The Brave New World of Philanthropy

With social media revolutionizing communication possibilities, SPEA researchers confront a changing landscape for nonprofits and fundraisers — for better or worse.

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It’s been called “the most viral video of all time.” On March 5, 2012, the nonprofit organization Invisible Children posted a 30–minute film on YouTube depicting the atrocities of central African rebel army leader Joseph Kony. Within its first five days online, the video reached more than 70 million views. Donations came pouring in to help the organization reach its goal of halting Kony’s abduction of children and restoring areas affected by his Lord’s Resistance Army. Just 16 days after the film was posted, 33 U.S. Senators introduced a bipartisan resolution condemning Kony, a warlord who had been operating for 26 years without attracting much American attention.

"This is about someone who, without the Internet and YouTube, their dastardly deeds would not resonate with politicians,” Senator Lindsey Graham (R-S.C.) told Politico. “When you get 100 million Americans looking at something, you will get our attention."

Leslie Lenkowsky, clinical professor of public affairs and philanthropic studies at SPEA, says the “Kony 2012” phenomenon illustrates how profoundly social media have changed the communication landscape for nonprofits, particularly with respect to fundraising campaigns.

“We talk a lot about the marginal cost of fundraising,” he says. “With a viral video like the one by Invisible Children, once you have video produced, you have zero additional cost. Each click costs you nothing. In this case, you now have 100 million people or more who are aware of Mr. Kony, and they may be hearing about it from their tween-agers who saw the video online.”

Quote from Les Lenkowsky

The flip side of this exposure, however, is that it’s difficult to control where it ends. As the Kony 2012 video sped across the Internet, so too did highly publicized critiques of Invisible Children, from questions of its financial structure to accusations that the group failed to involve independent advisors, particularly central Africans.

Two weeks after the video went viral, its filmmaker, Jason Russell, was detained by the San Diego Police after a public meltdown in which he allegedly appeared on a street corner in a state of undress, screaming incoherently and disrupting traffic. The episode was brought on, his wife said in a statement, by the “sudden transition from relative anonymity to worldwide attention” resulting from the video’s success.

If social media has created a “Brave New World” for philanthropy and fundraising, then, it is not without its dystopian elements. Unlocking the potential of new technologies and trends — while acknowledging and addressing their dangers — is the complex task before the scholars of philanthropy at SPEA.

Preparing for the public eye

“The bottom line, of course, is that using social media can get you unprecedented levels of attention, but it doesn’t necessarily mean you are prepared for it,” says Lenkowsky. “The reality is that we live in a culture in which doing good invites criticism. In this example, I don’t think the organization was quite ready.”

In his “Communications for Nonprofit and Public Affairs” course, Lenkowsky helps students anticipate these negative media portrayals and consider how to prevent them. One important step is recognizing that even invalid criticisms have the potential to become widespread. He offers the example of disaster relief efforts such as those of the American Red Cross following the recent tornadoes that tore through Indiana. As a forward–looking agency, the Red Cross recognizes that donations are likely to peak immediately following the event and to dwindle after, so it stewards its resources for a long–term recovery effort rather than spending all the donations up front.

“At some point, we will probably see an investigative news story pointing out that six months later the Red Cross still hasn’t spent 50 percent of what was donated,” Lenkowsky predicts. “It’s plausible that such a strategy would be in the best interests of area residents, but that may not be how that story is depicted as it spreads across the Web.”

With respect to campaigns, viral or otherwise, Lenkowsky emphasizes that nonprofits must educate donors on precisely how their contributions will be spent. They also need to have their affairs in order before they invite the scrutiny of the far-flung cyber-media. “In the case of Invisible Children, I think some of the financial criticisms were unwarranted, but there is a real issue with the closed nature of its advisory board,” he says. “It would be a good idea to have a sufficient number of independent board members before you attempt to go viral.”

Celanthropy

Another modern media realm full of potential pitfalls is the growing field of “celanthropy.” Short for “celebrity philanthropy,” this practice involves famous faces sharing their spotlight (though not necessarily their money) with strategically selected nonprofits.

