College Student Philanthropy and Funding Millenium Villages

When one considers that the average income in the world is $18000 a year and half the world lives on less than $2.50 a day (even when adjusted for changes in purchasing power in different countries), one’s idea of what is adequate changes.

Many liberal arts schools want students to be civically minded — aware of the social issues around them and motivated to do something about it. To this end, many universities have started getting students to think more deeply about philanthropy as a possible solution. Not only would the socially conscious student soon be graduating and hopefully earn an income sizable enough to afford donations, but many college students already have the means to donate some, whether it even be a quick $10.

Some organizations are already working on this. The Sillerman Center at Brandeis University gives out prizes for innovation in college philanthropy. Binghamton University has a Philanthropy Incubator ” provides students with grant money to distribute to local nonprofit organizations as part of course work in which they learn about philanthropy and the essential role nonprofit organizations play in building vibrant communities.”

My own university, Denison University, has very similar Pay it Forward grants, though I can’t find any electronic documentation for them. And of course, there’s Denison University’s Venture Philanthropy Club, which is a student-led organization that gives out $10,000 and 200 hours of community service each year to a local non-profit organization.

But I think we can build upon this existing philanthropy even further.

 

Funding a Millenium Village?

Philanthropy at college campuses has a lot of promise. But what should we raise money for? I suppose I’m fine with raising money for my university. But given that money raised can have far more impact if it’s spent in one place rather than another, even within one’s local community, it’s worthwhile to ensure money being donated is given to a particularly high-impact area, and there are many people in far more need than our own very well-resourced university.

One interesting idea comes from “How Students Can Support a Millennium Village?”, which talks about, obviously, funding a Millenium Village: (See also the school’s news report.)

Last year at Carleton University our group, Students To End Extreme Poverty, worked to get a question to referendum where students voted on whether or not they would all have to automatically pay an additional $6 in tuition fees ($5352 instead of $5346) to help support a Millennium Village. It worked. Carleton students now contribute over $110,000 annually.

Here is our hope: By getting enough universities and organizations to support Millennium Villages (aside from helping a couple communities help themselves out of extreme poverty) it would raise enough awareness, get enough media attention, engage enough people, foster enough cooperation, and generate enough civil society will to see policy changes: more and better aid, fairer trade, and debt cancellation.

Worst case scenario: thousands of people, many of whom would otherwise be dead, will have the basic tools they need to lift themselves out of extreme poverty.

 

I’d love to try to do something like that at Denison. With an additional $6 per student, Denison could raise $12,792 per year in philanthropy. To reach Carleton’s level, we’d need $51.80 per student per year. At $12,792, Denison could fund 213 people to live in a Millenium Village.

 

The Impact of College Philanthropy

What exactly is the impact of college philanthropy? Philanthropic dollars certainly aren’t useless, and the age-old saying that “anything helps” is certainly true. But many social problems would require money on the scale of millions, if not billions, of dollars to help solve. Student giving is typically on the scale of thousands. Raise $10 from each of Denison’s students, and you’ll be getting $21320, assuming everyone contributes. What’s that worth?

College philanthropy raises awareness. A liberal arts school, such as Denison, wants to provide training to students in recognizing (and hopefully responding to) social issues. By raising money for a cause, one is able to raise awareness for the cause by educating people about it. Hopefully this raised awareness will translate into more action around the issue further dwn the road, even if money can’t be raised more. It signals that this issue is one worth taking seriously.

$21230 can do some good on it’s own. It’s enough to provide a scholarship to fund a semester of tuition and costs for one student. It’s enough to buy 148000 pounds of food for a food pantry. It’s enough to fund 5000 anti-malaria bed nets. It’s enough to fund over 40,000 deworming treatments. Don’t underestimate the impact of $21230.

College philanthropy builds a giving habit. Perhaps most importantly, students giving now help cement the habit of giving in the future when they have much more to give. Colleges recognize that senior class gifts often make up <0.01% of their endowments and often put more money into fundraising than they immediately return, with the acknowledgement that the real return comes further down the road — “One day, it’s five dollars; later it’s 5,000; in 2042, Yale gets Smith Tower or the Johnson Fellowship.” And while causation between earlier giving and later giving is still unclear, the correlation has been found to be rather strong (Rosen and Sims 2010, PDF; Meer 2011, PDF). $21230 raised now could easily become $2 million raised within ten years.

It improves the reputation and desirability of the university. People would see students engaged in this kind of project and understand that students at this university do come together and care about social problems outside their world; they’re not just trapped in a bubble. And the university could get favorable press coverage from the new policy.

 

Thinking Through the Idea

However, I have some questions:

 

Is Millenium Villages the best philanthropy?

