Donation Innovation
By: Bldg Blox
Tags: Nonprofit, Blockchain, Charity, Technology, Donations

Also important to note, in the context of this article, ‘non-profit’ refers to all business models with a 501c(3) designation including public parks, museums, libraries, and more.

Unengaging, Unsustainable

One of the most glaring issues is the rapid fall-off when it comes to donation consistency and interest. The willingness to donate comes from an empathetic impulse towards causes you align with or people and places you which to support. Unfortunately, there is rationally little incentive to continue to donate over time and most first-time donors rarely follow-up with a second contribution.

This is what platforms like GoFundMe and Facebook Donate understand quite well, thus designing their donation pages in a way that only expects and encourages a momentary engagement. Overall, this works quite well for short-term and finite social efforts i.e. fundraising for an operation or local uniforms.

But this is obviously terrible for organizations and long-term efforts that need much more than a one-time contribution from their supporters. In these cases, five $1 donations from an individual are much healthier than a single $5 contribution since it denotes long-term and committed support. But most people simply don’t have the loose cash to support a cause for longer periods of time. Organizations try to mitigate this issue by encouraging newsletter signups, pushing renewing memberships, special seasonal events, and tirelessly creating new programming to re-attract their core base.

We Only Take Cash, Sorry

Financial support is obviously the priority when it comes to nonprofit activities and social programs. After all, someone has to pay the electric bill and office salaries. Not profits thus become a cycle, racing for the next donation pull against their expense sheet.

Young volunteers at Repair the World [Source]

But there’s a lot of sharing that pure money cannot facilitate, and frankly, the effective receiving of other non-financial resources would help in the long-term, even to reduce internal costs dramatically. Beyond donations, non-profits have a dire need for resource and knowledge sharing whether it be regarding best practices within the company or further expertise to keep organizations relevant. As non-profits are inherently non-scalable with a lack of business models, they’re stunted by the inability to bring in diverse new talent and expand on the impact of their current work. These organizations have no way to effectively scale their operations in marketing, programming, technology, engagement, and more. This all leaves non-profits stunted and starved for resources beyond the financial contribution.

Obscured Use of Funds

We’ve all heard distasteful stories of how non-profits are used or how they themselves mismanage their resources, both scenarios putting well-intentioned public money at risk. In many cases, there isn’t transparent money flow and even if things are done properly, there is an estimated $100 billion is lost on inefficiencies. Again, since non-profits cannot easily scale or contract further work, those holes are much less likely to be patched. Lastly, we also have no idea if an organization is well beyond their needs and if your money could actually be contributing to a core mission elsewhere rather than being a cherry on top.

The GoFundMe scam trio [Source]

And the above are just common circumstances. In the worst case of scenarios, the cause can be completely illegitimate. GoFundMe’s most recent scandal this year when $400,000 was raised to support a homeless man and turned out to be a total sham. Whether intentional or unintentional, there is little accountability to ensure the proper use of charitable funds.

Donations Need an Incentive Structure

So we’ve laid out three core and inherent issues in the modern donation system — they’re short-term, purely financial, and obscure the funding process. The nature of the current system is suitable enough for certain genres of the non-profit industry but stand as a detriment to the needs of urban development and cultural assets. These need long-term commitments, contributions that are beyond just financial, and transparent models that use funds efficiently and with accountability since they have the potentially longest-lasting and irreversible impact on our lives. To realistically achieve all this, a new donation model with an incentive structure is needed.