The Limits of Online Fundraising Contests

Stacey from Epic Change wrote an important piece yesterday about how vote-driven online competitions select against international social innovators and give Americans and Europeans one more advantage. I think she's right on, but I think it's important to parse a few things out.

1. Contests are PR and a context for asking for things. Don't get me wrong, I think online contests can be great if done well - we do one each year with Global Giving for the Global Engagement Summit. But they are largely about PR and marketing. The quid pro quo of an online contest is that you (the social innovator) have an excuse to mobilize your communities of stakeholders and ask for things, and in return, the action platform gets more traffic and eyeballs which could result in advertising, larger user bases, media and publicity that send more traffic, etc. I don't think this is cynical at all; people need reasons to act and contests are a great context for trying to inspire buy-in for both the project and the platform.

2. Contests are not rewards for quality social impact. Let's be clear and up front about this one; contests do not reward quality or quantity of social impact, they reward capacity for mobilization. To the extent that people are willing to be mobilized because of quality of social impact, there's a correlation, but by no means is quality a prerequisite. To hold our own feet to the fire a little bit, a lot of the young organizations who win contests frankly don't have the history or infrastructure to have collected lots of robust data about their impact, anyway, so we should be careful about being hypocritical with this critique.

3. Contests have taken on the significance they have because the cost-reward calculus is more clear than other forms of nonprofit fundraising. There is a more or less direct relationship between how hard you work and how likely to succeed you are in an online contest that requires mobilization. If you spend 18 hours a day emailing, you're likely to have more votes than the person who spends 8 hours a day emailing. Compare this to the largely opaque waiting game that is institutional funding. Often for small groups starting up, all they have is their communities of friends and family, and so this takes on the role of bridge or seed funding.

4. (Most) contests are not trying to solve the problem of seed funding for international innovators; not are they trying to solve the problem of internet access. The reality is that contests are designed to get lots of people to do a specific thing in order to increase traffic. This is different from setting out to solve the problem of seed funding for international innovators, which is a deep and profound problem. Now if someone was setting out to solve that problem with a contest, I think that the current constraints would most definitely make that a tough proposition. Even with that said, I think it would be a fair counter argument for someone like GlobalGiving to say that they *are* trying to solve that problem and that contests increase traffic which, overall, makes it easier to solve that problem.

5. Hopefully, contests (and even the current generation of action platforms) are the early indications of a changing social good funding ecosystem. One of the major motivations behind this blog is to see how the ecosystem for supporting and doing good is changing. Contests to me seem to be one exciting element of that, but they should be viewed in that larger context. There are conversations happening around the world about social stock exchanges, new forms of partnerships between non and for-profit orgs, and there are even folks explicitly focused on growing the social capital market. We should keep asking tough questions, but recognize that it won't be every organizations job to answer all of them.

Update: Looking back, I wanted to give a little bit more space to the question of whether contests, as they currently exist, select against international participants. The short answer is yes. We had students in Tanzania, Romania, Ukraine, and a number of other places participating in our Project Challenge this year. The contest was structured so that both amount of money raised and number of donations mattered. But for our international students, credit card processed donations weren't often an option, and so while they had people willing to give them cash, these individuals weren't added to their totals. This is a major problem and something we're working to update for next year; although how we'll do that we haven't figured out yet.