Wharton's Jason Wingard: 'The Internet Has Democratized Philanthropy'Published: May 19, 2011 in India Knowledge@Wharton
Over the past two decades profound changes have taken place in one of the oldest human practices -- philanthropy. According to Jason Wingard, vice dean of executive education and adjunct professor of management at Wharton, one of the biggest factors causing this has been the growth of the Internet and social media. In an interview with India Knowledge@Wharton, Wingard talked about the evolution of philanthropy across generations and around the globe, and how it is likely to evolve in the future. A more efficient philanthropic world, he says, is likely to inspire more participation.
An edited transcript of the interview appears below.
India Knowledge@Wharton: What has been the most significant change in the pattern of giving over time? How has it evolved?
Jason Wingard: Over the past two decades, profound changes in both the way that philanthropy operates and the way that citizens take part in charitable activities have been taking place at a faster rate than at any other time in our history. The biggest factor, without question, has been the rise of the Internet, which has allowed for charitable giving campaigns to form around either a cause or a major event, such as the recent earthquake and tsunami in Japan. These campaigns take place in a remarkably short period of time and involve much larger numbers of people. Consider the 2010 Haiti earthquake, in which the American Red Cross raised more than US$2 million in just 24 hours by using the Internet to ask people to text the word "Haiti" to a five-digit number. Last November, 39% of Americans said in a Harris Poll that they supported a cause that they followed online.
This trend has only accelerated in the past five years with the development of social media, such as Facebook and Twitter, which has empowered citizens to create or coalesce around causes typically outside the traditional fixed infrastructure of philanthropic organizations that arose during the 20th century. The enormous and mostly positive implications of these changes are still evolving; the speed and immediacy of the Internet is also leading to greater transparency and should ultimately lead to greater efficiency by creating new, networked approaches to a particular social issue or event.
Ironically, this evolution is bringing philanthropy back to its roots, particularly in the American tradition. Charity in the early days of the U.S. was centered upon so-called voluntary associations such as fire departments and public libraries that were fostered by a spirit of community, which dissipated with the rapid social changes of the Industrial Revolution. Those changes also led to a newfound sense of philanthropic obligation among the growing class of wealthy Americans, which in turn led to the creation of large charitable organizations. The new 21st century democratization of giving is thus, in essence, a return to the roots of American philanthropy, but with communities created around shared interests rather than geography.
India Knowledge@Wharton: Has the changing environment affected where people or institutions direct their giving at different points in time? Is there a "flavor of the month" effect?
Wingard: People are most inclined to give money to causes they can personally identify with -- for example, to a group such as the American Cancer Society that seeks a cure for a disease that afflicts a family member or a close friend. In more recent times, people have been particularly motivated to give aid for widely publicized natural disasters; this may reflect both the omnipresence of the 24-hour news cycle as well as the ability to use text messaging or Internet tools such as PayPal to donate instantaneously. The growing amount of information in the media about not only natural disasters, but also broader health and welfare problems in society has spawned a greater desire among citizens to respond and to seek to make a difference, and the new and more democratic charitable infrastructure is helping them to do that. Even in China, where traditions of charitable giving are weak, especially after 60 years of Communist rule, the public responded with remarkable generosity for victims of a 2008 earthquake [in China's Sichuan province]; citizens donated an estimated US$15.7 billion.
Unfortunately, charitable causes often do become trendy, and one could make the case that the speed and the vast scope of the Internet has exacerbated this problem. For example, welfare-related issues were a popular cause in the 1990s, and groups that worked with these populations often received large grants. But publicity over the success of government welfare reform at the end of the decade caused a rapid decline in both grant making and citizen interest. These sharp peaks and valleys in giving make it difficult for organizations to sustain their efforts to tackle social problems. It is critical to keep these organizations connected with funders who will continue to support them consistently -- especially for important social causes that may have faded from the nightly news.
India Knowledge@Wharton: Do the "old givers" differ in sentiment and action from the "new givers"?
Wingard: Typically, the "old givers" we identify with 20th century-style philanthropy, such as American industrialists Andrew Carnegie and John D. Rockefeller, were motivated by a need for recognition and a desire for something that would outlast them, such as naming a building, as well as the social benefits of philanthropic events such as black-tie dinners.
Those I would classify as the "new givers" -- younger, less affluent, and plugged in through social media -- have very different motivations. Rather than seeking a long-term legacy, these donors are highly motivated to make a difference in the world. The "new givers" are looking to charity as a form of empowerment in a bigger and more impersonal world, which is why they tend to gravitate toward causes such as disaster relief or broader social issues that greatly concern them.
India Knowledge@Wharton: In the West, philanthropy is about supporting museums and alumni giving donations to their colleges. In India, China and elsewhere, the focus is on clean water and elementary education. In the West, you support your alma mater. In India, you support your village. That's what the different countries need. Is this pattern of giving correlated to economic development or culture?
