Wednesday, January 27, 2010

The Impact of Haitian Donations

The whole phenomenon of the fundraising that occurred via texting in response to the Haiti earthquake was amazing. And what a telethon -- $57MM raised from the telethon alone at last count, with millions of that coming via texted donations.

People may not remember this but the 9/11 event was the first time that there was an outpouring of donations via online giving. The American Red Cross website actually shut down for a day after 9/11 because they couldn't handle the amount of traffic of people trying to make online donations to them. It cost them many millions in lost donations when that happened, and opened up the whole new way to give: online.

Prior to 9/11, online donations were possible but not likely. Nonprofits often didn't have a way to accept online donations and the security of the credit card transactions was inconsistent based on the technology. After 9/11, nonprofits tried everything they could to get people to migrate to the web -- it's much less costly to get people to donate online than to create a direct mail piece, print it, stamp it, send it out, then process the paper donations upon their return. What a way to open up to a whole new generation of donors, people for whom the internet is an integral part of their lives, including shopping, purchasing, entertaining, ultimately living.

After 9/11, nonprofits finally made in-roads in their attempts to drive people to the web. Trust in online giving increased and a breakthrough was made.

The millions that were texted to the American Red Cross in response to Haiti is yet another break through in giving.

A way of transacting that was previously known to a small subset of the population has gone mainstream. People like myself, who have never texted any kind of financial transaction, and have hardly texted at all, gave via texting for the first time. The intrastructure which allows for this kind of donating was already in place -- no systems went down, no donations were rejected, all went smoothly.

A new channel for giving has been opened up.

Now the question is, what will nonprofits be able to do with the new channel? Will they once again go through the process of trying to drive people to give via texting, only to find that generating content and reasons to migrate to the nonprofit will be immensely more powerful than pushing people there? Only time will tell. I'm excited to be a part of this new world in philanthropy, to be able to test things out and see what works.


  1. My question regarding the Red Cross is this? Will they again divert funds from what people think they are really helping with or will 100% of the money go directly to the people of Haiti?

    But, yes, the need is great and people are responding so well -- now how to use the money most efficiently to stop the suffering ASAP!?

  2. I agree with MOM. I've noticed that the Red Cross has already attached a disclaimer to their message. The funds will go to Haiti, or another important cause is the gist of the message I heard. I do not really care for the Red Cross. In the ice storm we had here last year that devastated such a wide area the RC got a little snippy in trying to help communities in our area.

  3. They are employing a tactic well known in the fundraising world -- they use a relevant event to get people to donate, but in the fine print when you make the donation they make the gift unrestricted, meaning they can use it for other means.

    Think about what the Red Cross, as a humanitarian organization, would have to do to actually spend the millions of dollars they raised for Haiti alone, if they could ONLY use the dollars in Haiti. The immediate relief efforts won't cost that much, they would have to occupy Haiti for years and years and work with their government to re-build in order to spend the kind of dollars they've raised. That isn't part of their mission, nor do they have the expertise for something like that.

    Wouldn't it be a shame if there was another ice storm this February and the Red Cross couldn't help at all because all the dollars they received have to be used in Haiti, and their fund for natural disasters was depleted.

    I do hear you both, though. There has definitely been a history of mis-management of funds at the Red Cross. I know that other organizations like Unicef and CARE are capable of organizing Haitian relief efforts, and they are good stewards of their donors' money.