Centraide: The importance of the digital transition for the social sector

Par Lili-Anna Pereša , Présidente et Directrice Générale Centraide du Grand Montréal
26 June 2019

The Solidarity Crisis

« La solidarité en crise: Centraide et la nouvelle philanthropie » (Solidarity Crisis: Centraide and Modern Philanthropy), this is how Taïeb Hafsi, professor and holder of the Chair in Management at HEC Montreal, called his book, published in the Fall of 2018. “Today, Centraide is faced with very strong pressures. On the one hand, there are the low-intensity long-term problems, not very visible but at the heart of community action (…). On the other hand, there is the trend of companies considering philanthropy to be a vital and strategic dimension of their work, which leads them to favour causes that are highly visible and attractive to the greater public.”[1] Centraide digital transition

Indeed, donors are more likely to give to a cause that touches them directly, such as research for a disease that affects a family member, rather than give to a cause that is far from their own reality, such as poverty. There has also been a decline in trust in institutions, particularly for the younger generation, as well as the fragmentation of the philanthropic sector. This represents a challenge for any organization attempting to attract the public’s sympathy towards their cause. This is the main challenge for Centraide’s federation-based philanthropic model, founded on the principle of solidarity, where donations are funnelled towards several community initiatives that fight against poverty and social exclusion.

Fundraising, essential to the sector’s survival, is becoming more and more complex as well: the philanthropic landscape is changing rapidly, donor expectations regarding participation and accountability are evolving and are shifting towards technological initiatives. In short, the divide is getting deeper, organizations are investing in services to respond to urgent needs and donors are expecting an ever-greater return on their donations and investment.

Changes in Philanthropy

Many factors are currently affecting philanthropy in Quebec. Donor behaviour is changing and the philanthropic model has to quickly adapt to the new reality:

  1. The number of donors in North America, including Quebec, has diminished by 30% over the past ten years;
  2. The significant increase in fundraising activities means that a greater number of fundraising organizations are soliciting a smaller pool of donors;
  3. Donor behaviour is evolving rapidly: for example, accountability requirements are higher and they are asking to be shown tangible proof of the proper use of donations;
  4. Donors want closer proximity with those who benefit from their donations;
  5. Other forms of contributions are more highly valued (expert volunteering for example) than straightforward monetary donations;
  6. Finally, the younger generation’s participation is spontaneous and dynamic but is often short-lived. Their loyalty to a cause is not as constant as their elders.

It is not only donors who are changing. Companies are also changing their approach and strategy towards philanthropy. They hope to mobilize their employees to donate and/or volunteer. Employee participation in the company’s cause or in a cause of their choice contributes to corporate social responsibility (CSR) while also being an element to motivate and retain employees.

The legitimate expectations of both donors and companies towards the charitable sector require significant investments in terms of technology, content production and the fostering of connections between the private and community sectors.

The digital transition is an urgent solution to be implemented to respond to growing needs and to act as a lever for social innovation.

Charitable organizations have always been creative: with little resources, they manage to respond to many of society’s issues. In this way, Centraide believes it is essential that a variety of bold, visionary and complementary tools be developed to respond to emergent needs and to find solutions to social issues, all the while answering to donor and company expectations.

1. Centraide at the heart of collectives

Community action is complementary to that of the state and is essential to reduce the impacts of poverty (food insecurity, school dropouts, social isolation, etc.). The network of Centraide’s in Quebec supports and reinforces this action.

In fact, the Centraides of Quebec represent a community and democratic space in which civil society can participate, according to their means and to their level of responsibility, in building a more united, altruistic and cohesive community. Located in each of Quebec’s regions, Centraide intervenes locally and deploys actions adapted to the reality of their sector and in particular, to the needs of impoverished and vulnerable people and families. 

In 2012, the registered revenue of Centraide locations across Quebec was of 93 287 525$. Quebec’s economic context, the changes in donor behaviour and the organization’s less adapted approach all affected fundraising results. A decrease had been noted for several years and an adjustment plan had been implemented in several regions. This generated some success as 2018’s revenue went up to 93 056 921$, meaning back to the same level as 2012.  

 

2012 2013 2014 2015 2016 2017 2018
Revenue 93,3 M $ 90,6 M $ 87,8 M $ 85,6 M $ 94,2 M $ 91,1 M $ 93,1 M $
Donors 295 000 331 000 259 000 283 000 221 000 211 000 Not available

Under the surface of a relatively stable overall result, the same trend we find in the sector is confirmed. In work environments, which generate around 75% of Centraide locations’ revenues, it is now only one solicited employee out of five that will respond positively and make an annual donation. The same goes for the number of declarants who make charitable donations in Quebec, from all organizations.

The transformation of the philanthropic sector thus affects Centraide locations, who must adapt to the new reality to continue offering vital services to the most vulnerable.

