Donate Like an Investor

Clam Lorenz

“Most giving happens because someone asked you,” says Clam Lorenz, who serves as PayPal’s General Manager of Social Innovation. “You want to support your friend, or your kid’s soccer team needs money. And that’s great.” But Lorenz wants to build a giving economy that’s faster, bigger, and smarter than ever before.

In the wake of last week’s record-breaking Giving Tuesday—which resulted in a 66 percent increase over 2013—Lorenz has just one question: “Are we actually creating a larger philanthropic pie?” That is, on a global level, did this year’s Giving Tuesday generate more dollars for more causes—or did donors simply shift the giving they’d have done on December 29 to December 2?

Based on findings from the Case Foundation, Lorenz says it looks like the giving pie is, in fact, growing. For the last two and a half years, PayPal has partnered with Giving Tuesday to test incentives and donor responses. For 2014, PayPal is still in the midst of its most ambitious campaign yet, matching one percent of every online donation made via the PayPal Give Cheer campaign through the end of the year. “We hoped to stretch donor engagement throughout the month.”

And stretch it did. Lorenz offers up the example of disaster relief, which tends to spark more donations, but less money in aggregate. (The average online donation is approximately $100. The average disaster relief donation? Less than $30.) Lorenz tends to see these smaller gifts from casual donors, compelled to respond to a one-time crisis in the heat of the moment. Casual gifts are helpful for the cause they support, but don’t move the needle for the nonprofit sector as a whole.

But on 2014’s Giving Tuesday, Lorenz says he noticed more disaster relief donations from repeat visitors—at dollar amounts starting at $100. “These are committed donors. Basically, Giving Tuesday created an opportunity for them to give twice.”

Lorenz wants to emphasize that it’s not about the size of the donation. It’s about the philosophy behind it. If we’re going to revolutionize the giving economy, he says, we’ve got to commit to a cause and support it over the long haul.

That’s called philanthropy. And Lorenz—who’s been working in the nonprofit sector since his first job as a lifeguard for the Boys & Girls Club more than twenty years ago—has a few tips for those looking to give it a try.

“It’s fundamentally a mindset. It’s not about a checkbook. You can be a very effective philanthropist donating $100 a year. First, you’ve got to develop a ‘theory of change.’ What, ultimately, are you trying to do and why?”

Once you’ve determined what gets you fired up, it becomes a question of seeking the best existing solutions to the problem you’re trying to solve. Lorenz recommends resources like Charity Navigator and GiveWell, which consolidate research into the effectiveness of a variety of charities. “You wouldn’t buy a phone without reading a review. Why would you donate to a cause you care about without learning just how effective your $100, or $100,000, is really going to be?”

The third step in the process becomes identifying what your annual commitment to your cause is going to be. “What’s your budget, in money and time? If you’re trying to solve hunger in your community, you’re signing up for a long-term effort.” Unlike casual donations, philanthropy isn’t just about feeling good in the moment (though, as he’s quick to point out, giving does wonders for our mental health). Long-term giving, when done shrewdly, is a smart investment in your vision for the future.

As it turns out, hunger in the Bay Area—where PayPal is located—is a pet cause of the organization, which has supported spring and fall food drives with San Francisco’s Second Harvest Food Bank for a number of years. And on December 15, PayPal is teaming up with a socially responsible food start-up called Munchery to co-host a holiday feast for low-income residents in San Francisco.

Lorenz, who just returned from a big Thanksgiving meal at his aunt’s house in Florida, is looking forward to the event. “The nice thing about the holidays is that they force us to stop and make connections with our friends, our families, and our neighbors. And one of the best ways to do that is through volunteer service and charitable giving.”

Of course, Lorenz hopes the goodwill of the season will inspire you to contribute to the giving economy all year round.