Do the Word

Six months after the quake, how much of the $1.6 billion raised by NGOs for Haiti has been spent?

$627 million, or 39% of the $1.6 billion raised.

As Holden Karnofsky notes, $627 million is roughly equivalent to the amount raised in the first nine days following the quake.

Now, in and of itself there’s nothing fundamentally objectionable about that statistic. Long term recovery projects are, after all, key to Haiti’s recovery.

The potentially objectionable part comes in questions like:

Was this reality reflected in the Haiti disaster relief fundraising? In other words, did NGOs make clear that “a little more than half of your donation may not be used in the first year or go toward emergency relief efforts?

A July 8 press release on The Red Cross website notes, “The American Red Cross is on track to meet its goal of spending more than $200 million to address immediate needs – mostly in the first 12 months after the earthquake. The remainder of the funds raised will go to longer-term recovery over the next three to five years, with spending plans likely to evolve to respond to changing needs.”

So of the $468 million Red Cross raised for Haiti, the plan was–and remains–to spend less than half of that in year 1.

The question I’m raising is not whether that is a good idea but rather:

Was that plan made clear in the disaster relief fundraising efforts?

The answer may be, “Yes, it was.” Or it may be, “It took us a while to put together the plan” or “We never know how much we can expect in donations” or some combination thereof, like “Our plan is generally to spend about XX% in the first year (depending on what we raise), and we don’t have budget numbers or plans available at the time we’re doing the fundraising because, good heavens, the disaster just happened, and it takes us a while to assess the damage and plan the recovery.”

That all makes sense. It really does.

It just doesn’t square, in my view, with two elements of disaster relief fundraising:

First, disaster relief fundraising turns on the urgent need for money now. Is it really too much to ask that an NGO fully integrates its strategic approach into its fundraising, i.e.,  “Our plan is generally to spend about XX% of what you give in the first year (depending on what we raise), and we don’t have budget numbers or plans available at this time because, good heavens, the disaster just happened, and it takes us a while to assess the damage and plan the recovery.

Second, much ado is made at the time of every major disaster about the importance of donors giving through highly-rated disaster relief agencies. Otherwise, the argument goes, you might as well just hand out cash to victims on the street.

That being the case, one part of the Red Cross press release bears particular mention:

Innovative Text (SMS) Cash Transfer Program
In addition, the Red Cross said today that it is launching a major $50 million SMS cash transfer program to give cash grants of approximately $125 to up to 400,000 Haitian families over the next several months. Recently, the American Red Cross tested a technologically innovative program to give cash grants to families using cell phones and text messaging. During this successful pilot, smaller $50 cash grants were given out to help nearly 1,800 families move from at-risk camps to camps in safer areas. This newly expanded program will enable families to buy food and supplies, fund the education of their children, purchase medicine, repair homes, relocate from camps, and invest in their businesses and livelihoods.

“Through these programs, families who once stood in line for relief distributions will now be empowered to buy some of the basic items they need most, which in turn should help stimulate the country’s economy,” McGovern said, noting that even modest amounts of money can make a big difference to Haitian families, as 70 percent of Haitians lived on less than $2 a day prior to the earthquake.

“The same cell phone technology that enabled Americans to text donations for Haiti will now enable earthquake survivors to access money to support their families,” said McGovern.

So after six months we are now on the verge of being able to do the technological equivalent of handing out money to people on the streets.

Again, I actually think this is probably a great program. My question is still the one I asked back on February 3: Who’s hindering the help in Haiti: “Disaster do-gooders” or NGOs?

And my answer–and my recommendation of how we consider giving at least a part of our donations in such circumstances in the future–is still the one I gave on January 25: Give through credible (denominationally-affiliated) ethnic church congregations and–in consultation with or through expats you know and trust–to institutions (like churches) in the country where the disaster occurred. Give, in other words, to credible groups whose connections to disaster victims is personal, not merely humanitarian and whose knowledge of the area is personal, not merely researched.

I wrote then:

Going on a decade ago, my wife and I noticed that when it came to helping North Korea, most people opted for giving through reputable major aid agencies.

Very few people attempted to reach North Korea through North Korean defectors.

And yet when we talked to the aid agencies and the North Koreans, we consistently found that the North Korean defectors had strikingly better insights into how to help and who to help–and how not to help–than the aid agencies did.

