New Study: Online Philanthropy Markets: From ‘Feel-Good’ Giving to Effective Social Investing?

December 10, 2008

David Bonbright
Natalia Kiryttopoulou
Lindsay Iversen

Publication Date

January 2008


This study, supported by the Aspen Institute’s Nonprofit Sector Research Fund and carried out by Keystone, examines the phenomenon of online philanthropy markets and details the opportunity that they have to create the informational basis for results-oriented giving and for serving as a lever for greater accountability and effectiveness of social purpose organisations. ‘Online philanthropy market’, as stated in the publication, describes an internet phenomenon “through which individual citizens and institutions can engage with citizen-led organisations and micro-entrepreneurs all over the world to invest their money, time or expertise to improve human and environmental wellbeing.” The study examines 24 online markets and six informational sites to identify the quality and quantity of resources available for domestic and international development through online platforms such as these. Through the analysis and recommendations of this study, Keystone aims to spark a field-wide dialogue about how to achieve the transformative potential of online philanthropy markets and about how to use innovative online tools to create the informational basis for effective social investments.
From the Executive Summary:

“This study represents a first attempt to examine this phenomenon systematically, and set out to examine four main questions:

  1. Do markets simply offer a means of mobilising short term relief or could they become effective vehicles for sustainable development?
  2. How do online markets currently try to measure the impact of their investments in bringing about change in the world?
  3. How do they present their ‘investment offerings’ to donors in ways that might cultivate larger numbers of donors and foster long term relationships of relatively unrestricted support?
  4. How might they positively influence the practice of development by fostering greater dialogue and learning among the constituents (investors, implementers and those most affected) of interventions?”

The study finds that online philanthropy market innovations are advancing performance of nonprofit organisations in areas such as accountability to beneficiaries and other constituents of their work. The document contrasts the traditional ‘feel-good giving’ approach to philanthropy with the cultivation of a social investment mentality among the users of their platforms. The document reports that 27% of markets provide formal evaluation of projects. Most reports simply document outputs rather than try to understand and communicate contribution to sustainable outcomes. “Many respondents felt frustrated that there is currently little common understanding of what ‘performance’ means, and how to measure and communicate it credibly and effectively. Most rejected the idea of a single universal system of measuring and reporting in favour of a plurality of approaches based on common values and principles.” However, 85% of respondents felt that evidence that an organisation was achieving its goals was the most important factor motivating them to give.

There was, as stated here, interest in ways to reflect the voices of all constituents more effectively. However, there was “deep insecurity in the market that the demand for more and better performance data would alienate both donors and offerings – listed organisations and projects that solicit funding – from their market, or channel resources to the biggest and the easiest at the expense of small organisations that are working in the most difficult contexts.”

Recommendations from the research consider three ways markets can work together:

  1. enabling their donors to begin thinking like investors by exploring effective and appealing ways of measuring and communicating the ongoing social value generated by online ‘investments;
  2. creating independent supplemental data sets that allow comparisons of the performance of listed offerings both within and across markets in a shared space, such as a ‘performance data commons’; and
  3. working to build a common reporting framework for constituency validated impact reporting.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: