Whether or not you’re engage in social networking, there’s a good chance you have come across a crowd-sourced corporate philanthropy contest (such as Chase Community Giving, Pepsi Refresh, or the American Express Members’ Project) sometime in the last few months. These initiatives, in which companies award funding to the nonprofit or nonprofits that earn the most votes via Facebook, Twitter, or the company’s own website, are sparking discussion in nonprofit and philanthropy circles. Most recently, James Epstein-Reeves’ editorial in Forbes outlines the pros and cons of the crowd-sourced corporate philanthropy model. (The June 2010 issue of BCA News [.pdf 873 KB] also covered the topic.) So, what’s the consensus? Is the crowd-sourced philanthropy model the wave of the future?
In some ways, crowd-sourced philanthropy seems like a win-win for both companies and non-profits. For businesses, crowd-sourced philanthropy contests don’t simply promote positive brand recognition, but also stimulate consumer engagement (especially in examples such as American Express and Pepsi, where consumers/participants log on and vote for nonprofits in different rounds, meaning they will keep returning to the company’s website or Facebook page). On the nonprofit side, Epstein-Reeves points out that these contests help level the playing field by allowing nonprofits who previously may have been ineligible for corporate grants access to the funding and branding power gained from association with the corporation, as well as national recognition that typically does not come from the award of a more traditional grant.
However, a closer look brings to light some potential problems with the crowd-sourced philanthropy model. Epstein-Reeves points out that the crowd-sourced model favors organizations with the most motivated voter base, and these organizations tend to be larger and better established. Indeed, if the organizations with the largest customer base, rather than with the strongest mission, are more likely to win, crowd-sourced philanthropy may actually be a detriment to smaller nonprofits operating on a skeletal staff with minimal resources. Diverting staff time from more mission-based activities to building a motivated voter base for such contests might not be the most effective use of resources at such an organization—especially if their efforts are thwarted when the larger organization ends up winning anyway.
This raises another point about crowd-sourcing philanthropy: there’s a reason that corporations (and foundations) have a grants process in the first place. A more formal grants process rewards a strong mission and effective management, not vote count. The idea of democratizing this process sounds nice, but will the money really be used effectively? Program officers at corporate foundations extensively vet potential organizations to fund based on the financial feasibility of their projects and as other factors that contribute to a project’s success, rather than persuasiveness or brand power. Voters’ motivation for supporting one nonprofit over another may be pure, but others might vote based on their affinity for an organization’s logo or celebrity spokesperson.
How do arts organizations fit into the picture? Both the Members’ Project and Pepsi Refresh fund organizations in several fields, including arts and culture. But in competitions where there is no mission-based separation, such as Chase Community Giving and USA Today’s Twitter campaign, can arts organizations compete with nonprofits with a social mission?
Whatever the pros and cons, it seems the crowd-sourced philanthropy trend is certainly gaining traction. We’d love to hear what you think of this trend. Have you voted in any of these contests, or has your organization participated? Do you think they are an effective way for businesses to help the arts and other nonprofits?