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Changing the Giving Game: IIC Pioneers “Market-Driven Philanthropy”

January 12, 2011

Americans give generously. Even amidst economic hardship, this year Americans gave $303.75 billion away in charitable donations.  That figure amounts to nearly 2.1% of American GDP, according to a 2010 report by Giving USA.  As Ewe Reindhardt noted recently in the NYT Economix blog, that amount is much higher, as a percentage of GDP, than is spent by nations which prefer to finance charitable and public interest activity through tax revenue redistribution.

According to a report put out by Network for Good, about 1/3 of those donations are recorded in the month of December – let’s chalk that up as 1 part holiday generosity mixed with 2 parts tactical prep for the close of tax year.  If – like most Americans – you are philanthropically inclined, and if – like many Americans – you are a final-hour donor, then the odds are strong that you’ve recently given to a cause. If that is the case, then you may have noticed that there has been a dramatic evolution in the ways we give.

Mail-in and over-the-phone donations have been overtaken by an explosion in online giving. Various tools, widgets, sites, and portals bombard potential donors with opportunities and appeals to support a cause, an organization, or a specific individual in need. As corporations get into the game with “cause-based marketing” and nonprofits take fundraising “social” via networks like Facebook, Twitter, and Jumo, the cries to “Give Now!” “Click Here!” “Watch This!” and of course “Tell Your Friends!” can be overwhelming. Surfing the web is fast becoming the virtual equivalent of walking down State Street during rush hour when the earnest, clip-board wielding minions of (Pick Your Charity) are out in force and cheerily intent on inflicting psychic pain as you dodge their gaze and dip into the nearest Starbucks for a $4.00 latte (let’s not dwell on what that money might otherwise buy).

I’m not suggesting this is a bad thing, necessarily. Tools and websites like Network for Good, Facebook Causes, Global Giving, Kiva and others make it easier than ever to learn about, connect with, and give to nonprofits and charities around the world. They also enable many small gifts to be aggregated for greater impact, facilitate mass mobilization in times of disaster or crisis, and may even shepherd new generations and cohorts of donors to nonprofits’ doors.

Unfortunately, while online channels have revolutionized how donors give, they have not altered the fundamental mechanics of giving. The basic transaction that defines donor-driven philanthropy remains the same. No matter how easy, fast, small, large, or distant the transaction, donors still must open their pocketbooks (figurative or literal) to support a cause. This is unfortunate because no matter how many creative pathways to giving are created, donor capacity in a given year will remain constrained by larger factors, such as the economy, the sheer volume of worthy causes, and the fierce competition for individuals’ interest, attention, and time. Thus, these tools do more to facilitate the competition for and distribution of existing resources than they do to introduce additional resources into the philanthropic system.

But what if there was an alternative to donor-driven philanthropy? What if there was a way to simply put a check in users’ hands and say, “It’s yours to give, but give you must”? Who wouldn’t leap at the chance to become a philanthropist; to discover and support causes they cared passionately about?

At Investing In Communities (IIC), we are making that idea a reality. We are changing the giving game by harnessing the power of markets to drive philanthropy. The IIC model unites individual and corporate consumers (“IIC Friends”) with charitable professionals (“IIC Members”), and generates funding for nonprofit organizations when an IIC transaction occurs a result.

IIC is an online platform that captures commercial transaction costs, which have historically been absorbed by for-profit middlemen, and redirects them to IIC Nonprofit (NGO) Partners. This innovative model empowers individuals and corporations to support the causes they care about, at no personal cost. For example, a recent IIC transaction generated $20,000 for the Chicago nonprofit, Women Employed.

the market as it exists, with transaction costs absorbed by private actors

IIC requires its Members to pledge at least 10% of their IIC-related commissions to the NGO Partner(s) their client selects. Due to the sizable commissions, intense competition, and precedent of referral services within the real estate industry, IIC is launching its model with real estate professionals. Rather than pay high fees for referrals, listings, or lead generation services, IIC Real Estate Members are enhancing their business prospects by Investing In Communities. In return for their commitment, Members receive real value in the form of increased online exposure, positive publicity, IIC branding, and visibility before nonprofits’ supporters.

the market with IIC innovation - transaction costs redirected for the public good

By working with IIC Real Estate Members, Individual Friends become philanthropists and Corporate Friends visibly enhance their corporate giving and CSR commitment, just by meeting a basic operational need – real estate.

Sean Stannard-Stockton of Tactical Philanthropy recently wrote that individuals and companies should be applauded for giving private money to social impact organizations, but that the next frontier is business leaders who figure out how to imbed social impact directly into the DNA of their profit engine. IIC is a nonprofit, but it is pushing this next frontier forward by enabling charitable professionals to integrate social impact into their business model, and by empowering corporations and individuals to generate impact through essential commercial transactions. If Stockton is correct, then may be among the first sites to truly change the game of giving– not only how we think about and act on it, but how we fund and sustain it as well.

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