The thing to remember, Lenkowsky says, is that these activities generally fall under the publicity heading for celebrities. Though many movie stars, politicians, and sports heroes feel strongly about the causes they represent, it has become the norm for big names to pursue such projects as part of a calculated PR strategy. “There are advisory companies that will work with celebrities on their charitable giving,” he points out. “It may not be the celebrity selecting the organization but their agent or someone else attempting to protect their interests.”

These arrangements can still be mutually beneficial, but they carry more risk than affiliations based on true concern for the organization’s mission, as the partnership may be fleeting. Moreover, the celebrities themselves can be gambles for nonprofits.

“What goes up can come down,” says Lenkowsky. “What happens if your celebrity loses his or her good name? Think of all the charities that were scrambling after Tiger Woods had his misadventures.”

Choosing celebrities wisely is an obvious mandate for nonprofit organizations, but it is also possible to insure yourself – literally – against celebrity scandals. Lenkowsky reports that a new branch of insurance has arisen to cover the cost of redesigning campaigns and materials in the event that a celebrity becomes a persona non grata. “It makes a lot of sense, really,” he says. “You can see how for a fee you can be insured so that you won’t lose your investment if your celebrity implodes.”

Love for mankind

If all of this strategizing sounds a bit clinical, the work of SPEA Assistant Professor Jen Shang shows that the newest branch of philanthropic study is entirely heartfelt. As the world’s first and only philanthropic psychologist, she supports nonprofits by focusing her research on increasing donors’ well-being.

Image of an outreaching arm and quote from Jen Shang

“When you look at the word ‘philanthropy,’ what it means is ‘love for mankind,’” she points out. “Donors give because they want to be more kind and caring. Doing so makes them feel happy. At the end of the day, this is our highest calling as human beings: We can derive happiness from righteous means and social morality. If we help donors access these deep human values we can offer life–changing experiences through giving.”

Shang works closely with her research partner and husband Adrian Sargeant, the Robert F. Hartsook Professor of Fundraising at the Center on Philanthropy at IUPUI and a professor at SPEA in Indianapolis. Together, they created a textbook and a website (studyfundraising. info) dedicated to training fundraisers in this character–centered approach to philanthropy. The trick when working with fundraisers, she says, is demonstrating empirical and quantifiable methods for helping donors feel righteous and moral.

“We provide this free website because we are passionate about increasing education for fundraisers and providing them with research that translates into action,” Shang says. “If all we do is tell fundraisers, ‘You need to understand your donors and make them feel better,’ their response is, ‘We already do that.’ But if you can show them research that demonstrates practical steps for increasing their revenues – ‘Use these two adjectives in this setting and you’ll increase giving by ten percent in this population’ – they start to develop a new perspective.”

Shang recently conducted this type of research with a radio station, using “moral priming” to increase donations during a pledge drive. The experimental conditions involved telephone operators inserting descriptors of positive moral identity into their preexisting pledge scripts, resulting in statements like, “Thank you for being a compassionate and helpful [station name] member.” In comparison with the control group that was thanked without the adjectives, women who received the moral prompts increased their pledge amounts by an average of 21 percent. A concurrent study showed that women’s self–ratings of moral identity attainment – how closely they felt they had come to achieving their moral ideals – were positively correlated with an increase in the dollar amount of giving, suggesting that increased donations were a win–win for donors and organizations.

“The concept is relatively straightforward, but it is very difficult for nonprofits to identify these strategies on their own as this whole field of research is very new,” Shang says. “Fundraising hasn’t always been recognized as the professional field that it is – Adrian is actually the world’s only chaired professor of fundraising. I think between his expertise and my training as an experimental psychologist, we are offering a new trans-disciplinary approach. We hope it will help fundraisers lead proud professional lives dedicated not just to raising money but to raising Man.”

Proliferation of product donations

As new dimensions of individual giving have been examined at SPEA, so too have trends in corporate philanthropy. An area of particular interest to SPEA Associate Professor Beth Gazley and SPEA Assistant Professor Justin Ross is corporate in-kind giving. While product donations have long been a part of the philanthropic landscape, the advent of online distribution tools has made it much easier for manufacturers to link to nonprofits that can utilize their goods. The Web-based broker Good360, for example, began nearly 30 years ago under the name Gifts in Kind as a distribution center for donated office equipment. It now partners with nearly 3,000 donors and more than 25,000 charities to facilitate the equivalent of more than $350 million in product donations around the world.

