3 Reasons Crowdsourcing Will Replace Charity

Charities, by and large, have a very tall order put to them. They're expected to collect money from individuals who give of their volition, put that money to solving an important problem (which is usually systemic) and make significant positive impact on the world. 

Sounds great, in theory. But is it all that realistic? Or better yet, efficient?

Unfortunately, not all charities are "totally killing it." If you are or you've ever spoken to someone who works for a nonprofit, you might relate. This happens for a wide variety of reasons, most of which aren't the fault of the charities.

Think about it: they're working against the way our economy is set-up. People aren't expected, for the most part, to give money without receiving something tangible. Markets, not simply "good intentions" are the primary driving force for actually getting things done. Maybe, just maybe, we reconsider whether charities are the quickest or most effective way to move and shake the world into a better place. 

Crowdsourcing is the Way and the Means

There are many reasons why charities don't bring in enough donations today. In general, since they are not-for-profit, charities are often demonized for spending money on themselves, for attempts to incentivize their employees to do better jobs. If success (by common definition) is discouraged, your organization is basically going backward, uphill, on a three-legged mule. And it's costing a fortune. 

Overhead in human resources and infrastructure is a cripplingly huge cost for running a nonprofit. Crowdsourcing, on the otherhand, completely eliminates overhead. Traditionally, you might hire 20 people to find 1 person who knows how to solve the problem. Then you hire another 20 to determine how to implement it. Crowdsourcing simply asks for those two people to step forward with the critical information, and rewards them directly for doing so. 

Unlike a charity, which is fundraising to pay the people fundraising the money as much as it is to get the job done, crowdfunding simply asks the public to show their support in direct dollar amounts, with the promise of an increasingly effective or swift solution as more money rolls in. All of that money, at least in theory, is earmarked for action. 

All in all, efficiency wins the day. 

No Room to Fail vs. "Fail Fast and Often"

When Hollywood, retail stores, video games, and fast food restaurants spend millions on commercials every year, we don't bat an eye. Can the same be said for nonprofits? 

The cost of overhead is not seen as part of the charitable cause. Many people think that if a charity foregoes spending money on advertising, consultants, or R&D, they can focus more on their chosen mission. But that's not generally the case.

This perception, that non-profits shouldn't be spending money on advertising, is just as applicable to risk-taking in general. SpaceX would never get anywhere without exploding a multi-million dollar rocket or two. Can you imagine the donor perception if that was funded with charitable gifts? When non-profits attempt something totally new, risky, or innovative, they must penetrate layers upon layers of approvals that simply don't exist in open innovation or incentive competitions. Innovation thrives on failure, and when thousands of people are trying and failing and trying again, together, someone is bound to breakthrough.

Everyone understands, in theory at least, that charities need to grow and advance themselves like any other organization. But that doesn't mean they like to see a charity they donated to spending that money on commercials, or expensive, unproven tactics. This puts non-profits at the end of the line for adopting new technologies, often keeping them in a perpetually out-dated lag-cycle. 

Are you feeling the second-hand frustration yet?

Some Charities Are Actually Bad At Business

Unlike a crowdsourcing campaign, being able to manage money well over long periods of time is crucial for non-profits. Don't forget: every dollar can be scrutinized, because it's public information. When people see that a charity is bad with money, they conclude that their donation would be lost in the shuffle. They put their dollars elsewhere. Where else, you ask? These days, likely to support a completely transparent crowdfunding campaign, with a clear objective. Imagine that! 

As with everything in life, there are the bad examples. Some charities do pay their executives inappropriately high salaries, or they spend too much on marketing that never pays off. When these problems stack up, it's hard to defend the non-profit model.

Charity Navigator keeps a list of charities that owe more than they own, putting them in very risky situations. These organizations are in the hole for huge sums of money, with those at the top having Working Capital of more than negative $3 million.

For the lighter side of things, Forbes often publishes lists of the most efficient large charities.

Alternatives To Charity

There are a variety of ways to help people that don't involve donating to an organized charity.

You can always start local: check out the local newspaper and see who might need help today. Could a small amount of money or time make a significant difference in someone's life? 

And if you're interested in specific national or global issues, there are a variety of online fundraising platforms that let you support the cause of your choice.

There's Donors Choose, a public school funding service which lets you pick the specific projects that you think are most deserving. You can search to find what you think is worth donating to, and avoid the frivolous causes. AdoptAClassroom is a similar organization.

Kickstarter, IndieGoGo, and GoFundMe have seized on this opportunity to provide alternatives to the familiar monolithic, institutions of good-doing. Instead of hoping that large, heavily-structured organization can take on enormous issues, like adult literacy or finding cures to different types of cancer, they go the opposite way. Instead, with crowd-powered platforms, small, like-minded people from all over the world pool resources, knowledge, and support to address specific causes with specific solutions.  

While this approach may not work every time, when your project does hit the bullseye, you get to hear about it! You're a part of it. Beyond monetary reward or feeling good about donating, the most valuable takeaway is simply feeling directly part of something bigger than yourself. A sense of real empowerment is the reward of collaboration, and for that there is no substitute. 


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