Are There Enough Altruists to Profit From?

While activism is virtually synonymous with “not-for-profit,” a San Francisco startup called Virgance has begun a slew of campaigns that aim to make money off of activism. As reported in The Economist, one campaign is a “green venture fund” on Facebook where users can invest their money (as little as $100), with Virgance getting a portion of the returns.

But can Virgance find enough do-gooders in the midst of a recession? In other words, how is the altruist market doing?

According to this Reuters article, charitable contributions are down in the U.S. only “modestly” so far this year. But charitable giving, unlike the stock market, is a lagging indicator.

Open question to our readers: how has your charitable giving and/or activism changed in light of the recession? To those of you working less than before, have you filled in those hours with volunteer work, e.g.?


Trips

In this tight economic downturn my "contributions to charities" in monetary form have wavered considerably. I adjust this however by giving something I consider equally valuable.. My Time. I do this by volunteering at my local library as a computer docent (helping PC newbies understand it all) as well putting some time in at a local homeless shelter. Cash is good, I realize these efforts take money, however Your time can prove to be just as effective and leave you with an even stronger feeling that your doing your part to help out in the community.

Tim

If this is a venture fund how are they able to allow anyone to invest as little as $100 dollars. They have to be an accredited investor. Prosper and other P2P lending get around this I think because they are offering loans, not "investments". However, they still got taken down for a short bit of time.

Sara

To answer your question, I would have volunteered my time if I had not found a new job after losing my old one. I don't have the money to give but I have time even now that I am working again. But I would want to volunteer for an organization that empowers me and doesn't just stick a "Hello, my name is" sticker to my chest. I once did volunteer work for a local literacy council through which I taught 2 girls ESL lessons I created myself. I think there is enough altruism for organizations to profit from if the altruists get a better experience than the warm fuzzies.

tkwonCMS

Seeing that altruism is a luxury, it seems strange that "charitable contributions are down in the U.S. only “modestly” so far this year". I know for one that De Beers the diamond company has taken a big hit amidst the recession...

If people are too busy taking care of themselves, they sure won't invest too much time being altruistic.

John

My charitable giving is down by about 2% of my gross income, compared to last year. Also, my wife is now getting paid to do work at a library that she was formerly a volunteer for. Time and effort that would have gone to helping others, is now being invested in our family and our home. We are now spending our time to maintain (hopefully increase) our property value, and we have severely limited spending on non-essential items. We don't eat out or buy coffee, and any clothes we buy come from Goodwill.

Will

My charitable giving is roughly the same as i previously had been, but my free time has been spent with self learning rather than volunteerism. Recently I bought a new copy of the Calculus book I used during undergrad (only $8 on ebay as it was an old edition but still in the shrink-wrap) and have been slowly working through the multivariate content I never did while still in school.

Andy

My charitable giving is unaffected, but I have been fortunate to retain my job and don't have significant secondary expenses.

As an aside, I don't think there will be a tight relationship between Virgance's profits and the altruist market in general. Speaking for myself, when I give money to a cause I desire that as much of that money reach the cause in question as possible. I don't want to support middlemen in the process, because they aren't "in need". Therefore, if I became aware that a particular donation channel was operated by a middleman who was skimming off of my donations, then I would stop using that channel and seek a different one.

I don't expect to profit from my charitable giving, and I expect a similar attitude from those to whom I give. Obviously, the people to whom I give "profit" from my gift in an efficient sense, but my gifts are intended to offset a loss, hardship, or inequity, or to support a morally worthy operation. My goal is not that they profit, but that their adverse circumstances are balanced. I would expect this motivation to be typical of altruists, and therefore I expect that Virgance's profits will experience a negative correlation to the degree to which the public is aware that they operate at a profit.

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WendyBird

I'm actually giving more to charity this year because I know that other people can't. Instead of going shopping to make myself feel better, I'm spending what I feel I can afford on charitable contributions.

Feeling completely overwhelmed by the financial news 2 weeks ago, I made an $800 donation to my public radio station's digital transmitter fund. Knowing that their matching grant would double-my money made that seem like a much better deal than picking up an HDTV at the pre-Superbowl sales. (And I'll get a tax deduction!)

A local organization that collects non-food items (diapers,toothpaste, shampoo, etc) for families with low income put a collection box in the lobby of my grocery store. Rather than cheering myself up with a $4 latte, I toss whatever shampoo is on sale that week into my cart and drop it in the box on my way by.

I haven't finished my taxes, but if I get a refund, half of it is going to the United Way to support the battered women's shelter that serves my county. The other half. . . will probably go back into the HDTV fund. I do still intend to buy one . . . someday.

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Rob

My contributions are a fixed percent of my income. If my salary contracts, my giving will decrease proportionally.

