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Home » Social impact » 3 ways to have a social impact, or why I’m not fundraising directly
Social impact

3 ways to have a social impact, or why I’m not fundraising directly

December 29, 2016 Leave a Comment 2561 Views

At the outset, I had very ambitious fundraising ideas for cycling Africa. I didn’t want my adventure to be just about me and my personal achievement, but to use it for a bigger purpose. Now you may wonder what happened to those ideas, or perhaps even how you could contribute to such bigger purpose.

Before I explain what I think you could do, let me give you three reasons why I’d decided to NOT fundraise directly.

Three reasons why I’m not fundraising directly

1. Fundraising platforms charge fundraising fees

We all would feel proud to be able to say we’d raised a certain amount of funds for a certain good purpose, wouldn’t we? At least I’d thought I would, until I learnt the realities of fundraising: Collecting funds from you to pass them on to another organization is an inefficient and costly process. Most fundraising platforms charge ridiculous fees of 5-10%, often without even making the donors aware of this inappropriate use of their funds! To be fair, there are a few honest platforms that don’t take any fees themselves, e.g. YouCaring seems to be one of those. However, even platforms like YouCaring need to pay a 2.9% payment processing fee to credit card processors. I haven’t found any way to avoid that. Thus, as I believe your money would be better spent if you donate directly to a good cause rather than via me, I’ve decided not to fundraise under my name.

Should you be aware of a more efficient way to fundraise, please do leave me a comment below.

2. I don’t believe in charity, but local entrepreneurship and global interconnectedness

Experience over the past decades has shown that charity can be more destructive than supportive in the mid- to longer term. People in Africa don’t need Americans or Europeans to tell them what to do, to give them donations that often lead to dependence, and then to be left alone and potentially even worse off whenever such donations dry out. What they most often need and want in order to sustainably improve their livelihoods is dignity to make their own living, as well as basic start-up assistance such as access to the financial system via microfinance lending.

If all of this sounds very foreign to you, I’d highly recommend you to read The Blue Sweater: Bridging the Gap Between Rich and Poor in an Interconnected World by Jacqueline Novogratz. Her captivating story and inspiring memoir provides us a new perspective on philanthropy and creating sustainable impact. It is also packed with insights into Africa overall.

3. I don’t feel sufficiently knowledgeable about any single cause to solicit your donations

Of course, there are also worthy causes and uses of donations, and certain areas of social impact cannot be addressed via entrepreneurship. However, I’m not an expert on development aid. While I’ve tried to identify some of the most worthy causes and organizations to fundraise for, I’ve come to the conclusion that I wouldn’t feel sufficiently comfortable to pick and recommend any such cause as best use of your funds.

Last but not least, I wouldn’t want us to feel good about our donations, but then go on and live our lives as ever before. Our world is interconnected. I believe the single biggest impact we can have is by changing our own behavior, but that of course requires quite a bit more of an effort than simply making a donation. Here’s how:

Three ways for you to have a sustainable social impact

1. Lower your own social and ecological footprint = consume less stuff

Most of us are not aware of, or consciously choose to ignore, our own footprint. The way we live every single day, including the stuff we buy and throw out, has a bigger negative impact on people living elsewhere than we could ever make good with any donation. Feeling good about making a donation without changing our daily behavior is like paying a priest to forgive your sins (sorry for being a bit extreme).

Of course it’s not possible to completely get rid of our negative footprint, but that doesn’t mean that we shouldn’t try and make an effort. And every effort starts with education. If you would like to have an impact without donating money, and there’s one single action you take away from my blog, please read The Story of Stuff: The Impact of Overconsumption on the Planet, Our Communities, and Our Health-And How We Can Make It Better by Annie Leonard. I trust more actions will follow naturally.

If you would like to make a donation, then I think your money would be well spent with The Story of Stuff Project. You can donate directly via their website.

2. Steer your investment portfolio towards social impact funds and/or socially responsible companies

If you are fortunate enough to have your own investment portfolio, you can steer the way your money gets invested. Socially responsible investing doesn’t have to sacrifice returns. To the contrary, a social responsibility approach may even yield better opportunities: On the low risk/low return spectrum, there are microfinance funds that tend to have a very low risk profile yet better returns than so-called “risk-free” government bonds. In the mid risk/return field, there are investment funds with social responsibility themes that yield equivalent returns to traditional mutual funds. And in the higher risk/return category, there are venture capital and private equity funds that focus on projects/companies with a positive social/ecological impact.

Have a conversation with your investment manager about possibilities to incorporate social responsibility criteria into your portfolio. Or if you manage your own funds, consider whether a company/industry might be creating more harm than value to society overall before you jump on that next financial opportunity.

3. Provide direct lending to local entrepreneurs

Perhaps having your own investment portfolio is something you could only dream of, or you do not have access to impact fund investment opportunities. Then here’s the good news: You can still have a big impact on someone else’s life by making a very small investment, as little as USD25.

What impact funds accomplish on a larger scale, each of us can accomplish on a smaller scale by lending money directly to local entrepreneurs. This is a beautiful concept that was pioneered by Kiva. Via their platform, you can search for projects from all over the world by criteria that you feel most connected to (e.g. projects by Women in Kenya in the food sector). You can read different stories about people and their projects, even see their photos, and select directly to whom you would like to lend. Thereby, you know exactly where your money goes and what impact you’ve created. When your loan gets repaid (97% repayment rate, i.e. borrowers are very honest and their projects mostly succeed), you can again lend the same funds to someone else, so you multiply the impact of your funds compared to one-way donations.

If all of this sounds too complicated, you could also donate directly to Kiva to help them expand their reach and allow more local entrepreneurs to raise lending via their platform.

Conclusion: It all starts with education

When thinking of creating lasting social impact in the developing world, educating children often ranks highly as a favorite cause to donate money. I agree that education is important. However, I tend to believe that the real education and awareness building needs to start with us. We are shockingly unaware of our own social and ecological footprint, the concept of global interconnectedness, and how changing our behavior is in our own best interest.

For the sake of awareness-building, I’d like to leave you with one more book recommendation—a book that has certainly opened my eyes with regards to Africa and our interconnected world: The Zanzibar Chest by Aidan Hartley.

In conclusion, I hope that—even though I’m not fundraising directly—I will still be able to use my cycling for a good purpose: education. The more we understand, the more we care, and the right actions will follow naturally. Thank you.

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