Wingard: It's not surprising that cultural values and even differences in religious beliefs are a significant factor in determining how philanthropy is carried out in various nations. The example of India is an instructive one, as we can see how lagging industrial development has led to different giving patterns than in the U.S. India has a strong charitable tradition, but historically this has largely played out on a community scale -- the wealthiest families in a village paying for a communal drinking well, for example.
As economies grow in emerging nations, it is almost certain that their patterns of charitable giving will be altered as well. We have begun to see the initial stirrings of change in China, where the government once strongly discouraged virtually all forms of charity -- except within the extended family -- because of fear that giving would reflect poorly on the success of what is promoted as a workers' revolution. Last September, Bill Gates and Warren Buffett held a successful dinner with a gathering of China's wealthiest individuals seeking to sell them on the benefits of large-scale philanthropy. It seems likely that as China's economic expansion continues, its patterns of giving may come to resemble those seen in the West over the past century.
India Knowledge@Wharton: Are there more areas of difference across the U.S., Europe, China and India that are apparent to you?
Wingard: Yes, particularly in Europe. Although some European countries -- most notably in Scandinavia -- rank at the very top in rates of charitable giving, other nations on the continent lag. This is especially true in nations with extensive taxpayer-funded social welfare programs. France tends to rank extremely low on the list of nations in rate of charitable giving -- 91st, according to the 2010 World Giving Index. While this is due to a variety of factors, including off-the-books community aid for the homeless and a less advantageous tax code than in the U.S., the biggest factor is that the French support social programs -- including universal health care and low-cost university education -- extensively through tax dollars. The same could be said about Great Britain, where the wealthy donate at a lower rate than Americans, but that difference is dwarfed by greater government social spending. Although tax codes are a factor, the biggest differences we see among nations with regard to philanthropy tend to be cultural in nature.
India Knowledge@Wharton: How integral is philanthropy or giving back to a nation's cultural fabric?
Wingard: The concept of philanthropy is deeply woven into America's core values. The broader ideal of philanthropy -- love of humanity -- is even embodied in the Declaration of Independence and related documents, such as Thomas Paine's 1776 pamphlet "Common Sense," in which he declared the cause of the newly-formed U.S. to be one "through which the principles of all Lovers of Mankind are affected." In the early years of the republic, founders like Benjamin Franklin brought these concepts to life with their promotion of voluntary associations such as fire departments to foster a sense of community. Another of these "voluntary associations" became the institution where I work -- the University of Pennsylvania. The French writer Alexis de Tocqueville in the 1830s saw these early philanthropic groups as central to what it meant to be an American. He wrote, "In the U.S., as soon as several inhabitants have taken an opinion or an idea they wish to promote in society, they seek each other out and unite together once they have made contact."
Nearly two centuries later, although the practice of charity has changed dramatically, the core notions of philanthropy remain central to American identity. This plays out in myriad ways, [including] in the U.S. tax code that offers more benefit to charitable donors than is typical in other nations, the substantially higher rate of per capita giving here, [and] the speedy response of the American military to a national disaster such as the recent Japan earthquake and tsunami. In other nations and cultures, charity often prospers but on a smaller, village-oriented scale. That said, it is a tribute to the power of the American philanthropic model that our norms become more common in other nations as their economies develop.
India Knowledge@Wharton: What are some social, economic and governmental initiatives that can foster the spirit of giving in the psyche of people across the world?
Wingard: There is clearly a role for government in encouraging greater philanthropy, although that ability can be exaggerated. Numerous studies have shown that rewriting tax laws to better reward charitable givers -- as enacted several years ago in Great Britain, for example -- often has little impact. In the U.S., known for its high rate of cash contributions, as many as half of the taxpayers file a short form in which those donations are not even declared, meaning that a write-off is not their motivation for giving.
In all likelihood, the major changes in philanthropy that will inspire increasing public involvement and increasing donations over the coming years will involve harnessing the power of the Internet and the new social networks to go beyond their current role, which is mainly raising awareness and more efficiently soliciting donations. The next level of technological innovation will be working through new networks to create better solutions to the problems that charity is seeking to fix.
Increasingly, online philanthropic networks are focused on activities such as prize competitions, which involve raising dollars to reward entrepreneurs with creative solutions to social problems. The power of Internet crowd-sourcing -- entire communities forming online and dedicating themselves to solving a problem -- will create a greater emphasis on sharing data among groups and discovering the critical tipping points for ameliorating a social problem.
Funding problem-solvers ... raise the prospect of helping more people with fewer -- but smarter -- contributions. Ironically, a more efficient philanthropic world will likely inspire even more participation, and perhaps usher in a new golden era of charity in the broader global economy.