Kathy A.

As a small business owner, my work hours have increased while my business income has gone down. (I have to cover the work of positions we can't afford to fill). So my monetary and volunteer donations have gone down.

Jeffrey

I have money donated from my paycheck before I even see it. That money hasn't gone down. After-the-fact contributions are probably going to be down for me this year, though. The money will be sent to my emergency fund instead.

Brendan

When I was unemployed (thanks to the recession) I started volunteering on any day I didn't have a job interview lined up. Fortunately, the volunteer work ended up resulting in helping me find a job in a field related to said volunteer work.

Since I started working again, I've gone back to donating money to charity. However, I've been donating through Kiva.org, which provides microloans to people starting businesses in the third world. The same $25 will be repaid, and can be redonated to another individual. Admittedly, part of the reason kiva is so appealing is that there are clear, measurable results for the donations- I can see how many people I've loaned money to who have been successfully able to repay it. Also, in the event that I was out of work again, I would be able to withdraw any money that had been repaid, and not reloaned again, and get it back.

Prior to the recession, I used to donate to the Girl Scouts.

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Simon Synett

Andy, I hear what you're saying about the middlemen, and I also feel a sort of knee-jerk aversive reaction to collectors or organisations that are taking a cut for their efforts.

But, I think there are some cases where you've got to take a longer sighted approach. If the profit motive can inject the needed energy and innovation to raise far more attention and money for a cause that would otherwise be possible, then there's a great deal of value in that.

Take something like JustGiving.com in the UK - it's hard to argue with the fact that many of the charities that use their platform wouldn't raise nearly as much money as they do by leveraging their committed fans to collect for them. Yes, the company makes a tiny commission on each donation, and is a for profit company, but they fully deserve that profit for the service they provide. (I have nothing to do with them, just in case you wondered - I merely think they are a great example of social entrepreneurship done right.)

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Marcus Ogawa

I'd like to point out, Virgance doesn't operate on offering only the altruistic solution but in fact also seeks to offer the best economic alternative in the market. In the example of One Block Off the Grid (1bog.org), Virgance offers a significantly competitive pricing option for Solar Power by collectivizing buyers and negotiating with installers for the best price and package on behalf of them. Individual buyers are then able to get deep discounts typically only afforded to economies of scale.

Virgance lends itself to altruistic goals, but relies on economic sense first and foremost to achieve them. Altruism will forever be a luxury, and so in order to push altruistic goals into the mainstream, consumers have to vote with their feet. That is the big idea behind Virgance's Carrotmob (carrotmob.org). This can be achieved by consumers demanding a portion of producer surplus being allocated to altruism in exchange for being a customer. Now that is pure market competition. Businesses seek to maximize their producer surpluses, so why shouldn't consumers work together to do the same?

@Andy I agree with you, if I donate money to a charitable cause I'd like to see as little of that money spent on overhead, and most of it go to the cause I donated to. However, in Virgance's case, you're not donating. You're simply making a choice as a consumer to buy the same product you would normally buy for the same price or ideally cheaper, AND the company you buy it from agrees to help a cause you care for. Its you as the consumer exercising your economic power.

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SHUN-CMS

Time is money. Today, in the period of econmic downturn, many workers and employers are not gaining profit, or a lot less than before. Hence, must cover the lost by extra work etc. Thus, less time to contribute for the good cause. As much as we are caring animals, we are (having higher level of thinking) equally selfish. This makes it difficult when one does not have extra time to do good - luxury/hobby time. As stated in my previous post, economics does not take sympathy into account... sadly. Oh well c'est la vie. - BUT we are SMART, we always find solutions - anytime there's a problem, there's an answer.

royale

Being a recent graduate who was lucky enough to get a good job at exactly the right time, I am actually giving more in terms of cash to charity this year relative to the last. However, being employed full-time has left me with no time to donate compared to the amount I used to give as a student.

So my question is, what if altruism is not a luxury good? What if when incomes go up and down, only the proportional mix of time and money donated changes rather than there being an absolute fall in both time and money donations?

If I was made redundant tomorrow, I would certainly donate more time, and less cash. Not only would it give me something purposeful to do, but it would also help to keep up my skills or develop new ones, thereby giving me a better chance in the labour market.

Annie

I'm donating more time and money this year. It seems like there are fewer volunteers at community events and there are definitely fewer business sponsors for said events. In Cleveland, OH, it's becoming more difficult to keep what we have previously worked so hard to get, in terms of the arts and community groups. We lost an orchestra, last year, our theaters are struggling to stay in business and the arts outreach programs are dropping off, one by one. So I don't mind going into my pockets or signing up to help with something because I can see real honest to goodness need.