After all, North Korean defectors weren’t simply motivated by humanitarian concerns. They were motivated by trying to help family members not die.

So $627 million down, $1 billion left to go. I wonder if this is what everyone had in mind when they texted in their urgently needed life-saving donations six months ago?

Hooray to my bud Jason Dick at A Small Change for his interview with Adam Penenberg, author of Viral Loop: From Facebook to Twitter, How Today’s Smartest Businesses Grow Themselves.

And hooray to Adam Penenberg for applying the concept of the viral loop to nonprofits.

(And hooray to Give and Take for calling the article to our attention!)

Since we’re in the midst of this series on sustainable fundraising practices for nonprofits, however, I’d like to suggest to Adam that we apply his concept differently. Sustainably, you know.

Here’s Adam’s recommendation:

Viral marketing relies on people passing on information they deem worthy–whether it’s a link to a funny video on YouTube, a political message, petitions, etc. If a nonprofit has a passionate core group of donors then the key would be to incentivize these donors to reach out to their social networks of friends, family, colleagues and neighbors. It would work well with a specific campaign. Ideally, the non-profit could create a Facebook application that could incentivize donations. Let’s say your organization is called Save the Cats (STC). I’d set it up like this: Create a Save the Cats branded app fueled by virtual currency. Just by downloading the you receive $100 in STC dollars. They can be spent at any number of retailers that donate inventory the retailer would like to sell anyway. You then get $30 off a shirt from the Gap, $20 off a rental car, $40 off a pair of rollerblades, etc. As your cash reserves dwindle you can earn more virtual currency–it doesn’t cost STC anything–by getting 5 friends to download the app and donating a certain amount of money. It should be small increments, say, $10 each. And so on and so on. Once you have a large enough installed base you can try al sorts of things. At the very least you gain thousands or even hundreds of thousands of new names to add to your donor lists. You raise money for your non-profit. And you spread your message. It’s a win-win-win for everyone involved.

What’s not sustainable about such an approach?

It makes the marketing campaign viral, not the cause.

That is, taken in isolation, Adam’s recommendation makes perfect sense. But envision two nonprofits doing the same thing and you’ll begin to see a challenge emerging:

Should I work for $20 in Save The Cat dollars? Or should I instead work for $20 in Save The Marmot dollars, since STM dollars are redeemable at Banana Republic, whereas STC dollars are only redeemable at Old Navy, which I like much less?

Multiply this by ten nonprofits, and then ten thousand–just a fraction of the 1.5 million or so nonprofits in existence today–and you bring to the virtual arena the very same kind of challenges we have in the physical world with fruitcake sales, nonprofit auctions, golf scrambles, and every other kind of fundraising event where we promote involvement through self-interest rather than direct, personal involvement in the cause: Commodification. As these kind of campaigns proliferate, we select our involvement more and more based on the self-interest reward and less and less on the cause.

Not sustainable.

The alternative?

What Lave, Wenger, and other Situated Learning specialists call Legitimate Peripheral Participation:

Legitimate peripheral participation (LPP) is a theoretical description of how newcomers become experienced members and eventually old timers of a community of practice or collaborative project (Lave & Wenger 1991). According to LPP, newcomers become members of a community initially by participating in simple and low-risk tasks that are nonetheless productive and necessary and further the goals of the community. Through peripheral activities, novices become acquainted with the tasks, vocabulary, and organizing principles of the community.

Gradually, as newcomers become old timers, their participation takes forms that are more and more central to the functioning of the community. LPP suggests that membership in a community of practice is mediated by the possible forms of participation to which newcomers have access, both physically and socially. If newcomers can directly observe the practices of experts, they understand the broader context into which their own efforts fit. Conversely LPP suggests that newcomers who are separated from the experts have limited access to their tools and community and therefore have limited growth.

In other words, rather than making a Save The Cat Dollars campaign go viral, find ways for people to save cats through social networking that are “simple and low-risk tasks that are nonetheless productive and necessary and further the goals of the community” such that saving cats itself becomes a viral cause.

For ideas on how nonprofits are already doing this, read Clay Shirky’s Cognitive Surplus at the same time you’re reading Adam’s Viral Loop.

It may take you two books to learn how to do it this way. But, hey, at least then you’ll be on the road to fundraising sustainability.