How Social is the World According to Facebook?
By Peter Deitz • Posted on January 15, 2008
A recent opinion piece from The Guardian casts new light on Facebook, and more importantly, on the investors who have helped turn the dorm-room project into one of the fastest growing multi-national companies.
For the last eight months, Facebook has had a strangle hold on the imagination of the nonprofit tech community. Technology consultants and bloggers have written endlessly about strengthening the relationships between a nonprofit and its supporters through Facebook, including myself.
But to what end? If Facebook is designed primarily to centralize resources in the hands of the few and advertise brand names that have nothing todo with the nonprofits we support, then what good could a one-off Facebook group or fundraising application do for philanthropy and the change sector?
As Facebook continues to flex its corporate identity, nonprofits and the people who support them may start looking elsewhere for social action platforms designed for social change. Purpose-driven communities like Change.org, ZaZengo, GiveMeaning and Razoo may prove safer and more credible places for organizations and independent projects to harness the power of networked individuals.
Here are a few excerpts from Tom Hodgkinson's With Friends Like These:
I despise Facebook. This enormously successful American business describes itself as "a social utility that connects you with the people around you". But hang on. Why on God's earth would I need a computer to connect with the people around me? Why should my relationships be mediated through the imagination of a bunch of supergeeks in California? What was wrong with the pub?
And does Facebook really connect people? Doesn't it rather disconnect us, since instead of doing something enjoyable such as talking and eating and dancing and drinking with my friends, I am merely sending them little ungrammatical notes and amusing photos in cyberspace, while chained to my desk? A friend of mine recently told me that he had spent a Saturday night at home alone on Facebook, drinking at his desk. What a gloomy image. Far from connecting us, Facebook actually isolates us at our workstations.
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It seems, though, that I am very much alone in my hostility. At the time of writing Facebook claims 59 million active users, including 7 million in the UK, Facebook's third-biggest customer after the US and Canada. That's 59 million suckers, all of whom have volunteered their ID card information and consumer preferences to an American business they know nothing about. Right now, 2 million new people join each week. At the present rate of growth, Facebook will have more than 200 million active users by this time next year. And I would predict that, if anything, its rate of growth will accelerate over the coming months. As its spokesman Chris Hughes says: "It's embedded itself to an extent where it's hard to get rid of."
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Clearly, Facebook is another uber-capitalist experiment: can you make money out of friendship? Can you create communities free of national boundaries - and then sell Coca-Cola to them? Facebook is profoundly uncreative. It makes nothing at all. It simply mediates in relationships that were happening anyway.
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An interesting take on things
The writer of this piece blends together the money we raise online for projects posted at GiveMeaning.com and money we raise to pay our overheads which is absurd and irresponsible.
He called me on Friday telling me he was writing a piece for Saturday and seemed uninterested or incapable of understanding what is clearly said on our website in the About Us section. To quote directly from our About Page:
"We charge nothing for donations collected online and even cover the credit card costs associated with each donation. We rely on the support of generous donors and advertisers to provide this service." Can't get more clear than this.
But to reiterate, 100% of everything we collect through the GiveMeaning.com website for the projects listed on the site is forwarded to Implementing Organizations without charging their donors or the organizations a penny.
The donors who fund GiveMeaning Foundation's expenses do so specifically so that we don't have to charge any fees and do so with the knowledge of how their money is spent.
By lumping two totally separate activities together as one, the writer makes it appear as though we deduct money from projects, something that any of our project founders can tell you is clearly not the case.
We spend the money we do so that other charities don't have to invest in the infrastructure we provide for free. Infrastructure which dramatically lowers the cost of fundraising for charities of all sizes.
He also seems to think that a website runs itself and that more than 50,000 members and over 1500 fundraising pages happen without some serious investment required.
He also takes issue with the fact that many of the charitable foundations who have supported our work prefer to be anonymous. I offered him the opportunity to speak with some of our donors and he declined to do so.
Had he taken the time to understand the simple distinction between our operating costs and the funds we raise on behalf of our service, he wouldn't have had a story except that we have invested heavily to build a service for everyone to use free of charge.
GiveMeaning numbers
Excerpt of article in The Vancouver Sun newspaper of January 19, 2008:
http://www.canada.com/vancouversun/news/business/story.html?id=b76ff000-...
During the year ending Sept. 30, 2006, GiveMeaning received $234,643 in donations for which it gave tax receipts, according to a financial statement filed with Canada Revenue Agency. Tom Williams said these are largely donations from individuals.
It received another $730,350 from other registered charities. Williams said these donations were made specifically to pay GiveMeaning's overhead.
He refused to identify any of these donors. I found this strange: My sense is that, while some donors request anonymity, most registered charities or foundations publicly report where they are placing their money, not so much for recognition as for transparency.
More generally, I do not understand why certain undisclosed charities would give money to pay overhead for what is essentially a charitable conduit.
In the case of GiveMeaning, that overhead is disproportionately large. Of the $982,705 in total donations it received (and issued tax receipts for), GiveMeaning spent $666,070, or 68 per cent, on administrative expenses.
Those expenses included $199,043 for professional and consulting fees; $153,646 for salaries, wages and benefits; $28,433 for advertising and promotion; and $24,019 for travel.
I asked Williams whether he receives a salary. Well, yes, $90,000 per year. And his wife, country singer Jessie Farrell, who works part-time for the foundation "when she can," gets $30,000. So together they collect $120,000 per year, plus expenses.
After subtracting overhead costs, just over $300,000 was available for charitable purposes in 2006, but only $172,000 was actually given to charities (the remainder is still on the foundation's books). That $172,000 represents just 17.5 per cent of total donations.
But that's not the end of it. Many of the charities that receive money have their own overhead. So the net amount available for true charitable purposes is even less.
Williams insists that, whenever a person gives money for a particular charity, 100 per of that money gets to the named beneficiary. That may be true, but it does not mitigate the fact that the vast majority of the overall money collected during 2006 went to administration.
Williams says this was due largely to start-up costs: "Yes, we have spent more than we have given away. Just like any other start-up business, it takes time to get profitable," he said.
He said the financial return for the year ending Sept. 30, 2007, which is just now being filed, will show a greater percentage of overall donations going to charity. We shall see.
The Vancouver Sun January 19, 2008
Re: GiveMeaning numbers
I suspect the seeds to this Vancourver Sun article were planted in the comments section of the Globe and Mail article about GiveMeaning in December. That's where questions about the numbers behind GiveMeaning were first raised.
I have written to GiveMeaning founder Tom Williams and have asked if he can write a blog entry for About Micro-Philanthropy in response to this article.
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