DonorsChoose On The HotSeat: Can Micro-Donations Make The Difference?

You may never have heard of this week's HotSeat contestant, Michael Everett-Lane, but you've probably heard at least a little about the organization he's involved with, DonorsChoose, which, by attracting lots of new, relatively tiny ($100) donations to classroom projects, has become the media and philanthropy darling of the moment -- the Grameen Foundation of education philanthropy. Well, other than KIPP.

Fairly predictably, all this attention led me to air some questions about the organization's model earlier this year -- most if not all of which were (or are here) rebuffed.

On the HotSeat, Everett-Lane, who runs the organization's New York outfit, dishes on how DonorsChoose works (think eBay for donors and classroom teachers), describes some of the most outlandish requests teachers have made (not quite a Segway, but close), and fills us in on how matching donors and classroom teachers directly is bringing in new education funders and shaking things up in the foundation world.

UPDATE: Donorschoosemakes another convert!

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How did you get involved with DonorsChoose and what did you do before?

MEL: I got involved just over a year ago -- someone sent me an article about DonorsChoose. Looking around on their website, I saw they had "TBA" as the New York Executive Director. So I applied. Before DonorsChoose I worked for Computers for Youth, another technology-and-education nonprofit.
Just how big is the DonorsChoose empire, and how long has it been around?

MEL: We've been around since 2000. Geographically, our empire stretches to eight states (Alabama, Indiana, Louisiana, Mississippi, New York, North Carolina, South Carolina, and Texas) and four metropolitan areas (Chicago, Los Angeles, New York City, and the San Francisco Bay Area).

Is it true it was started by a high school teacher?

MEL: True! Charles Best was teaching at Wings Academy, a public school in the Bronx, when he had the idea for DonorsChoose while talking to other teachers in the teacher's lounge. His students were our first volunteers.

Seriously -- no one had thought of this before?

MEL: I'm sure there were others who thought of it before -- and we now have some imitators, both here and abroad. But Charles was the first to go ahead and build it. If there's one thing about entrepreneurship I learned in business school, it was that great ideas are easy—it's the execution that's hard. DonorsChoose executes the idea really well.

Who are the imitators, and what does DonorsChoose do better or differently than the others that have popped up?

MEL: Means for Dreams (http://www.meansfordreams.org) was an spinoff of DonorsChoose, serving the Washington D.C. school system. We are actually going to absorb their operations early next year. There’s also a version of DonorsChoose in Hong Kong called EdExchange (http://www.edexchange.org). Global Giving (http://www.globalgiving.com/) started around the same time as DonorsChoose and follows a similar model to ours, although applied to international aid projects.

Adopt A Classroom is our closest “competitor,” although their operations are different from ours. For instance, DonorsChoose funds discrete educational projects and offers teachers a wide range of options, including field trips, while Adopt A Classroom funds general supplies from a few vendors. While we require that all teachers submit feedback and thank-you letters to our donors, Adopt A Classroom leaves the interaction up to each teacher. And finally, DonorsChoose funds our operations with a fulfillment fee (usually 15%) that is transparent and optional for each donor. Adopt A Classroom funds its operations out of rebates from their affiliate vendors. When DonorsChoose gets rebates from our vendors, we use those to lower the cost of classroom projects or apply them to fund new projects.

What do the traditional funders think about DonorsChoose?

MEL: There are plenty of "traditional funders," from foundations to corporations to individuals, who support DonorsChoose because they see the value of the service we provide by directly connecting their financial resources to the classroom. Obviously our model is much different from a "traditional" nonprofit. We represent a different way of doing business, and that doesn't appeal to all funders. Operationally, we have more in common with eBay than we do with Teach for America or the New York Community Trust. In a way, we're more like an e-commerce site than a nonprofit (or a foundation) -- it's just that we're "selling" philanthropy.

Does the existence of DonorsChoose undercut the need for more resources for
schools and classrooms?

MEL: There are probably some who might say that our existence, or the existence of local educational foundations, means that schools don't need more money. I think that we actually inform the debate over the need for increased education funding. If a teacher has to ask for a DonorsChoose grant to buy pencils for her classroom, how can you argue that the schools need less money? The public education market is $500 billion dollars a year. Teachers spend $1 billion a year out of their own pockets for classroom resources. This year we'll put $5 million into classrooms, which is great, but it's only about .001% of the total educational pie.

