UNITED STATES NEWS

Causeway: Part stock fund + part donor-advised fund = A new bid for young donors

Aug 23, 2023, 8:08 AM

What might persuade affluent 20- and 30-somethings to give to charity?

Charity Navigator, which millions of Americans use to guide their giving, is betting it has an answer to that vexing question for nonprofits: a new online platform that promotes giving to causes, not individual organizations. The ratings giant announced Tuesday its acquisition of Causeway, the start-up company behind the platform.

Causeway, which launched only last year in a test with about 100 donors, invites the charitably minded to make monthly recurring gifts to one of its cause funds — curated bundles of nonprofits rated as highly effective. The structure mimics that of a mutual or stock exchange fund, in which investors put money into a basket of publicly traded companies rather than individual stocks.

Charity Navigator aims to expand the Causeway model and boost giving, particularly among younger Americans, says CEO Michael Thatcher. Millennials and members of Generation X are often eager to, say, bring clean water to developing countries, Thatcher says. But they don’t care who gets it done. “They’re impatient with the brand and identity of individual organizations. They’re really just looking for results.”

Causeway co-founders Ben Horwitz and Reed Rosenbluth — tech entrepreneurs in their late 20s — created the platform after they saw many of their high-income friends sitting on idle donor-advised funds, paralyzed about how to give effectively. Others were “firing from the hip,” Horwitz says, without a plan or research.

Causeway, Horwitz says, seeks to simplify and spur giving. Its online format aims to replicate the digital experience of managing finances or stocks. “My generation wants to do this in three clicks and know that they’re getting the best possible organizations,” Horwitz says. There’s also a chance to build online communities around donors’ shared passion and commitment to a cause, he says.

Horwitz, who will join Charity Navigator, quit his job in business development at Facebook to start Causeway. Rosenbluth is a software engineer who previously worked at Ripple, a cryptocurrency exchange.

Research shows that younger Americans, while generous and philanthropically inclined, aren’t making financial donations at the same rates as baby boomers or older generations, says Woodrow Rosenbaum, chief data officer at GivingTuesday, which analyzes trends in giving. Millennials and Generation Z don’t have the same affinity for nonprofits and traditional charity, perhaps because organizations aren’t engaging with them.

“I have thought for a long time that there’s untapped opportunity for these kinds of curated cause funds,” Rosenbaum says.

So far, Causeway has established five cause funds through which it funnels donations to 25 nonprofits in animal welfare, climate change, global health, poverty alleviation, and racial equity. Donors also can add individual nonprofits outside the cause funds to their portfolio.

With a slogan of “donations that make a real difference,” Causeway promotes gifts to its funds as a way to get the most good for the charitable dollar. It says it has worked with philanthropy experts to select groups that it believes are cost effective, transparent, and in need of funding to ensure success.

Most notably, Causeway teamed with GiveWell, perhaps the pre-eminent name in charity evaluation. Started in 2007 by two former hedge-fund analysts, GiveWell relies on data and deep analysis in a search for top-performing organizations. Guided by the principles of effective altruism, it researches only groups whose work can improve the lives of the largest number of the global poor.

GiveWell also offers donors several funds through which it funnels gifts to a set of organizations, including its Top Charities Fund, which supports its top-rated charities that have the highest-priority funding needs. The four charities in Causeway’s global health fund are also organizations that have been recommended by GiveWell.

Other charity evaluators partnering with Causeway are: Animal Charity Evaluators, the Center for High Impact Philanthropy at the University of Pennsylvania, and Giving Green.

Causeway’s value proposition — that it can identify highly effective charities — hinges on the nascent, complicated, and expensive field of measuring and evaluating nonprofit performance. There’s no consensus as to what metrics define impact, and few nonprofits have the will or resources to rigorously evaluate their work.

GiveWell’s extensive analysis means it rates only a handful of organizations each year. Charity Navigator introduced an impact score to its ratings in 2020, but so far, it has such data for only 1,500 of the more than 200,000 groups in its database.

Most impact measures developed to date focus on an organization’s direct service — meals for people who are homeless, say, or surgeries for individuals who are blind. There’s no widely used and accepted means to estimate the impact of less tangible work, such as in the arts or advocacy.

“Collectively, we’re doing better and learning,” says Katherina Rosqueta, founding executive director of the Center for High Impact Philanthropy at the University of Pennsylvania. “But there will always be limitations. The search for the Holy Grail never ends.”

As Causeway expands, its system of evaluations will likely be imperfect, particularly in the early days, says George Mitchell, a City University of New York scholar who studies charity evaluation and ratings. But the promise that nonprofits in the fund are high performing “may create a belief — an unwarranted belief — that they found the best charities through some kind of comprehensive process.”

Nonprofits may also be worried to learn that Causeway has borrowed elements of donor-advised funds. Like DAF users, donors can direct Causeway to withhold their name and personal details from nonprofits in their cause funds. Indeed, Horwitz said that nearly everyone in last year’s test declined to share that information. Some complained about previously receiving hundreds of email gift solicitations or being asked for an additional donation immediately after contributing.