Despite the increasing proportion of corporate giving devoted to product donation, little research has investigated the impact of these types of programs, Gazley says. She recently partnered with Good360 to assess the outcomes of the Framing Hope program, which links Home Depot stores with charities in their areas. Gazley and SPEA doctoral student Gordon Abner conducted surveys of current and former Framing Hope participants to measure a range of outcomes including the number of people served, charities’ satisfaction levels, and the extent of performance measurement.

Quote by Beth Gazley

“The best news from our study is that these charities are happy clients,” Gazley says. She reports that 90 percent of those surveyed reported a “good” or better relationship with Home Depot, and 92 percent rated their relationship with Good360 as “good” or better. With respect to the total value of donations and the number of households served, the results indicate that Framing Hope donations have amounted to over $46 million in product contributions and reached some 450,000 households. Surprisingly, though, few charities had attempted to measure the program’s impact on clients.

“I think in-kind donations are being undervalued,” Gazley says. “The charities don’t seem to be investing nearly as much effort as they could in looking at these bigger questions of impact. The program should be helping charities address the capacity challenges associated with receiving and using in-kind gifts, including processing the gifts but also measuring performance.”

While the question of long-term outcomes for charities remains open, Ross offers a useful perspective on how these contributions affect corporations’ bottom line. In a study released earlier this year, “The Business Case for Product Giving,” he determined that in-kind donations offer a number of advantages over liquidating or destroying surplus products.

“The question I wanted to address was how a corporation could think through the logistics of determining when it makes sense to donate inventory,” says Ross, a tax economist. “You could get rid of it by selling it at half off, but then the product is selling at a loss while taking up your floor space. You could throw it away, but devalues your products. The tax code is also weighted toward product donations.”

In-kind donations carry risk too, including the possibility that products will go unused and introduce the same problems as direct discarding. Inappropriate donations – like the thousands of size 12 shoes that were shipped to China after an earthquake (reaching a region in which very few people have such large feet) – can appear to be blatant attempts to enjoy a tax write-off without actually helping those in need.

Both Ross’s and Gazley’s analysis suggests that while the business case for product philanthropy is strong, corporate donors should be working more closely with charities to maximize its potential. As Gazley observes, “Attention must be paid to ensuring that the donated items meet real needs.”

In his report, Ross offers a step-by-step analysis with which corporations can determine whether in-kind donation is the best option for their surplus inventory. Online marketplaces like Good360, which allow charities to “shop” for products, play a crucial role in making that option more practical.

“The Internet has made it very easy for corporations to find organizations that need their products,” he says. “The nonprofits might even pay for the shipping cost, or may be local and be able to come retrieve the goods. I just don’t think this type of matching was possible before everything went online.”

Intelligent rating tools

The online clearinghouse concept has provided another vital service to both corporate and individual donors: quality assurance. Where once the Internet was regarded as a free-for-all in which veracity and authenticity were uncertain, it has now given rise to repositories devoted to rating and reporting on nonprofits.

Quote by Justin Ross

These systems are becoming ever more sophisticated, Lenkowsky says, transitioning from simple questions of financial distribution to considerations of transparency such as the presence of an autonomous board and independent audits. The largest of the independent rating services, Charity Navigator, is now working with SPEA students in Lenkowsky’s capstone class to develop a third iteration of its rubric.

“We are working with them on Charity Navigator 3.0,” Lenkowsky says. “We now want to ask what kind of impact the charity is having. This is a very difficult question to answer, because a lot of outcomes are long–term or intangible, and Charity Navigator works on such a large database of about 6,000 charities that you can’t expect them to have raters with Ph.D.s reading all the evaluation reports. Even if we can’t at this stage assess the true impact, though, we can create some criteria to see how seriously the charity is taking its own evaluation process.”

The students are designing a logic model to determine if charities are putting in place independent evaluations and seeking input from constituents that include donors, outside experts, and the people the organization serves. They presented their suggestions to Charity Navigator on April 20 – ironically, the same day Invisible Children had designated as its worldwide “day of action.”

