A year ago, Jean and Steve Case’s teenage daughter asked a question that inspired her parents to reassess their entire approach to philanthropy.

Steve, one of the cofounders of AOL, had taken her— one of his five children—to mingle with Bill Clinton and other global charitable titans at a philanthropy conference at the Clinton Presidential Library in Little Rock, Ark. Despite growing up with parents who established a family foundation, and despite her hands-on participation with her family in volunteer work, the teenager leaned over to her father in the middle of the conference to ask, “Dad, what’s philanthropy?”

“That was the point at which we said, the way we’ve been doing things, the way we talk about what we do . . . it’s all really out-of-date with how young people think today,” says Jean, the CEO of the Washington, D.C.–based Case Foundation. "We really need some new branding here."

This realization inspired the Cases to rethink both how they define giving and how they promote it. When Steve and Jean (also a former AOL executive) founded their charitable organization in 1997, they believed they had to set aside the consumer-marketing skills they had honed during the Internet revolution and adopt only the nonprofit arena’s methods. Now, however, the Cases have realized the value of applying consumer-marketing principles to further their foundation’s mission of helping underserved families and fostering economic development. They had been at the forefront of popularizing personal Internet use through the spread of AOL. Technology has since transformed personal communications and shopping habits, but philanthropy has consistently lagged behind this trend. The Cases want to help it catch up. 

Instead of a closed circle of insiders, the Cases—along with Napster co-founder Sean Parker and a handful of major foundations—are defining charity as something that everyone should make part of their daily lives. To further that new ideal, they are hosting online competitions that help donors choose grant recipients. They are also tapping online social networks such as Facebook and Second Life to foster new ways for philanthropic groups to coalesce and to find new solutions for persistent social ills. In keeping with the consumer-business model, philanthropists are also seeking ways to use technology to reach out to those who want to give, rather than relying on traffic to a particular website. That might mean, for example, allowing people to use their cell phones to make donations after attending a film or event highlighting a cause.

Parker, who at age 28 has already spearheaded two large-scale online communities—the music site Napster and the address-book site Plaxo—and been part of Facebook’s executive team in its early phase, launched a new venture last year called Causes on Facebook. The project is designed to replicate online the networks that support grassroots social and political movements. Causes allows Facebook’s more than 61 million active users to create a cause complete with a real-world nonprofit beneficiary. Users then invite friends on the site to join, and members can even donate to the cause directly through Facebook.

From its May 2007 launch through mid-January, Causes had 10.2 million users who donated hundreds of thousands of dollars to 52,391 recipients. Parker is the chairman of Causes, which he cofounded with Joe Green, a veteran of John Kerry’s presidential campaign. He is also an investor via the Founders Fund, a venture capital firm in which he is a partner. The Founders Fund invested $2.35 million in Causes.

“Right now you’ve got to be a large nonprofit or a huge PAC to have an impact socially or politically,” Parker says. “We are putting tools in the hands of individual activists to change the world on a large scale.”

A Wider Net

With the broadening of philanthropy’s reach, wealthy individuals gain greater access to innovative projects in need of funds. They also have unprecedented opportunities to market their causes and generate far more funding via numerous small donations than traditionally they would have made by writing a few large checks.

What’s more, the collaborative spirit found in social-networking websites and in the contests with public feedback is starting to find its way into the giving side. Jean Case, for example, recently teamed up with an old corporate rival to back a new social-networking site affiliated with MTV. In December, the Case Foundation announced plans to give $750,000 to charity in partnership with Parade magazine, Network for Good, GlobalGiving and Causes on Facebook. Marketed as a “giving challenge,” this effort will award funds to the charities that are able to drum up the most donations online.

"A lot of times, the nonprofit sector has been criticized for not collaborating enough or for being too competitive. But really, funders haven’t been very collaborative, either,” Case says. “I think that there’s a huge potential for folks to co-invest and collaborate around big ideas and achieve more outcome as a result.”

