By Mark Feinberg
Philanthropy has long been a common business activity. From local restaurants sponsoring their town's little league team, to Fortune 500 companies with million dollar foundations, companies have found that it's good business sense to give back to the communities in which they operate.
According to the 2013 Cone Communications/Echo Global CSR Study, 80 percent of consumers say they consider corporate social responsibility, of which corporate philanthropy is a key part, when choosing where to shop and buy products. This data supports the recent trend of businesses changing and increasing the ways in which they support their communities financially.
Many businesses want to support the non-profits and neighborhood projects that operate nearby but don’t always know where their dollars would be best spent. On the flip side, those in need don’t always have the resources to communicate directly with every business that might be able to help. The viral nature of online communication, especially social media, has opened the door for new ways to communicate about fundraising opportunities. While we still see the names of businesses on the backs of youth sports jerseys and engraved on playground equipment, the rise of online fundraising is expanding the ways in which businesses can sponsor community projects, making crowdfunding is the next frontier of corporate philanthropy.
Crowdfunding technology is bringing together community members, nonprofits, socially-minded businesses and private foundations to finance projects that non-profits struggle to fund. This model is changing the game for four key reasons:
- Virtual Public-Private Partnerships – Because crowdfunding platforms bring businesses, foundations and individuals together, they’re essentially virtual public-private partnerships. What used to require hours of phone calls, grassroots organizing and networking, now takes place in a matter of days on a single website.
- Transparency – Businesses are racing to fulfill consumers’ desire for deeper transparency and openness. In fact, according to CorporateRegister.com, more than 5,500 companies around the world issued sustainability reports in 2011, up from about 800 a decade ago. Due to crowdfunding’s social media-like features, these sites typically detail individual donations, business sponsorships and foundation contributions in a fun way - taking transparency from a buzzword to a friendly and engaging standard. Businesses get an immediate boost from their online support of good causes.
- Funding Power – Crowdfunding is Internet based, mobile accessible and socially shareable, allowing all types of donors to participate in real-time with their networks. This technology can harness the passions and pocketbooks of thousands in a very viral way – funding projects in days versus months.
- Idea Exchange - At their core, crowdfunding platforms are highly searchable. Concerned citizens can locate new projects that warrant their attention, businesses can find programs worthy of their support and foundations can identify projects that complement their mission. For sustainability leaders, crowdfunding lets you see how like-minded non-profits are innovating their communities and how other CSR groups are paying it forward. Essentially, crowdfunding platforms become communities in and of themselves where ideas flourish.
Crowdfunding is used by everyone from education organizations to food banks to victims of natural disasters; but until now, only individuals have been able to support causes through crowdfunding platforms. If you are a business leader looking to support non-profits in a new way, consider the next frontier of CSR and give back in highly transparent and social way.
Mark Feinberg is a 15-year veteran of Atlanta’s investment and business communities with senior leadership experience from the IBM Corporation and Ernst & Young Consulting. Through Uruut, Mark is able to blend his business, technology, investment and entrepreneurial background with his passion for strengthening community. Find Mark on Twitter @MarkLFeinberg and @Uruut.