Want A Better World?
There’s An App For That
Credit: Sven Torfinn/Panos Pictures
Mobile phones, apps and alternative currencies are changing the way we think about the welfare of others. Ambika Kandasamy explores their impact on philanthropy
BACK IN 2009, while studying economic development at Harvard University, Paul Niehaus and a few friends had a question. If they wanted to donate money to people living in extreme poverty in the developing world, what was the most efficient and effective way to do it?
Their research led them to the conclusion that a system for transferring cash directly to people in need held the most promise. Such a fast and personal method needed a corresponding technology. Luckily, the rapid spread of mobile phones in the developing world had created a new type of financial ecosystem that allowed just these kinds of payments to be made securely and efficiently. The only thing missing was an organisation set up to do the job.
So they created GiveDirectly, a non-profit organisation that transfers money to people who live on less than US$1 a day in Kenya and Uganda. These people are chosen using a simple, objective criterion of poverty – whether they live under a thatched roof. The recipients then get a lump sum of around $1000 to use as they wish. “Once we find them, the end-to-end cost of putting money in their hands is less than 3 per cent,” says Niehaus. “We think that’s transformative.”
Now president of the organisation, Niehaus says his group stays in touch with 99 per cent of these recipients by phone. “It’s just as important that the people we’re serving can give us feedback on how we’re doing through mobile,” he adds. Communicating with recipients allows the organisation to find out how well their strategies are working in real time.
GiveDirectly is just one example of the way modern and emerging technologies are transforming philanthropy. In Australia and other places, charitable organisations are beginning to harness the mobile phone revolution, the rise of apps, micropayment systems, alternative forms of currency and, of course, the internet to change the way people give and receive.
While this provides clear opportunities for small, nimble organisations to start transforming the world, it also poses a challenge for larger, more established philanthropic organisations, which are having to adapt quickly to compete in a changing landscape of donation approaches.
Mobile phones are probably responsible for the greatest number of recent significant changes to philanthropy. Take, for example, the ability to make donations by sending an SMS message.
“People are so used to texting now,” says Renee Bowker, CEO of the Telco Together Foundation in Victoria, which promotes volunteering and fundraising in Australia. “It takes away all those barriers around trying to get people to get their credit cards out and actually make a conscious payment – they just have to text.” To build on this, Bowker’s organisation is coordinating a pilot SMS donations programme with telecommunications companies in Australia. It’s expected to launch in July.
Then there are the plethora of apps that aim to change the culture of giving by allowing people to donate as easily as checking their email. These includeGoogle’s One Today and the Australian-based app Shout For Good. A range of tools are also streamlining the way people can send money online, such as the PayPal donate button and Google Wallet.
In the past, the affluent class was responsible for the bulk of philanthropic giving. But technology has democratised the process of giving in unprecedented ways. Now people manage financial transactions on their mobile phones – an ability that has had a huge impact in parts of Africa. For example, systems such as M-Pesa in Kenya allow people to deposit, withdraw and transfer money easily using their mobile phones. The result is a banking system that almost anybody can access, without the need to visit a branch.
These banking systems have become hugely popular. M-Pesa is now available in many more countries and, in Kenya, transactions during 2014 reportedly had a value equivalent to almost half the country’s GDP. This system has made it simple to send money directly to people in need – it is one of the methods GiveDirectly uses to transfer money.
Other, even more unconventional ways to donate are starting to appear. Bitcoin is a decentralised digital currency that people can send to each other without an intermediary such as a bank. It is entirely independent of governments and financial institutions and completely transparent – every transaction is recorded and made publicly available.
That has attracted some interest in the non-profit sector. “Where I think bitcoin has the real opportunity to change philanthropy is in its transparency,” says Peter Chasse, founder and president of The Water Project, a non-profit that helps communities in sub-Saharan Africa access clean water. Bitcoin’s detailed transaction records allow people to see exactly how their donations have been used, which can reassure them that the money is definitely going where it’s needed.
Some organisations use other forms of currency entirely. Yerdle is a smartphone-based marketplace where users buy and sell items with “Yerdle dollars” earned by giving away their things. The Freecycle Network does away with currency entirely with a forum where people donate unwanted possessions and obtain things they need – all for free.
But change on this scale has its downsides too. A key challenge for charities is capturing the attention of prospective donors when there are so many distracting alternatives.
Last year, Chao Guo at the University of Pennsylvania in Philadelphia and Gregory Saxton at the State University of New York in Buffalo outlined the difficulties and opportunities caused by information overload in the philanthropic world.
They use the phrase “attention philanthropy” to describe the phenomenon and say it provides a clear motivation for non-profit leaders to be more innovative. In other words, they need to come up with compelling and targeted messages that capture the attention of potential donors. There is no shortage of ways to do this thanks to the growing ubiquity of social media mobile and multimedia tools.
At the same time, non-profit organisations that place too much emphasis on attracting attention run the risk of straying from their mission and accountability, says Guo.
The changes already enabled are having a profound impact. GiveDirectly has helped people increase their assets and income, improve their psychological well-being and reduce the number of days their children go without food. Important change by any standards.