The introduction of a new gatekeeper to donors may frustrate charities. Giving dropped 10.5% after inflation in 2022, marking only the fourth time that donations have fallen since at least 1956. In response, charities are working hard to forge tighter connections with their supporters. Yet conceivably, Causeway’s three-clicks-to-give approach means some donors might give to a fund without even visiting the websites of its nonprofits.

Causeway groups likely will have an opportunity to connect with donors through a monthly “impact” report that it plans to send donors. That report hasn’t yet been designed, but it could be an ideal way for organizations to share their stories and inspire more giving by showing the good accomplished from earlier donations, says Rosenbaum of GivingTuesday.

“That information ultimately is going to have to come from the organizations that are generating that impact and outcome,” he says. “That storytelling component comes from the field.”

_____

This article was provided to The Associated Press by the Chronicle of Philanthropy. Drew Lindsay is a senior writer at the Chronicle. Email: drew.lindsay@philanthropy.com. Associated Press coverage of philanthropy and nonprofits receives support through the AP’s collaboration with the Chronicle and The Conversation US, with funding from Lilly Endowment Inc. The AP and the Chronicle are solely responsible for this content. For all of AP’s philanthropy coverage, visit https://apnews.com/hub/philanthropy.

United States News

Associated Press

A pregnant Amish woman is killed in her rural Pennsylvania home, and police have no suspects

SPARTANSBURG, Pa. (AP) — Investigators have no suspects in the killing of a pregnant 23-year-old Amish woman inside her home in rural northwestern Pennsylvania, and are appealing for tips from the public to help solve the crime, a state police spokeswoman said Wednesday. Rebekah A. Byler was the victim of a criminal homicide inside her […]

8 minutes ago

Associated Press

Police in suburban Chicago are sued over a fatal shooting of a man in his home

CHICAGO (AP) — The sisters of a man fatally shot in his home this month by suburban Chicago police filed a federal lawsuit Wednesday against the officers and their department, alleging wrongful death and other counts. Kyenna McConico and Kennetha Barnes, sisters of Isaac Goodlow III, filed the lawsuit in U.S. District Court in Chicago […]

2 hours ago

Workers drive among shipping containers and trailers at a BNSF intermodal terminal, Jan. 3, 2024, i...

Associated Press

US economy grew solid 3.2% in fourth quarter, a slight downgrade from government’s initial estimate

WASHINGTON (AP) — The U.S. economy grew at a robust 3.2% annual pace from October through December, propelled by healthy consumer spending, the Commerce Department reported Wednesday in a slight downgrade from its initial estimate. The expansion in the nation’s gross domestic product — the economy’s total output of goods and services — slipped from […]

2 hours ago

FILE - Activists mark the first anniversary of the Supreme Court's decision in Dobbs v. Jackson Wom...

Associated Press

About as many abortions are happening in the US monthly as before Roe was overturned, report finds

The number of abortions performed each month is about the same as before the U.S. Supreme Court overturned Roe v. Wade and the nationwide right to abortion more than a year and a half ago, a new report finds. The latest edition of the #WeCount report conducted for the Society of Family Planning, a nonprofit […]

2 hours ago

This undated photo shows oral historian Francine D. Spang-Willis, who is leading a project to creat...

Associated Press

Laurene Powell Jobs’ philanthropy seeks to strengthen communities with grants for local leaders

Francine Spang-Willis wishes the landscape of the Crazy Mountains near Livingston, Montana, could speak for itself. But absent that, the oral historian will launch a new project talking to people with a connection to the land. Spang-Willis is one of a dozen new fellows announced Wednesday by the Emerson Collective, Laurene Powell Jobs’ philanthropy. In […]

3 hours ago

Associated Press

Tornadoes in February? In the Great Lakes? Storms leave a trail of destruction

Severe thunderstorms with large hail and several possible rare winter tornadoes toppled trees, cut power and damaged homes in the Chicago area and other parts of the Great Lakes into Wednesday morning. In Grand Blanc Township, Michigan, near Flint, a possible tornado knocked down trees and damaged homes and gas lines shortly after midnight, but […]

3 hours ago

Sponsored Articles

...

DISC Desert Institute for Spine Care

Sciatica pain is treatable but surgery may be required

Sciatica pain is one of the most common ailments a person can face, and if not taken seriously, it could become one of the most harmful.

...

Day & Night Air Conditioning, Heating and Plumbing

Day & Night is looking for the oldest AC in the Valley

Does your air conditioner make weird noises or a burning smell when it starts? If so, you may be due for an AC unit replacement.

...

Sanderson Ford

The best ways to honor our heroes on Veterans Day and give back to the community

Veterans Day is fast approaching and there's no better way to support our veterans than to donate to the Military Assistance Mission.

Causeway: Part stock fund + part donor-advised fund = A new bid for young donors