What's the most common type of thing teachers ask for?

MEL: Of those proposals that get funded, 46% are for some kind of classroom supplies. Books run second at 25%, and technology (which we define as anything that gets plugged in or needs batteries) are 17% of funded proposals.

What are some of the most unusual requests that have been made --whether or not they ever got approved or funded?

MEL: We had a big laugh at the teacher who requested a motor scooter for his own personal use -- so that he could "set a good environmental example" for his students. That didn't make the cut. But Give Cindy A Voice was a pretty amazing proposal; we funded a voice machine for a student with Spastic Cerebral Palsy.

Does DonorsChoose make any effort to monitor or make sure that teachers in the know don't "hog" donors choose while others aren't even aware?

MEL: Well it's not as if DonorsChoose is a secret they can keep to themselves! In some regions we're actually giving some teachers a bounty (in the form of a DonorsChoose gift certificate!) if they refer a friend; in others we're partnering with the union to get the word out. Most of the projects do get funded (86% of those at or below the median cost of $430), so there's plenty of funding to go around!

Do you track where the funding is going, in terms of school poverty or other demographics, to make sure that it’s spread out evenly or reaching the most needy schools, or is that entirely left up to market forces?

MEL: We carefully track the proportion of proposal dollars that go toward low-income schools, both nationally and on a regional basis. In the 2004-05 school year, 87% of our resources went to low-income schools (40% or more of students at Title I). Last school year, 90% of our dollars went to such schools, and 68% of our dollars went to schools that had 60% or more of their students in the free lunch program. Also, project funding isn’t left entirely to “market forces,” as we have some discretionary grant funds that we can apply to deserving projects in low-income schools.

What’s the trick to writing a successful DonorsChoose proposal?

MEL: I would say that the best proposals are specific about the situation in the classroom, and how the resources will address that situation. They creatively and clearly introduce the school, the teacher, and the idea. They not only describe the situation, they describe the solution by 1) listing necessary resources and 2) giving details on a student based project.

What's the biggest obstacle to getting teachers to apply?

MEL: I'd say there are two big obstacles. One is that teachers have so little time. Whenever I meet a teacher, they've almost always heard about us, but haven't used DonorsChoose because there are so many demands on their time. The second major obstacle, and one that we're working to address, is that writing a proposal and using our e-procurement system could be easier.

What are you doing to make it easier?

MEL: We're actually about to launch a new version of the software that runs the DonorsChoose site. While teachers won’t see changes right away, the new platform will enable us to make improvements in the future.

What have you learned since you started at DonorsChoose about how teachers, donors, and philanthropy works?

MEL: One thing I've learned is how much people really respond to the idea that they can decide where their money goes. Ordinarily you have to give a five or six figure grant before you can designate how your gift is spent. At DonorsChoose, we give that level of service to a donor who gives us $100. In our surveys, most donors say their primary reason for supporting DonorsChoose is that level of choice -- not necessarily because they want to support public education!

What is the overhead/admin cost for the DonorsChoose operation? Is it higher or lower than most other philanthropies?

MEL: Our administrative expenses are 9.3% and our fundraising expenses are 8.3%. One thing I should make clear, is that an individual donor can choose to have 100% of her donation go to the project they select. There's a fulfillment fee (usually 15%) which is completely optional and transparent. I was pleased that over 75% of our donors choose to make the additional donation.

How much do donors typically give, and what portion of them are new or nontraditional donors – folks that haven’t given to education before?

MEL: Our median donation is $100. Of those surveyed last spring, 68% said that this was their first gift to public education.

Are there any policy implications that come from DonorsChoose – things that school districts, schools, or philanthropies could learn and implement more broadly?

MEL: First, we recognize that our philanthropic model isn’t for everyone. Our ability to break our funding into small discrete projects is only possible because we’re building off the existing platform of the public school system which is actually paying the salaries of the front-line educators who do those projects.

For schools, I think the policy implication is that teachers and front-line educators are an amazing source of innovation. We’re just one mechanism to tap into that source. Applying small resources to those innovative ideas, with the proper accountability, can have a disproportionate impact in the classroom.

For the nonprofit sector in general, I’d say that a lesson to take from DonorsChoose is the importance of customer service for donors, including those who make small donations. It’s at the heart of our operations and our philosophy, and properly done it can transform donors into evangelists.

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