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The New Culture of Giving

There’s direct donations, employee-guided giving, a charity database and more

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Illustration: iStock

Hawaii’s people and businesses are as generous as ever, despite the economic slump.

But how local people and businesses give is rapidly changing and that transformation has some nonprofit leaders heartened, while others are worried. Optimists welcome the decay of what they saw as paternalistic philanthropy – where nonprofit leaders told contributors: “You donate the money and we’ll figure out where the needs are.” These optimists see the rise of a new philanthropy in which individual donors are more empowered, and nonprofit success is rewarded with recognition and more donations.

Other nonprofit leaders, however, worry that these changes in giving might mean that important – but unsexy – community needs are forgotten.

An astounding 92 percent of Hawaii households donated to charities in 2009, a proportion unchanged from 2001, according to the Hawaii Community Foundation’s Hawaii Giving Study. That’s much higher than the national average of 70 percent. The average amount given annually by Hawaii households – $1,467 – is actually 2 percent higher than in 2001 when adjusted for inflation, says the foundation’s study, which was conducted by Ward Research.

 Click to enlarge image.

But, while overall giving remains largely unchanged, the way people give in Hawaii has morphed and will continue to evolve. Here are some of those important changes:

A virtual, giving community:

The Hawaii Community Foundation, by far the biggest and richest grant-giving and -receiving nonprofit in the state, is about to launch an Internet-driven initiative that will create a new community of givers, volunteers and organizations.

This virtual community will decide what works, what doesn’t and where the money will go. The issue is: Can the same technological and social forces that drew millions of people to Facebook, Twitter, eBay and the Internet itself also transform local charitable giving?

Last year, Pierre and Pam Omidyar announced they would commit $50 million to the foundation, with part of that money aimed at spurring innovation in the nonprofit and public sector in Hawaii. This Omidyar Innovation Fund will give matching funds for creative, new projects, and it will also help create an online giving community.

“The idea is not so much for fundraising as to be a marketplace for ideas,” says Kelvin Taketa, president and CEO of the foundation.

Here’s how it works:

• You go online and find a charity or nonprofit you admire from the hundreds or thousands listed;
• copy their strategies; or
• volunteer; or
• give money; or
• adopt their ideas as your own.

There were 10,032 nonprofits in Hawaii in 2007, the latest year for which that figure is available, according to the Hawaii Alliance of Nonprofit Organizations. Of those, 7,712 are 501(c)(3) charitable nonprofits and 574 are foundations that give money to nonprofits.

Today, most nonprofits struggle to survive day-to-day and many operate in isolation. The connectivity provided by this charity marketplace might change that. Here’s how the foundation put it in a prospectus:

“Networks are altering the way the world works, shifting from organization-centric models with centralized structure, closely held knowledge and a focus on organizational longevity to network-centric models that value decentralization and fluidity, openness and a rapid pace of connectivity and mobility.”

Read that paragraph a few times and you will understand where the foundation is headed.
“It may work, it might not,” Taketa acknowledges. “But change is inevitable.”

In many ways, businesses are taking the lead in this transformation.

“People like (Bill) Gates and (Warren) Buffett are changing consumer behavior on how giving is handled,” he says. “The old model has been left behind. That model was: ‘You sign, I’ll figure it out.’ It’s different now. Business is trying to narrow its focus to something that is strategic or useful to them. It’s a different kind of engagement.”

     Click to enlarge image.

Decline of umbrella charities’ share

Overall dollars to the big “legacy” nonprofits are down. For instance, the Aloha United Way reports that total contributions in 2009 were 26 percent below 2005. Both individual and corporate donations to AUW were down about equally in percentage terms.

But drilling deeper into the AUW numbers, you find that the proportion of donations targeted for specific charities or causes has actually increased from 17 percent to more than 27 percent. More and more people designate where their contributions go, rather than just making a general contribution to the AUW.

“The trend is to targeted giving,” says John Howell, CEO of Easter Seals Hawaii. “In the past, you really just kind of trusted people to make good decisions with your money. Now it is more of a personal engagement. It’s building a relationship with donors.”

That thought was echoed by Laura Robertson, CEO of Goodwill Industries of Hawaii. “People want to know: Are our donations going to services we support?”

In 2005, the AUW raised a total of $13.2 million – three-quarters came from individual gifts and one-quarter from corporate donations. By 2009, the split was about the same, but the overall amount raised was down to $9.3 million. Adjusted for inflation, the decline was even greater.

     People who want to target a specific cause can designate their
     donation to one of the Aloha United Way's five "impact areas"
     says AUW President Au Doyle.
     Photo: Kevin Blitz

In recent years, the AUW has shifted from an individual agency focus to a focus on five “impact areas:” crime and drugs; early childhood development; emergency and crisis services; financial stability and independence; and homelessness. There as been a small but steady increase in gifts in money donated specifically for the impact areas, says Susan Au Doyle, president of Aloha United Way.

“We encourage people, if they want to do something specific, to give to one of our (impact) areas,” she says.

“Overall,” she says, “giving has gone down. But you really can’t tell if people don’t like the United Way anymore or if they’re just giving in different ways.”

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