When Category 4 Hurricane Matthew, with its 235 kilometers per hour winds, smashed into Haiti on October 4, 2016, it had a devastating impact. Hundreds of people died and thousands of families lost their homes, livestock, and crops.
As information from the hardest-hit areas became available as villages and coastal towns began making contact with the rest of the world, the scope of the damage became evident and the international community prepared itself to help.
The United Nations was called to address the critical life-saving needs of affected people through a US$5 million grant from UN OCHA’s Central Emergency Response Fund (CERF), which was released within three days to kick-start the initial emergency response operations and to meet the most urgent needs. The US$5 million CERF grant was sufficient to cover initial expenses of the emergency response. However, as the CERF contribution was rapidly depleted, UN agencies and humanitarian NGOs relied on funding support from bilateral donors.
UN OCHA released a flash appeal (resources estimates for emergency response) six days after the disaster requesting US$ 138.2 million (initially US$ 119.9 million) to reach the 1.4 million people in need of assistance (750,000 of whom needed urgent life-saving assistance).
However, despite the urgency to rapidly mobilize funding for the emergency response, donations from traditional donor sources required multiple days, weeks, and months to arrive:
Seven days after the disaster only 2.5 percent of funds requested in the Flash Appeal were transferred from donors to recipient organizations. Even one month after the disaster, only 13 percent of the funding required as per Flash appeal was mobilized and transferred to recipient organizations.
Overview fund mobilization over time:
However, late arrivals of funds is not the only issue. Often, funding from bilateral sources is not sufficient to cover the emergency response. In the case of Hurricane Matthew, seven months after the hurricane hit Haiti, only 62 percent of the flash appeal has been committed, with only 35 percent of committed donations transferred (as per May 2017).
Hurricane Matthew Flash Appeal 2016:
Funding appeal: US$ 138.2 million
Funding committed (as of May’17): US$ 86.2 million
Funding received (as of May‘17): US$ 30.3 million
Need for exploring new funding modalities
Looking at the statistical increase of natural disasters and escalating conflicts over time, the widening funding gap is creating potentially debilitating challenges for the humanitarian system. Funding from traditional donor sources is no longer sufficient and new funding sources from non-traditional donors need to be explored.
Crowdfunding by engaging the public in fundraising has emerged as a promising alternative to traditional fundraising. Platforms like Kickstarter, GoFundMe, and Indiegogo have shown annual growth rates of 25+ percent over the past three years. GoFundMe has raised 3 billion dollars since its launch in 2010.
Following the herding principle that each and every of us wants to be part of something larger than ourselves, Crowdfunding has not only allowed startups and private companies to raise previously unthinkable amounts of funding, but it has given people the feeling of being part of something bigger, a feeling of community, participation, and ownership.
“Other than being part of something larger, we particularly enjoy feeling that we can make a true difference and help others in serious need.”
Social crowdfunding fund-raisers for victims of natural or man-made disasters, launched as the humanitarian emergency is unfolding, combine both aspects: They bring people together to do good, and the raised funds truly make a difference.
The public sympathizes with those affected by disasters as pictures are broadcast and shared on TV and social media. Donation-based crowdfunding has the potential to capitalize on this and raise life-saving funding in the determining hours and days after a disaster has struck. Collected donations add up and have life-saving impacts.
However, as of May 2017, there is no existing crowdfunding platform for people to easily engage and make a small donation for humanitarian relief aid. Existing relief aid platforms have a minimum donation amount exceeding what most are willing to give, are not mobile friendly, and the donation process is cumbersome and complicated.
Looking at the case of Hurricane Matthew, a disaster with tremendous news coverage and international awareness, the total funding support from individuals worldwide was less than US$ 1 million, which made up less than 4 percent of total funds raised. Among the reasons for low engagement of private individuals is certainly the fact that there is no easy way for individuals to give. While we were watching the devastating pictures coming out of Haiti on TV, the internet, and social media, it felt like there was nothing we could do.
“Humanitarian relief aid is very close to many people. Crowdsourced fundraising for humanitarian relief operations through micro-donations has tremendous potential.”
Technology as a key enabler for crowdsourced philanthropy
The advancement of cashless payment technologies and significant reductions in transaction fees for mobile donations are among the many key enabling factors for donation-based crowdfunding.
Apple Pay has shown a great positive impact for mobile donation-based crowdfunding. With the introduction of Apple Pay for non-profits in late 2016, Apple rang in the era of frictionless online philanthropy. Apple Pay allows smartphone users to seamlessly make donations of small amounts with the touch of a button on their smartphone, by simply downloading an app.
This is an important milestone as mobile donations play a very significant role in micro-philanthropy. With 2+ billion smartphone users worldwide, many of which have connected their smartphone to their preferred payment modality (PayPal, Apple Pay, Google Play Store), it has never been easier to make small payments and donations.
Social media informing the masses
“Social media plays a very important role in crowdsourcing and crowdsourced philanthropy.”
News about a sudden onset disaster and pictures from the ground spread through social media networks within minutes — literally around the world. As we receive the news and see pictures, we sympathize with the victims of the disaster and often feel a desire to help.
If the news on social media would also provide an easy and fast way to make a small donation, many people would be drawn to help, especially when we see that our friends, colleagues, or family members have already given.
As research shows, giving is heavily influenced by others. Giving is fundamentally a social act. And it is contagious. People are more prone to donate if they see that a friend or family member has donated to the same cause.
Also, we tend to give significantly more if the person asking for our donation is a colleague, friend, or family member of ours, and if our donation is perceived as a social act and we receive public recognition on social media.
One way to provide public recognition to a donor to a crowdfunder is by automatically posting a message on the donor’s social media page thanking them publicly for his/her donation: “Thomas has helped the people affected by hurricane Matthew through a small donation. Join Thomas now and make a difference!”
Conclusions / Way forward
Donation-based crowdfunding — crowdsourced philanthropy — is drawing people together to rally for a good cause that they are passionate about, sharing resources and contributions. It is not about the amount people donate, but rather about the social act in itself. As technology drives change and mobile cashless payments are a daily routine for smartphone users, 2+ billion smartphone users can make a significant positive impact during humanitarian emergencies by making a small donation to crowdfund the emergency response.
© Peter Prix, May 2017, @PeterPausk