re turning to neighbors, turning to family, and doing what they have always done in one way or another, but it becomes more intensified.”

Human Impulse

Stephanie Keith, Getty Images

Donors have diverse motivations for supporting individuals or groups of people directly. Some are drawn to how personal that giving is, how tangible the impact is, and how quickly they can get money or other resources into the hands of people who need it. Others see it as an opportunity to change someone’s circumstances without the red tape and overhead costs they associate with nonprofit bureaucracy.

Dautruche, the nonprofit director, doesn’t necessarily feel like she’s making more of a difference when she gives money to a GoFundMe campaign or sends a Venmo payment to an individual she connected with through a mutual-aid network.

“No one is like, ‘Here’s a report on what I did with your hundred dollars.’ No, I don’t expect it. I don’t want it. But I do feel like this is a space where I can be helpful,” she says. “I have access to people who have access to me, and we’re in community. And so that’s enough for me.”

Now that people share details about the people and causes they support on GoFundMe and social media, it might seem like it is a new thing. But the desire to help individuals has always been there; it’s human instinct, says Megan Kashner, founder of the crowdfunding organization Benevolent.

There’s an academic term for this: the identifiable victim effect. It describes the likelihood that people will feel greater empathy — and an urge to help — if they have information about a specific, identifiable individual versus if they are asked to help a broader group of people or an organization.

What has changed in recent years is our individual ability to act on that urge and give, Kashner says. “Does Venmo and Cash App and Zelle and GoFundMe make it more possible to do that? Absolutely,” she says. “We are further spreading our freedom to act on those impulses.”

Bernholz agrees. What’s underlying these technologies is “somebody asked somebody else for a gift and they gave it to them, which is as old as time.”

Julia Ho, a community organizer in St. Louis, helped start STL Mutual Aid at the beginning of the pandemic to help neighbors help one another. Mutual-aid groups — grassroots collectives that emphasize an egalitarian way to meet members’ needs — have deep historical roots.

People who make financial contributions to the St. Louis group have the option of giving to a pooled fund or helping specific individuals directly based on requests made on a central spreadsheet.

Because the pooled fund has a fiscal sponsor, an arrangement that allows the group to accept charitable donations without incorporating as a 501(c)(3), people who contributed to it could claim that gift on a tax return. Ho thinks tax exemption mattered for a few donors who gave six-figure gifts but that others gave to the pooled fund because they didn’t want to decide who got support or wanted to give to people without a Venmo or bank account.

The pooled fund raised more overall — $911,583 as of mid-August — which was distributed to more than 1,000 families. But some people still prefer to give directly to individuals, Ho says. People recorded more than $46,000 in person-to-person payments on the mutual-aid group’s website. “Some people made it a practice.”

One story has stuck with her. “I remember hearing from one mother that she would sit down with her 12-year-old son every week and they would read the stories of the people who are on the spreadsheet so that they could understand what other people were going through.”

‘Missing Middle’

Giving is changing in extraordinary ways in the United States. It’s an open question as to whether direct giving might help explain the numbers.

Researchers have charted a steady decline in the share of Americans who donate to charity — at the same time total giving continues to increase. The latest Philanthropy Panel Study from Indiana University’s Lilly Family School of Philanthropy found that only half of U.S. households contributed to a nonprofit in 2018, marking a 20-year low. Donors with wealth of less than $50,000 were half as likely to have made donations to charity as households with more than $200,000 of wealth, the Lilly report found.

Following the passage of the 2017 tax law, far fewer donors today have access to the charitable deduction. And it’s unclear if the modest tax incentives now available to donors who give small amounts really spur more giving.

Experts who study giving talk about the “missing middle” in philanthropy — both the hollowing out of the ranks of small and midsize donors and fundraisers’ lack of investment in them.

But these trends don’t capture giving to crowdfunding campaigns for individuals, gifts of goods and services, or person-to-person cash transfers. It’s tough to get quality data to tally generosity that happens outside of nonprofits. Major payment apps and crowdfunding platforms lack transparency about the money they move.

All of this has some experts wondering if what seems like a drop in donors is really a shift in how Americans choose to give.

“The whole ‘missing middle’ explanation might have a three-word answer: GoFundMe,” Bernholz says. “We really don’t know.”

But not everyone is convinced that money given directly to people in need is money that nonprofits are missing out on.

Asking that question is an example of the nonprofit world’s scarcity mind-set, says Asha Curran, CEO of GivingTuesday. “If we could only just learn to see generosity not as a pie but as a harvest,” she says. “Giving begets giving. Generosity begets generosity. It’s a value, not a commodity.”

Una Osili, associate dean for research and international programs at the Lilly School, says there’s no evidence that this kind of giving cuts into the pool of money that might go to nonprofits.

“People are doing both, and for different reasons,” Osili says. “They’re supporting nonprofits, and they’re also giving to those in need, sometimes not through a charitable organization.”

That’s the case for Kristin Giant.

Giant works at a tech company that supports nonprofits, but she wears a lot of other hats. She also works as the part-time grants administrator for a local family foundation and founded a consulting firm to help people focus on direct action. That firm helped start the Friends & Family Fund for Southeast Fort Wayne, a pooled fund launched in June of 2020 to support nonprofit and business leaders of color.

She’s also a big believer in direct giving. For the past five years, she has made it her personal practice to support every GoFundMe campaign request she gets. Whether she gives $5 or $100, she says, “not only do they get the financial boon of my gift, they also get seen as a human by another human.”

Giant understands the power of the nonprofit economy, but she also believes that money doesn’t always flow to the right people in the right way.

“It’s almost like you have additional insight into the both/and need for direct aid if you’ve seen the machine under the hood of a nonprofit,” she says.

Other donors say there isn’t a clear distinction to make. In GivingTuesday’s October survey, younger people were more likely to see crowdfunding for individuals and political giving as the same as charitable giving.

Dautruche, for example, gives to her local free community fridge — a refrigerator in a public place that allows people to share food — and others outside of her town. She supports a Black-owned farm in the Hudson Valley. She gives to Feeding Westchester, her local food bank. When it comes to food access and other causes she cares about deeply, she sums up her approach like this: “Here are the issues I care about. Here are the people I see working on them. Here’s how much money I can just throw into the pot and hope it does well.”

Her peers in development spend too much time trying to persuade people to give who are not inclined to do so. That drains her energy, she says, especially because “there are so many givers everywhere, and we don’t value them.”

At the end of the day, she says, “giving is giving.”