TL:DR
I am exploring a new idea for a fundraising platform that encourages donors to make more effective giving decisions based on allocations towards high need areas and the most effective charities. It applies investment-style portfolio thinking (e.g, tracking, benchmarking, effectiveness "return") to individual giving. It utilizes AI and other tools to personalize and customize feedback to help navigate givers towards more active management of their contributions.
The Problem
>The average American household donates roughly 1.7-2% of disposable income or $3,000-$3,500 (Philanthropy Panel Study, Indiana University Lilly Family School of Philanthropy)
>Much of giving is shaped by personal networks - who asked, who we know - rather than any real assessment of where a dollar does the most good. For example, roughly 40% of all giving is going to religious institutions which makes sense from a social network and affiliation perspective.
>Giving tends to be a fairly random endeavor. People may have anchor charities that they give to annually, but a large portion of giving is largely reactive (e.g, giving to the Red Cross to help earthquake victims in Colombia, or a friend is asking you to sponsor them for a 10K race to cure a disease).
An Imperfect, But Useful Analogy
For Americans of a certain income level (the same demographic who have the capacity to donate funds), investing is a much more systematic practice. A person might contribute monthly to their 401K through payroll deductions or work with an advisor to develop a balanced portfolio of stocks and bonds based on their risk appetite. The concepts of compounding interest, dollar cost averaging, portfolio diversification, expected return, and risk are fairly well knows to even the most novice investors.
No equivalent fluency or real discipline exists for individual givers to charity. If a friend sends you an email and says "I have a great investment opportunity, are you interested?" You would probably be somewhat skeptical and cautious. But, for a charity solicitation we are more than willing to Venmo a contribution. As Schubert and Caviola point out (Effective Altruism and the Human Mind), donating is not like investing as there is no simple ROI, a diversified portfolio management approach may not be the most effective strategy given that splitting donations may dilute impact, etc. People get a lot of psychic validation from giving to a cause, regardless of "return,' impact, or charity effectiveness. Still, I wonder if there is something powerful to be learned and possibly ported from the way we invest to a better way to manage our donations.
Building on Current Efforts
Instead of another donation aggregator, I am thinking of developing a platform which a legible sense of focus and priority across causes. As noted above, I recognize that diversification for investment portfolios is a virtue based on the the fact that returns are independent and risk pooling has real value. The EA critique is that donations diversification actually has a dilution effect and can actively reduce the impact in giving. This is especially true for smaller givers. On one hand, this argument makes a lot of logical sense. On the other hand, the reality is that people give to a diverse set of causes. Perhaps part of the "nudging" in the platform is to get people to concentrate their portfolio in a high area of need. I would be interested in other peoples suggestions in this area.
Besides an investment-like portfolio view of their donations, the platform would provide evaluative and performance feedback on charity effectiveness (e.g, incorporating reports from credible 3rd parties like GiveWell, Charity Navigator, etc.). A donation site like Giving What We Can is very powerful and effective. It presents highly effective charities, presents evidence, allows you to split donations, and has many other helpful tools. It uses the Pledge (e.g., as 10% of income) as a primary form of commitment. This pledge framework can be powerful for those already committed (11K+ have made a pledge), but it's probably not realistic for most incremental donators. I recognize that I need to do more research on successful sites like Giving Multiplier and some other donor advised platforms, but I think I am coming from it from a different vantage point.
Features of an Enhanced "Investment" Type Non-Profit Donation Platform
I am working through the specifications now, but the features might include:
-An AI-based navigator that clarifies donors' giving priorities and surfaces the most impactful matching charities (a discovery tool)
-An AI engine to evaluate the effectiveness of their existing/future donation portfolio (this is like scenario planning in the investment world)
-A portfolio-wizard allowing donors to build an allocation around their own interests (and if allowed) to "nudge" them towards adding effective charities/high impact causes
-Exposure to model donation portfolios to allow new donors to benchmark their allocation decisions
Feedback Welcomed!
Any feedback from members of the forum would be great. Specifically:
-Does this seem like a worthwhile problem (e.g, improving donation platforms) to focus on?
-Is portfolio framing and other personalization features named above likely to actually change behavior? Is it a useful "nudging" mechanism?
-What's the biggest reason this kind of tool has not already been introduced or succeeded in your view?
Thanks, Todd