2. The state of philanthropy in Quebec

In Quebec, 900,6 million dollars were collected in 2017. This is an increase compared to previous years, but the median donation, on the other hand, has not budged in several years whereas it has increased in other provinces. The number of donors, however, has been decreasing in Quebec, as in Canada [2].

We also note a significant trend: donations are being made more and more online. From 2006 to 2015, the number of donors who made their donations online has greatly increased (+20% on average per year for the CanaDon platform). This evolution is meaningful in a context where the number of donors is decreasing. Also, average donations have increased more online than in total (+2.8% annually versus 1.2%, from 2006 to 2016). [3]

Charitable organizations are confronted with the need to improve donor loyalty strategies with very limited technological and financial means. 

3. Volunteering: an essential non-financial vehicle for philanthropy

Volunteering is not a financial vehicle but it is becoming an increasingly unavoidable prerequisite step towards philanthropy.

Interest in volunteering is very present, even though statistics show that the number of hours dedicated to the task has been in decline since 2007 [4]. Requests for this type of activity are on the rise in the network of organizations that we support. The population wants to contribute to their community and use their experiences and skills to benefit a cause that is dear to them[5]. We have noted significant differences depending on several factors, one of which is age. The younger generations see an alternative to monetary donations and participate in challenges, be they athletic or other [6].

The evolution of donor interests, individuals as much as companies, also has repercussions on community organizations. Employee participation in their community is highly valued by many employers, which opens up a new potential pool of volunteers for community organizations. However, since it is often a spontaneous offer of volunteers, they must have the capacity to respond quickly and punctually. It is often organizations with more resources and those who are better equipped that manage to profit from social media in attracting volunteer resources, donors and who are able to build connections with companies. In this context, several organizations, often smaller in size, are left behind. 

Corporate volunteering, which consists of freeing up a group of employees to accomplish a task in a community organization, is a fast growing practice, which favours team cohesion in the same way as a team building activity.

Modern technological tools can encourage volunteering by grouping together requests from organizations and corporate and employee offers, responding to the needs of both parties.

4. Digital technologies at philanthropy’s service

The incredible potential of new technologies, big data, deep learning and artificial intelligence must be exploited for the common good of society. It is thus a priority for social organizations to turn towards the digital age. The social impact’s reach of this new knowledge, resources and practices is significant.

The changes in behaviour of new generations, the use of social media combined with technology’s rapid evolution threaten the existence of organizations who are more geared towards their mission and who have a hard time following this evolution, often failing to dedicate resources to it. Another challenge arises: beyond literacy, including financial literacy, digital literacy might increase the exclusion of certain vulnerable groups.

In addition, donors want better legibility and visibility of their contribution’s results. They want to know the history behind the donation, the impact on people’s lives, be reassured of the use of their donation and on the efficiency of the organization to whom they have given. This level of accountability can be very complex for organizations.

4.1 Crowdfunding

Companies from the private sector have been investing for many years in the development of technological fundraising tools. The great majority of Crowdfunding platforms (peer-to-peer), are very lucrative private companies. One of the bigger players, GoFundMe, was sold by its founders in 2015 for approximately 600 million US dollars [7]It was predicted, in 2015, that there would be over 2000 platforms to chose from by 2016[8].

One of the ongoing crowdfunding campaigns on GoFundMe that has collected a phenomenal amount was to build a wall between Mexico and the United States[9] [10]:

 

We The People Will Build The Wall $22,217,900 of the 1 billion US dollars (as of May 3rd 2019) Citizen campaign created to build a wall against illegal immigrants at the border of the United States and Mexico

In 2019, media attention was drawn towards a dishonest campaign. In fact, 3 people made up a touching story in order to mislead donors. According to their fraudulent story, a homeless veteran had spent his last 20 $ helping a woman when her car ran out of gas. The story went viral in the United States and abroad and the objective was surpassed by 4000%, collecting 402 826 US dollars. Those behind the scam got into an argument about the distribution of funds and the argument, made public, led to an investigation, arrests and accusations of theft and fraud [11].

The risk of fraud and abuse is ever-present on crowdfunding platforms as no control mechanisms or regulations exist to validate the truthfulness of the pertinence of the fundraiser’s objective. Beyond the individuals who have bad intentions, organizations not recognized by the Canada Revenue Agency resort to these platforms to solicit donations from the public at large without having to conform to the same requirements of registered charities.

4.2 Online donation and volunteering digital platforms

 Private companies, especially start-ups, have developed workplace giving platforms such as Benevity, Your Cause, etc. These for-profit companies’ business model is to offer employers who host fundraising activities tools to facilitate at the source withdrawals, events (athletic challenges, cultural galas, etc.), volunteer pairings, etc. There are many ways of making these services profitable, including a membership fee for charitable organizations who wish to receive donations made to them.

