Paul Penley

In the last 5 years, charitable giving ‘contests’ have grown in popularity in the United States. In 2006, the Network for Good/Yahoo Challenge demonstrated how online contests could attract significant involvement. The Case Foundation expanded the reach and potential of contests with its first America’s Giving Challenge in 2007, in partnership with Causes, Network for Good, Global Giving and Parade Magazine. 

Since these initial giving contests, competing for grants has become a normal online game operated by social-media savvy foundations and self-promoting corporations.  Companies like Target and TripAdvisor have had people vote for a pre-selected group of charities to determine how one lump sum of $1 or $3 million is distributed. The Red Cross and Humane Society of the US have won $50,000 after rallying the most supporters to join Facebook groups for corporations like Microsoft (who have a stake in Facebook).  Right now, Christian ministries in the US are being targeted by a faith-based charitable giving contest.

A couple of the more popular contests are Chase’s Facebook voting contest and Pepsi’s Refresh project. Both initiatives have been marred by allegations of injustice and rule-breaking. Chase opened up the contest to all charities but disqualified some who received a plethora of votes because of their mission. The Pepsi Refresh project hurt itself early in 2010 by breaking its own rules to benefit a charity associated with a TV celebrity. Then allegations surfaced about a service that was taking payments from nonprofits to create additional votes.  In the midst of the controversy, there are still beautiful stories of communities like Keeseville, NY coming together to revitalize unusable public parks with contest grants.

The question is: are online giving contests a good or bad idea? On the one hand, you can critique giving contests for selfishly serving corporate interests or for being rigged. On the other hand, you can praise social media giving contests for creating connections with donors and offering financially limited supporters the chance to raise more money by voting online or joining Facebook groups.

As a philanthropic research analyst, I am focused on identifying effective organizations that create sustainable life improvements and influencing philanthropists to support the ones that match their interests. I pursue charities with top-quality leadership teams who execute high-impact strategies and produce verifiable program outcomes. So here’s my problem with giving contests: I can’t see how social media-driven voting contests push any charity toward better governance, improved strategies and demonstrable outcomes.

Giving contests reward charities with the best mass email lists, biggest Facebook fan pages, and the most Twitter followers. If the best marketers and communicators were always the best organizations with the best outcomes, giving contests would be a good idea. But that is not the case.

What do giving contests teach us? First and foremost, charitable voting contests reinforce the message to charities that funding is not based on performance but rather on marketing and messaging. Creating hype in email campaigns is more important than tracking program results and making strategic adjustments to improve long-term program outcomes. Charities that register for each game and put alerts on Facebook and web pages will receive funding.

Any approach to funding charities must realize it trains charities how to act. If a charity CEO, board, and senior staff care about their cause, they will do what it takes to keep the organization going. If donors require videos linked to Chase’s Facebook page, then a charity must comply or risk missing a grant. However, if donors require a transparent presentation of efficient governance, clear strategy, and verifiable results, charities must shift their attention to these matters.

Businesses and foundations in the US must be aware of how they are influencing charities. In an era where more foundations and individual donors are demanding impact metrics, accountability and long-term outcomes, charitable voting contests move people in the opposite direction.

Until more donors start giving based on performance, charities will be forced to apply for giving contests and online games that have the potential to support their cause. That is what we would all do if we believed in the quality and importance of our work. Hopefully, more products, services and even contests will be developed that reward great work rather than big networks. That is why I am behind initiatives like Charting Impact and Intelligent Philanthropy that train donors to give to strategic, high-impact organizations. If you change a donor’s grantmaking criteria to performance, you will set charities free to focus on measurable, sustainable long-term outcomes.