Dollar Days

A panel I moderated today at the Harvard Business School Club of New York underscored what cash-crunched nonprofits are just beginning to figure out: “crowdsourcing”—using the Web and online social media to better engage supporters and woo new ones—will become ever-more critical to surviving the unfolding economic slowdown. My panelists at the Club's first-ever social enterprise summit—Vinay Bhagat, Greg McHale, Katrin Verclas, and Shelley Bernstein—agreed that the rise of social media, from mobile phones to online social networks to digital video-sharing, is forcing many charities to expand and rapidly accelerate their use of the Web to drum up new converts, new dollars, and ideas. I call it the Engagement Imperative; panelists agreed the description is spot-on. “Nonprofits need to engage people they haven't reached before,” said Bhagat, the founder and chief strategist of Convio. "They need to reinvent the way they build support.”

Given the week's financial meltdown on Wall Street, all four panelists acknowledged new levels of skittishness among advocacy groups heading into their annual giving season. Many attendees predicted the worst giving season since 9/11. "If you doubted it before," Bhagat said, "engaging supporters (using social media) is now mandatory." Added McHale, founder of Good2Gether, a Boston-based Web service that helps nonprofits promote their work by placing widgets next to online news stories relevant to their cause: "The word out there (among nonprofits) is terror." Organizations that have not previously taken big strides with technology, he said, are being forced now to play catch-up—fast—and not all groups will make it. "This economy is really focusing people on finding new ways to get to more people, faster," he said.

But Bernstein, manager of information systems for the Brooklyn Museum, cautioned that marketing shouldn't be the sole focus of the Web's new social engagement tools. "It’s really important that people participate in a cause, and feel like they've had some input," she said. "That must come first...If people feel personally engaged and part of (your cause), they will contribute. But first and foremost, this is about engagement, not marketing. It's a critical distinction to understand. If you're not personally more engaged with your supporters using these tools in authentic, sustainable ways, they'll go somewhere else."

To be sure, the rise of social media will trigger structural changes at many nonprofit organizations, panelists agreed. "Organizations as we knew them are dead," said Verclas, co-founder of MobileActive.org, when asked to come up with a quick phrase summarizing the impact of this so-called Web 2.0 on philanthropy. Elaborating, Verclas said social media are so powerfully reshaping the way people organize themselves into groups for change, that not only do nonprofits need to manage donors differently—they also must rethink the way they manage themselves.

For more on the push by some nonprofits to use crowdsourcing and other forms of social engagement to boost support in this flagging economy, see my story on MSNBC.com, the first in a series I'm producing to explore the rise of social media and their influence on the nonprofit sector during the current economic downturn.

One final note: Worries about the future of philanthropy similarly dominated the conversation at a private book party hosted tonight by Economist North America Publisher Paul Rossi to celebrate the September 30 release of U.S. Editor Matthew Bishop's new book about America's new class of philanthropic billionaires, Philanthrocapitalism: How the Rich Can Save the World. Co-authored by Michael Green, the book describes how these wealth titans are reshaping philanthropy, using big-business-style strategies and expecting results and accountability to match. Do these new giving powerhouses like Bill Gates, Bill Clinton, George Soros and others have too much power? Who holds them accountable, Bishop and Green ask—and, perhaps most urgently, will these leaders continue to give generously through the financial sector's meltdown?

Bishop, for his part, told guests assembled at The Campbell Apartment in Grand Central Station that the new climate on Wall Street will put the much-professed commitment of these new philanthrocapitalists to its first real test. "We'll know soon enough if this was just a hobby born of a company's or an individual's desire to burnish an image or whether today's activism represents the deep commitment to change that has been expressed these past years," Bishop said. Either way, Bishop added, "the rich will probably get richer, regardless"—and philanthropy, ever-more critical. Said Green: "The huge cost of bailing out the financial system will mean that the government will have far less to spend on everything else."

As if to emphasize that point, next door to the Harvard Club—where Bishop and I addressed side-by-side panels earlier in the day—someone put a sign made out of masking tape on the cornerstone of the old New York Trust building. Just beneath the chiseled granite that heralded the bank's founding in the late 1800s, the sign added the postscript: "Floundered, 2008."

(Illustration by Brian Stauffer for the ispot.com)