November 1, 2001 | Read Time: 6 minutes
September 11 left us many victims, but gave us many heroes — including the millions of Americans who have given so much energy, time, passion, and money to help survivors begin rebuilding torn lives and institutions.
The generosity that people have shown is enormous, and among the many things rebuilt with their support may be our perceptions about efforts to get Americans to give money or time online. Now that more than $100-million of the $1-billion given to the recovery effort has been donated via the Internet, many people in the nonprofit world are wondering whether this signals that Americans are ready to go online to make donations a part of their everyday giving.
However, extraordinary as the Internet donations have been, they offer a disappointing lesson to those with high hopes for the medium as a tool for bringing new resources to all of America’s nonprofit organizations. Despite the potential for many groups to find support from a generous public, most of the money went to the long-established organizations that were well-known by the American public or that received publicity from President Bush or from powerful media networks.
Before the terrorist attacks, efforts to raise money online were struggling; no single group had raised much more than $3-million online in a year, and many companies and organizations that built sites to channel gifts to large numbers of organizations have gone out of business. Until September 11, Internet giving didn’t meet a need that people had, or didn’t help them do something they wanted to do either more easily or more cheaply than they could the old-fashioned way.
But in the weeks following the attacks, millions of Americans went online looking for ways to help. People wanted to do something now, and the Internet gave them ways to help immediately and far more easily than traditional solicitations or mailed contributions could. One big question now is whether online giving was just an impulse reaction, or whether Americans will turn it into a habit. But an even bigger question is what would happen if they did?
One lesson from the giving in response to September 11 is that the beneficiaries would be few.
Of the $102.7-million in online contributions tracked by the American Liberty Partnership (the collaboration of Amazon.com, AOL-Time Warner, Cisco, eBay, Microsoft, and Yahoo to channel online charity efforts), about 60 percent went to the Red Cross, 8 percent went to the September 11th Fund established by New York City’s United Way and the New York Community Trust, and about 1.5 percent went to the Salvation Army.
In other words, while scores of organizations are helping to repair the damage to lives, families, and communities, just three of them garnered 70 percent of the total online giving.
That is not a criticism either of donors, who should, of course, always be able to give to the organization they believe to be the best, or of the organizations that won the support, because they all have strong track records and sponsors.
What it underscores is a fundamental dynamic of the Internet: When numerous providers of similar services are available online, mainstream success — measured in number of users, number of transactions, or transaction totals — goes to a very small number of them, often, as in this case, to fewer than three. And even in that small group, the pie is rarely divided equally.
The reasons seem to be the same, both for nonprofit groups and businesses. Promotion through major media channels focuses on a few names — with good cause if time or space is limited. At the same time, as people talk to one another to find out what their friends and neighbors have done, a self-reinforcing dynamic comes into play whereby people give to what they believe to be successful programs. Much of this happens offline, too, but the Internet exacerbates those dynamics, creating strong tendencies to create what economists call “winner-take-all” outcomes.
The potential long-term implications are quite sobering. Online giving creates conditions in which a group of nonprofit organizations providing similar services is likely to come into much more direct competition for donor dollars, especially when they can be compared side by side. In essence, that is happening at sites like Helping.org and Liberty Unites. Both sites have strong promotion and visibility, and both used their position to encourage giving to any one of the many charities striving to respond to the crisis.
But despite the evenhanded treatment by the major giving sites, the donations were strongly concentrated. Indeed, that is generally likely to happen as online philanthropy flourishes.
The initial success of one service provider or the much greater visibility of one nonprofit organization can generate public perceptions that that provider is the charity of choice in its field. Once that perception of success catches on, both users and media outlets are increasingly likely to follow the lead, thereby reinforcing the success of the strongest charity. In many ways, the strength of the Internet is also the source of the problem: It essentially provides a kind of silicon spray that acts as a lubricant to increase the speed and distance of communication and the immediacy of the feedback that allows people to guide one another toward similar ends.
The more people move their giving online, the more likely that the long-term result, strangely enough, will be a reduced number of beneficiaries. If the pool of dollars is directed toward a relative handful of organizations, the remaining groups will have trouble supporting themselves and they may end up going out of business or consolidating with more successful organizations.
Online philanthropy has drawn supporters in part because of the hope that it would be a boon for all nonprofit groups, which would be able to lower their costs of raising money, or could reap donations from new and current donors. Instead, as we are now seeing, e-philanthropy will be a boon for donors, who can give more instantly and in some ways more easily, but it will be a benefit only for a tiny fraction of charities. Nonprofit organizations may get some new revenue, but if e-philanthropy is like the rest of the online world — and the evidence of September 11 says that it is — much of the new activity will benefit just a few of the biggest names. Is that really the revolution we wanted?
Andrew Blau advises foundations on the social and policy implications of the Internet and other technologies. He is the author of “More Than Bit Players,” a report on information technology and nonprofit groups published by the Surdna Foundation, in New York.