The trade-off I imagine here is between the impact-per-person of the chosen cause and the likeliness that students will choose to endorse it. GiveWell, a non-profit evaluator, has criticized Millenium Village has not yet “demonstrated cost-effective or sustainable benefits”. GiveWell’s top charities would likely do better. Much stranger causes, like Vegan Outreach or future movement building, I think have even higher impact, but are extremely unlikely to attract people to signing on.

One might also consider helping the local community surrounding the college; in Denison’s case, Licking County. There certainly is need in the area, with several low-income areas, like Newark. My push back against this would be that the need is significantly higher overseas and Denison is already putting money and service hours into the local community. But the desire to support a local community is very high, much more so than overseas.

Perhaps we could consider splitting? Or perhaps the split would just confuse people, making them overall less likely to support the idea?

 

Is the tuition raise the best model?

The interesting thing about Carleton’s model is that they’re not just getting behind tables and asking students who walk by to put money in a box. Instead, students were voting on whether to pass the small levy onto all students. It was optional in the sense that students could have voted the levy down and rejected the increase, but it’s mandatory in the sense that the levy passing meant that even students who voted no would be coerced into donation as part of their student fees.

This plan has some important benefits. I think the coercion is an important effect — people are more likely to donate when others around them are doing so and being secure in the knowledge that everyone will have to contribute the same should make people more likely to get engaged. And it also is a lot more successful at raising money than normal fundraisers, given that 100% participation is very unlikely.

However, there are drawbacks. By introducing the levy and then forgetting about it, one gains the initial donation, but loses the opportunity to raise awareness or set students up to be future donors, which probably has more impact than the initial donation itself. And there’s an issue of unfairness — those who vote “no” are still being coerced and given that students also graduate and are slowly replaced, it might be unfair to pass this cost on to future students as well.

 

There are some alternatives that could get most of the benefits while also getting rid of some of the drawbacks.

Perhaps one could add a check box to the tuition bill that allows one to optionally add the $6 to their tuition bill. Or perhaps one could take a page out of knowing that people are far less likely to opt-in than they are to opt-out and go for opt-out philanthropy, enable the donation by default, and make people check the box if they want to be removed from the donation pool.

Furthermore, perhaps the levy could come up for a vote every year. Assuming the levy keeps getting passed, this would have the benefit of continuing the program, while also annually raising awareness for the cause and hopefully encouraging students to donate after they graduate. Of course, this “risks” ending the levy, which would be unfortunate for those whom the levy benefits, but would give people an outlet to address the unfairness of coercion.

I suppose one could also ditch the levy model altogether and go back to the fundraising behind the table kind of deal that’s pretty popular (and occasionally still enormously successful) with senior class gifts already.

 

Is $6 per student the best target?

There’s also the trade-off of being able to raise even more money by asking for more, but turning off those who won’t give the higher amount, but would have given a lower amount.

With a levy, this consideration is important, because people might oppose it solely based on the amount of money it intends to raise. It seems that the $6 wouldn’t be controversial in the same way my non-serious $51.80 suggestion would be, for example.

Of course, one could modify the levy model so that people can define their own amount they want to give, perhaps even allowing for one to give $0, thus allowing people to give as much or as little as they wanted. But by coercing everyone to give a certain amount, one is likely to get more money than one would’ve otherwise, I think.

When I first heard of the Millenium Village idea, I thought Carleton was able to fund an entire village, which would make the contribution per student that which is needed to fund the village, which would be satisfying and not arbitrary. But these villages take millions of dollars per year, so their contribution still was a largely arbitrary amount. Going back to my previous question, I wonder if there’s anything that can be funded which would produce a doable and non-arbitrary contribution…

Though, overall, I think one could get more by requesting more than $6. Right now, my best guess is the ideal target would be $9, taking advantage of psychological pricing — as compared to, say, asking for $10, which seems a lot higher, though I haven’t seen any evidence that psychological pricing happens in philanthropy. $9 per year would put the individual Denisonian down for $36 in his or her undergraduate career and would raise $19,107 a year.

 

Is there a way to leverage this for more money?

One other potential idea I would have is to explore the idea of matching gifts. Perhaps not only would the students commit to $9/year (or some amount), but the administrators (and perhaps even trustees, staff, faculty, or other people) of the college would also commit to matching the total amount raised by the students this way (or even more, or less, or their own specific amount per year, or something).

This comes from the idea of “challenges” — For example, a George Washington Trustee offered $50,000 if half the class donated to the Senior Class gift. Getting the administrators/trustees/staff/faculty/other on board along with the students would probably make the idea even more popular and would increase the total size of the gift.

Maybe we can do this, and then later convince everyone to join Giving What We Can?

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On 10 Feb 2013 in All, Community Building, Optimal Philanthropy. No Comments.

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