If the “Kony 2012” video fulfills its promise, those students will wake up to a world plastered with posters taped up overnight by hundreds of thousands of volunteers. As they walk to class past endless red-and-black signage, they may be reminded of the enormous power that can now be wielded on the Internet, and feel especially compelled by their work with Charity Navigator to ensure that power is matched by intelligent analysis and reporting.

“It’s interesting to contrast Aldous Huxley’s vision in Brave New World with George Orwell’s in 1984,” Lenkowsky says. “Orwell’s brave new world is nonstop propaganda. On the other hand, Huxley imagines a future in which people are controlled not with force but with a recreational drug, soma. The journalist Evgeny Morozov suggests that YouTube might be the electronic version of soma, because it entertains us and distracts us from what’s happening in our immediate area.” Both concepts, he points out, may be called to mind by Invisible Children’s sudden ubiquity.

Neither author could anticipate the social media landscape that now confronts donors and nonprofits, but with these cautionary tales in mind, SPEA researchers are working to make philanthropy more transparent, deliberate, and verifiably beneficial for everyone involved.

Image of arrow pointing to succeeding the tried-and-true way

While the likes of Twitter and YouTube are catalyzing some fundraising efforts, others are succeeding the tried-and-true way: “Through 20 years of good work and good relationships,” says John Krauss, director of the Indiana University Public Policy Institute (PPI), which is housed within SPEA.

This year, the Institute received a $6.6 million grant from Lilly Endowment. Krauss explains that the Endowment’s grant is a vote of confidence in PPI’s longstanding commitment to providing policy-makers with nonpartisan, non-ideological research. “We’re here to help the citizens of Indiana understand the issues before them,” he says. “I told my staff this grant is just the latest endorsement of the good work they’ve done.”

The Lilly Endowment provided PPI’s seed money when it supported the formation of the Center on Urban Policy and the Environment in 1992. The Endowment continued to contribute critical operating support year after year through successive three-year funding cycles. In 2008, the Center for Criminal Justice Research was formed, and PPI was established as the umbrella organization over both centers. PPI’s work has focused on government and community policy – such as land use, economic development, and gaming – as well as criminal justice, public safety, and environmental issues.

“PPI and Lilly Endowment have enjoyed a great relationship for all these years,” says Krauss. “But then, last year the pattern shifted. Clay Robbins, Lilly Endowment’s president, said he had a change in how he wanted to approach the institute. Instead of three years, he gave us 10 years of funding up front. Clay said, ‘It’s up to you to use it how you wish.’”

The $6.6 million award will “allow us to have more control over our destiny,” Krauss says. PPI is now developing a forward-looking business plan that will use the grant as a “springboard” to invest in more visible projects, which will in turn attract more clients and funders to help grow the institute.

Most exciting for Krauss is the opportunity to take on more large-scale initiatives like the “Policy Choices for Indiana’s Future” project that was released in February of this year. This 18-month research and analysis effort was led by PPI advisory board co-chairs Randall Shepard, the former chief justice of the Indiana Supreme Court, and Mark Miles, President and CEO of the Central Indiana Corporate Partnership. Designed to improve the state’s economic health by engaging leaders and policy makers in a continuing nonpartisan discussion, the research portion of the project involved representatives from the private, public, nonprofit, and higher education sectors. The end product is a comprehensive overview of the challenges the state faces along with policy briefs on encouraging “An Educated Workforce,” “An Environmentally Sound Energy Policy,” and “A Balanced Tax Policy.”

PPI rolled out the project’s findings with an innovative gathering of what the popular Howey Politics Indiana blog described as “100 movers and shakers from around the state.” Rather than merely presenting their reports, the group divided the attendees into roundtables, then invited each table to share highlights from their discussion of each topic area.

“This way, we all got a sense of what the whole room was thinking, which is important, because everyone wants to be heard and listened to,” says Krauss. “This is all about relationship-building. Respectful, mutually beneficial relationships have sustained PPI for 20 years, and will enable us to continue our good work in the decades to come.”