A few big companies are launching themselves in this area to supplement a service they already offer, to respond to the needs of their clients or even to refine the data they collect on individuals. Fidelity Investments and Facebook have recently announced that they were launching themselves into this form of services [12].

This “competition” from the private sector calls to the philanthropic sector, which obviously does not have either the same knowledge or resources. The required technological investments are huge, the constant concern of donors about charitable organization administrative fees and the limited capacities of the philanthropic sector partially explain the divide. The fact that the private sector has access to funding from the government to support their digital transition accentuates the divide as charitable organizations mostly use government grants for the services and social programs that they offer to the groups they serve.

The space occupied by the private sector in philanthropy cannot leave us indifferent and inactive. This is why Centraide United Ways propose, through a partnership with Salesforce, a modern geolocalized platform of donations and volunteering, accessible to employees in workplaces who have a campaign with Centraide United Way or any other charitable organization.

The implementation and deployment of such a platform would allow Quebec’s 16 000 registered organizations to have an entry point to workplace fundraising and to offer volunteer opportunities to employees.

This type of opening for philanthropy could have a positive impact on organizations themselves. The access to this pool of potential donors would allow for a reduction in fundraising costs and thus an increase in the dollars that go back to the community. By improving the stories of impact in the field and of changed lives, we hope to increase the number of individuals who will give generously.

However, the effort will be enormous as creating, documenting, archiving, transmitting and disseminating stories requires significant know-how, talent and investment.

Conclusion

Centraide: a relevant and essential agent of change

Throughout the years, Centraide has become an expert of social issues and community solutions, a catalyst for the development of individual and collective philanthropy and one of the rare sites of convergence of leaders from all sectors of our community.

The Centraide network is present throughout Quebec’s regions. It englobes a vast movement of solidarity and mutual aid, supported by the generosity and participation of hundreds of thousands of donors and volunteers that support a network of over 1 500 community organizations (which represents 30% of social charitable organizations). If the philanthropic sector faces challenges, Centraide uses innovation and audacity to adapt to it.

It is vital to ensure coherence and cohesion among social investments and the exploitation of technologies and the digital world. This must be done to benefit Quebec’s collectives. Centraide deploys great energy to avoid bypassing this important transition, as this would have an impact not only on the organization itself but mostly, on the entire social system with which it interacts. 

 

Notes de bas de page

[1]Our translation, Hafsi, Taïeb et Saouré Kouamé, (2018).  La solidarité en crise : Centraide et la nouvelle philanthropie, Montréal, Éditions JFD Inc., 204 p., quatrième de couverture.

[2]Statistique Canada.  Tableau  11-10-0130-01   Dons de charité sommaire

[3]Canadon, (2018). Le rapport sur les dons 2018, p.13.

[4]Institut de la statistique du Québec.  Tableau du nombre d’heures consacrées annuellement au bénévolat selon le sexe et le groupe d’âge.  http://www.stat.gouv.qc.ca/statistiques/conditions-vie-societe/benevolat/tab2_1.htm

[5]Institut de la statistique Québec. Tableau statistique : Motivation à faire du bénévolat dans le principal organisme, selon l’âge et le sexe, Québec, 2004-2013. http://www.stat.gouv.qc.ca/statistiques/conditions-vie-societe/benevolat/tab5.htm

[6]Épisode, (2018).  Étude sur les tendances en philanthropie au Québec en 2020. http://medias.centraide.org/Tableau_de_donnees/Contenu-reportages/2018_Episode_Etude2020_FR.pdf

[7]MacMillan, Douglas et Gillian Tan, (2015). GoFundMe Founders to Reap a Fortune in Buyout. The Wall Street Journal. https://blogs.wsj.com/digits/2015/06/24/gofundme-founders-to-reap-a-fortune-in-buyout/

[8]Drake, David, (2015). 2,000 Global Crowdfunding Sites to Choose From by 2016 : Top 5 Growth Indicators. Huffpost. https://www.huffpost.com/entry/2000-global-crowdfunding_b_8365266

[9]Wikipedia :https://en.wikipedia.org/wiki/GoFundMe

[10]La Presse (2019, 27 mai).Des partisans de Trump construisent un mur privé à la frontière mexicaine : https://www.lapresse.ca/international/etats-unis/201905/27/01-5227746-des-partisans-de-trump-construisent-un-mur-prive-a-la-frontiere-mexicaine.php

[11]Wikipedia : https://en.wikipedia.org/wiki/GoFundMe

[12]Ebeling, Ashlea, (2019). Fidelity’s Latest Move in Workplace Benefits : a New Way to Donate to Charity.  Forbes.  https://www.forbes.com/sites/ashleaebeling/2019/03/26/fidelitys-latest-move-into-workplace-benefits-a-new-way-to-donate-to-charity/#ef959818d321