Coverage: Social giving as a business story

Amyotrophic lateral sclerosis (ALS), which is best known as Lou Gehrig’s disease, is the Internet giving star of the summer. Unless you’re living in a hole, you or your friends have posted videos dumping ice buckets over your heads. The premise, do the challenge or donate, but many are doing both.

Writing for The New York Times, Emily Steel pointed out that the awareness being raised is almost as staggering as the dollar amount:

With everyone from former President George W. Bush to Justin Bieber and Shakira posting online videos of themselves dumping buckets of ice over their heads in the name of charity, the viral “Ice Bucket Challenge” continues to dominate social media and has now raised more than $41.8 million for amyotrophic lateral sclerosis, commonly known as Lou Gehrig’s disease.

Donations to the ALS Association, a Washington-based nonprofit that funds global research to find treatments and a cure for the disease, have surged since the challenge started trending in late July. The group said Thursday morning that it had received $41.8 million in donations from July 29 until Aug. 21.

More than 739,000 new donors have given money to the association. That’s more than double the $19.4 million in total contributions the association received during the year that ended Jan. 31, 2013, according to a filing with the Internal Revenue Service.

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“While the monetary contributions are so absolutely incredible, and we’ll be able to really make a considerable difference in moving the mission of the ALS Association forward, the real fortunate part of the Ice Bucket Challenge is the amount of awareness it has raised for the A.L.S. cause in general,” Ms. Munk said. “It puts us in a whole different ballgame to find treatments and cures for this disease.”

Time’s Diane Harris pointed out that many writers are emphasizing the negative aspects of the campaign:

As is inevitable with something as wildly successful as the ALS Ice Bucket Challenge—$16 million has been raised for the ALS Association from July 29 through August 18, vs. about $19 million in donations for all of 2012—a bit of backlash is developing, and thoughtful voices are starting to raise concerns about the charitable giving campaign’s message and impact.

Among them: MONEY reporter Jake Davidson, who wrote an opinion piece for Time.com in which he pointed out problems with the way the campaign is crafted: Folks are asked to donate money to help battle ALS or pour a bucket of ice water on their heads; if taken literally, all those funny videos of celebs and Facebook friends would be of people who prefer being cold, wet, and uncomfortable to helping to fight the disease.

Davidson, whose father died of ALS, also questions how much the campaign has actually educated people about the disease since many of the videos don’t mention ALS or treat it as an afterthought to the main event, a point that Slate’s Will Oremus also made. And Will Macaskill, a research fellow in moral philosophy at Emmanuel College, charges on Quartz.com that such trendy fundraising drives ultimately end up cannibalizing giving to other causes.

But Forbes reporter Matthew Herper counters that Macaskill’s argument for Quartz is flawed:

So people are donating to ALS. The next argument among naysayers is that charity is a kind of zero sum game, and that money actually might be wasted if people invest based on internet memes. This argument was made most memorably by William McAskill, a moral philosopher, on Quartz.

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But McAskill’s protest is wrong on its face. First, there is 50% more money being given to charity than there would have been previously among this group of donors. And although McAskill fears that there is money and attention being taken away from other charities, it’s equally likely that the result will be to cause those charities to find their own, effective promotion techniques to compete. This is likely to result in even more money being raised for good causes.

McAskill also worries that if the ALS Association is less than half as effective as other charities at creating positive outcomes from the money, then the money it’s “stealing” from other charities is wasted. But that doesn’t seem to be true. At the very least, CharityNavigator gives the ALS Association a high rating. If we only wanted to invest in surefire charities, we’d never invest in any medical research.

CNBC’s Robert Frank said the challenge could change the way people give to charity:

“This campaign is a real breakthrough,” said Melissa Berman, president and CEOof Rockefeller Philanthropy Advisors, which advises charitable donors and foundations. “It’s raised a huge amount of money for something that’s an ongoing condition not a natural disaster or immediate crisis. That’s a very fundamental shift. And I think it should cause the nonprofit world to take notice.”

The business of getting people to give to charity has changed remarkably little over the 125 years since Andrew Carnegie first ushered in modern philanthropy with his book “The Gospel of Wealth.” Most nonprofits have basically followed the same three-step model: Find rich people in a community, solicit them for dollars by phone and mail, then hold dinners, fundraisers, walkathons or similar events to expand and honor collections.

The Ice Bucket Challenge, however, may have just thrown cold water on that model. Charities may now look to use social media to reach a broader base of donors, rather than just a select few wealthy givers, Berman said. And they will look for more creative and entertaining ways to raise awareness about a cause.

As the gap in incomes increases, fewer and fewer wealthy donors will be available to support important causes. Anything that encourages a lot of people to give a little and brings charitable giving to a more grassroots level is a breakthrough. If being peer pressured through social media is what it takes to get people to raise awareness and funds for important causes, it’s a good idea. But those in the nonprofit sector and other fundraisers are now challenged with coming up with the next idea to go viral.