Back to top

A Charity Offers Donors More Control Over Where Their Funds Go

Friday, November 4, 2016

As charities increasingly deal with donors who expect more control over how their money is spent, a large humanitarian relief organization has developed a new online tool to give supporters a bigger say.

Direct Relief, which concentrates on medical aid for emergencies and povertystricken regions, will begin testing a new online donor site next week, as the annual year­end giving season approaches.

Currently, the group’s donation web page allows donors to choose from one of two broad options. They can click to let Direct Relief use their gift where it is “needed most.” Or, they can use a drop­down menu to have their donation directed to one of several program areas, including efforts focusing on Hurricane Matthew, the Zika virus and the Syrian refugee crisis.

Under the new system, donors can use a slider tool to apportion their gift among several options with greater specificity. The tool will set a suggested allocation, but donors can change it as they wish. For instance, if donors give $25, they could choose to have it all go to “emergency preparedness” or another broad category. Or, they may choose to divide it up into smaller chunks: $10 to Hurricane Matthew, $10 to Zika and $5 to “improving health in vulnerable communities.” (Donors can still click to have money go where it’s “most needed.”)

The new tool also has a line item for “fund­raising,” said Tony Morain, a Direct Relief spokesman who helped oversee its development, with the default donation set at zero.

“They can allocate their donation as they like,” Mr. Morain said. (Large contributors as well as those who give offline already had the opportunity to direct donations, he said, but the new tool expands that opportunity for individual online donors.)

The new system is expected to be fully operating by early December. Initially, some visitors to the site will see the new page, while others will still be directed to the current donor page, so Direct Relief can assess donor preferences and fine­tune the tool, Mr. Morain said.

The approach is part of a larger trend toward greater flexibility and transparency at nonprofit groups, driven by new technology as well as wariness by donors. In recent years, some major charities have faced criticism for using donations collected after major disasters for other purposes, or spending too much on fund­raising and overhead costs.

“Nothing turns off a donor more than the word ‘waste,’” said Laura Fredricks, a philanthropy consultant and adjunct professor at the George H. Heyman Jr. Center for Philanthropy and Fundraising at New York University.

Charities are under pressure to show that they are open and effective because of increased competition — not only from a growing number of nonprofit groups, but also from online crowdfunding sites and social media campaigns. Election­year scrutiny of foundations affiliated with the presidential candidates is a factor as well, Ms. Fredricks said. “It’s the year of transparency and explanation,” she said.

“We’re hopeful it will instill more trust,” and so increase financial support over the long term, said Thomas Tighe, chief executive of Direct Relief. “Fingers crossed.”

Sandra Miniutti, vice president of marketing at the nonprofit evaluation site Charity Navigator, said Direct Relief was one of its most highly rated charities. She said she hadn’t seen its new donor tool, but couldn’t think of another site offering such detailed online options for donors.

But Ms. Miniutti cautioned that setting the default donation for fund­raising costs at zero might give the impression that fund­raising was unimportant. While donors may prefer to have their money go directly to specific programs, she said, the reality is that all charities have to raise money, pay employees and cover mundane costs like electricity bills. Tight fund­raising budgets could put a damper on that. If you have researched a charity and are comfortable making a donation, she said, it’s best to give without restrictions, to allow the charity as much flexibility as possible. “Generally, we try to educate donors to give without strings attached,” she said.

Mr. Morain said Direct Relief was able to try different strategies with its donor page because it currently had a bequest to cover its fund­raising budget. “It’s a bit of an experiment,” he said.

Here are some questions and answers about charitable giving:

Should I give only to charities that allow me to concentrate on a specific program?

Catherine Hollander, outreach associate with the nonprofit group GiveWell, said “earmarked” gifts may hamper a charity’s ability to accomplish its mission effectively. Her advice is to do your homework and find a charity you feel confident in, then let it spend your money as it sees fit. GiveWell does intensive research, which it publishes on its website, and then recommends a handful of charities it deems highly effective.

How can I evaluate whether a charity is worthy of my donation?

In addition to Charity Navigator and GiveWell, you can check out charities on sites like BBB Wise Giving Alliance and CharityWatch.

Will other charities adopt digital tools to offer donors greater choice?

That remains to be seen. Direct Relief plans to make its donor tool available without charge to other nonprofit groups, Mr. Morain said, under an “open source” software model.

Originally published by: The New York Times
Published on November 4, 2016
Author: Ann Carrns

Funding Issue Area & Geographic Regions
Related Organizations