effectiveness Posts

GlobalGiving’s Big Bet

Betting On Impact

How we’re using gamification, incentives, and behavioral economics for good.

We all want our donations to have the most impact possible. But how do we choose which nonprofits to support? And how does an organization like GlobalGiving, working with nonprofits in 165 countries, measure, compare, incentivize, and reward effective nonprofits doing everything from providing affordable housing in Nicaragua to restoring buffalo on Lakota land, to teaching organic farming to at-risk teens in Indonesia?)

Well, we’ve made a Big Bet about how we can do just that, and today marks a major milestone as we’re working to drive more money to more effective organizations. Starting today, the organizations on GlobalGiving that we believe are more effective—those nonprofits that are committed to learning—will be rewarded with more visibility and the chance for more funding through the crowdfunding community.

GG_Rewards_Logo_whiteWe’re using gamification, incentives, and behavioral economics to encourage organizations to listen to the people they serve, to act on what they hear by testing new ideas, and to learn faster and more efficiently. (We call this the Cycle of Progress: Listen, Act, Learn. Repeat.)

The Cycle of Progress: Listen, Act , Learn, Repeat

We’ve created a new ranking system, which we’re calling GG Rewards, that helps us identify which nonprofits are climbing the GG Rewards ladder as Partners, Leaders, and Superstars. We’ve developed this system in collaboration with our nonprofit partners, with researchers, and peers. We’ll continue to improve as we learn more in the coming months. (In case you’ve been following our progress, the GG Rewards system is a big improvement on the Effectiveness Dashboards and Partner Rewards rankings we’ve been experimenting with for several years.)

GG Rewards Status

When our partners log on to GlobalGiving today, they’ll see their GG Rewards Status, a list of benefits their status affords them, and then they’ll have immediate access to tools and resources that can help them log more Effectiveness and Engagement points that will help increase their scores. Nonprofits not only get points for reporting to their donors, but they can also earn points for interviewing stakeholders, collecting community stories, or collecting feedback from the people they intend to help, for example.

We know that 40% of our partners log into our system every week, and we have data that demonstrates that they’ll take actions to improve their ranking because it leads to more funding, so we’re making sure those actions will help the nonprofits not only become better fundraisers but also more effective at meeting the needs of their communities.

As nonprofits demonstrate their commitment to learning and improving, they’ll now have increased visibility on GlobalGiving, and we’re confident that Superstars will reap tangible rewards. Stay tuned as we roll out ways for donors to search for and find effective organizations!

Versions of this article have also been published by GuideStar and Markets for Good

Why 15% Makes Sense

People sometimes ask me why we charge a 15% transaction fee.  My cheeky answer is, “So I can be sitting here having this conversation with you.”  As Chief Program Officer at GlobalGiving, my job is to make GlobalGiving more valuable to more organizations around the world.  We work with thousands of organizations, qualifying them, supporting them, disbursing funds to them, monitoring their activities, and maintaining an online platform for them to connect with donors.  Work at this scale would be impossible with an all-volunteer team.  Without great people and robust systems working full-time, GlobalGiving does not work.

Could we find a large donor to fund operations, making the ongoing transactions free?  Maybe, but we believe a transaction-based fee is a better idea.  Funders like Skoll Foundation, Omidyar Network, Hewlett Foundation, Packard Foundation, Rockefeller Foundation, and Kellogg Foundation have invested in our effort to make the transaction-based model work, and we’re almost there.  The model gives GlobalGiving a strong incentive to invest in the performance of our marketplace, which aligns nicely with our partner organizations’ goals and the needs of donors – the more funds flowing, the greater the social impact.  We are motivated to build better tools for donors and project leaders, we aggressively court corporate partners, we attract donors through a strong social media presence, we offer free training and development opportunities to our project leaders, and we find innovative ways to demonstrate results.  We strive to earn our 15%, and GlobalGiving only works if we deliver the value.

So, why do organizations decide that 15% is good value?  We connect them with new donors, we provide donor management tools, and for some organizations we save the expense of maintaining a transactional web platform.  For international organizations, the ability receive tax-deductible contributions in a secure, transparent platform is worth the 15%.  We do not charge organizations an up front fee to participate in GlobalGiving, so fees only exist when donations flow, and we’re careful to explain the fee to all prospective organizations.  Donors should feel good giving to organizations on GlobalGiving, because each organization calculates that our platform is worth 15%.  Donors always have the option of covering that 15%, and over 50% do just that.  Donors should expect to receive quarterly updates and can exercise the GlobalGiving Guarantee if the experience doesn’t meet expectations.  We just finished our best year yet, delivering more funding to more organizations than ever before.

That said, our 15% does not work for many organizations.  For organizations that maintain a web site with transaction processing, or have a staff dedicated to donor management, or do not like to accept project-specific funding, GlobalGiving is probably not a good fit, and that’s fine.  If a donor simply wants to fund general operations of a US nonprofit, that donor should give through that organization’s web site or a portal like Network for Good, both of which have lower fees.

Our commitment to this model holds us directly accountable to the donors and organizations connecting on our platform.  Organizations and donors do not have to use GlobalGiving  If we are not worth our 15%, people will stop transacting, and GlobalGiving will not survive.  If we are worth our 15%, more transactions will happen, we will continue to improve the platform, and we might just improve the efficiency of giving to the most effective organizations worldwide.