The Gathering blog reflected recently about the “disruptive innovation” of crowdfunding. Crowdfunding sites like GoFundMe allow individuals to publicly post a need to which anyone can respond with a contribution. Occasionally, GoFundMe causes go viral, and they receive thousands more than they had initially sought. Such was the case of 89 year old Fidencio Sanchez in Chicago, who received over $300,000 when a stranger created a GoFundMe page so that he could support his grandchildren.
Crowdfunding has indeed created a totally new way of giving, allowing thousands of individuals to encounter each other through the web and support each other in their immediate needs. Scrolling through GoFundMe’s website, one can find a variety of requests, from funeral expenses to funds to visit family for Christmas. According to the post, crowdfunding produced over $34 billion in cash contributions in 2015.
The author refers to crowdfunding as a disruptive innovation because it bucks some other prevalent trends in giving. The author writes, “the rise of crowdfunding is a reflection of a generation that mistrusts nonprofits and has a compelling interest in relieving the immediate need of an individual rather than contributing to the solution of a larger societal problem.” Towards the end of the article the author adds, “Would it not be ironic that at the very time all we read about is strategic and highly rational philanthropy that is based on data and results that we would be surprised by a microtrend like crowdfunding?”
So according to the author, crowdfunding may represent a shift from support for organizations and causes to direct support for the immediate needs of people. The author is right to point out a contrast between strategic philanthropy and giving that is directed towards relieving the immediate needs of people. But in characterizing crowdfunding as a “disruptive innovation” carried out by a refreshing new generation against an establishment of nonprofits and strategic philanthropists, the author draws the lines the wrong way.
First, giving is not a zero sum game. We give money at church for one reason, to neighbors in need for another, and to nonprofits for yet another. We are much more likely to give to each one because we are moved by piety, compassion, or admiration than because we have deliberated on which one is most worthy of our support.
Second, we should not lump nonprofits together with strategic philanthropy or working for a cause with strategic philanthropy’s fixation on “larger problems.” Nonprofits are necessary precisely because they come together to address a problem that falls outside the scope of the public and private sectors, or which the private or public sector haven’t adequately resolved. For example, a new after-school music institute is created to offer students classical music lessons. This does not represent the alleviation of an immediate, individual need, but it does serve the common good by making cultural enrichment accessible. Advancing the “cause” of music has little to do with strategic philanthropy, which in this case would probably only support the music program if it was shown to have “measurable” results like raising SAT scores.
Moreover, recent events show that mistrust of nonprofits isn’t quite what’s going on. While today’s hot topic is political populism and distrust of institutions, the outpouring of support for organizations such as the ACLU after Trump’s immigration ban should indicate that people still trust the nonprofits that are working to achieve their desired ends.
Finally, we should see the rise of crowdfunding not as a sort of populist microtrend reacting against strategic philanthropy and established nonprofits but as a “macrotrend” subsuming strategic philanthropy’s mechanisms for its own purposes. Strategic philanthropy gets a lot of airtime because the big names like Gates live by it. In reality, however, most Americans have always given away money out of an emotional connection to a cause or person rather than out of a calculated assessment of the impact of their giving. Crowdfunding apps tend to be couched in the language of strategic philanthropy. They are about “change,” and “action,” valuing innovative technology as a means of achieving social transformation (in its own words, GoFundMe is “changing the way the world gives”). Ironically, however, Americans have used crowdfunding in a much more straightforward way.
As has always been the case, Americans give money when they see an organization with a mission they believe in or a person whose need moves them. GoFundMe simply allows more Americans to encounter more people in need of immediate assistance than ever before.