Despite all the enthusiasm and some hugely successful online contests—American Idol: Idol Gives Back, for example, raised more than $75 million last year for poor children in the U.S. and Africa—these strategies are still new tools being tested mainly in small ways. The Robert Wood Johnson Foundation awarded about $400 million in grants in 2006; the $750,000 it gave to Changemakers.net, which hosts collaborative online competitions to help foster social change, was merely a fraction of that budget. And as high-net-worth individuals and foundations explore new ideas, they must strive to match modern technologies with appropriate projects, rather than simply racing to adopt the latest online fad.

“The challenge is to figure out how the Internet fits their mission,” says Steve Gunderson, the president of the Council on Foundations in Washington, D.C.

Mass Philanthropy

Testing these innovations also reveals new hurdles, specifically in the matter of website security. Lapses can be embarrassing, as the New York charity City Harvest discovered last year. The organization sent out warning letters in the summer to 12,500 donors, informing them that their credit card data might have been stolen by hackers.

Foundations accustomed to receiving grant proposals via mail are also finding it difficult to manage the vast amounts of diverse information that the online competitions generate. Case received 4,641 applications for the Case Foundation’s Make It Your Own contest. She also received hundreds of responses to a call for potential judges, and chose about 70. Similarly, after the Rockefeller Foundation’s Ideas Portal—a section of its website for submitting ideas that will help further the organization’s philanthropic mission—launched in November 2006, it drew nearly 35,000 visitors and yielded 3,700 ideas within a year.

“The ability to absorb that, and absorb that well, has been a challenge,” says Nadya Shmavonian, the vice president of foundation initiatives at the Rockefeller Foundation, based in New York.

While working on ways to maximize new technologies, philanthropists are already seeing clear benefits from these innovations. Contests and online calls for ideas have yielded access to hundreds of ideas and individuals that otherwise would not have been discovered. Posting ideas online offers exposure to a broad audience and fosters collaboration among participants. That breaks with the usual winner-takes-all outcome, in which many good ideas end up discarded.

Because Make It Your Own was designed to bring in people who are traditionally shut out of the grant process, Case and her team at the foundation determined that they would focus on ideas rather than sterling grammar and spelling skills. This approach yielded an unprecedentedly diverse group of entrants across age, racial, ethnic and geographic lines. One application that particularly inspired Case, who served as a judge, came from two African American women, ages 19 and 21, who live in a large U.S. city. One is a single mother, and neither has a college degree. The women put together a proposal on how to make their neighborhoods more helpful for young women who are raising their children alone.

“If you look at the power of their ideas and the solutions they put forth, it was one of the best examples of why we set out to do what we did,” Case says.

Another huge benefit of this kind of process is that ideas solicited online arrive far more quickly than through traditional means. In the past, the Robert Wood Johnson Foundation has spent up to two years researching a new field and developing a program. Now that time frame can collapse to just two-and-a-half months. That was the case last year with the first Changemak-ers-Robert Wood Johnson competition for ideas to help combat intimate-partner violence. The contest received 243 entries from 46 countries. Two of the three winners focused on the atypical perspective of teaching men new strategies. The winners received grants of $5,000 each.

“This gives a very fast, very broad environmental scan that provides a framework that is extremely valuable,” says Nancy Barrand, a senior program officer at the Robert Wood Johnson Foundation in Princeton, N.J.

While the grants awarded so far have been relatively small, wealthy funders are enthusiastic about new technology’s unprecedented power to leverage funds. When Sean Parker left Facebook, he considered setting up a foundation. He says he believes in personal donations, but saw greater potential in applying the skills he acquired from his Internet businesses toward an online forum for spreading ideas. “I thought I could have a much bigger impact by investing my time and money in a platform to bring about systemic change,” says Parker, who is based in San Francisco.

Community Service

Case has used Facebook to share her interest in PlayPumps, which provides merry-go-rounds that double as water pumps in Africa. Though the charity is not something she would normally promote to her friends, by posting it on her Facebook profile she has brought attention to the cause in a low-key way. Both Case and her husband are listed among the 65 friends of PlayPumps, which has also attracted a group of 695 members.

“What we’ve seen is that if I put up a cause or my friend puts up a cause, suddenly all of our friends now say, ‘Wow, that’s cool. I didn’t know about that,’ and then they become a champion for the cause as well,” Case says. “It allows more of an always-on relationship than email.”

Case also has teamed up with the Bill and Melinda Gates Foundation, the Goldhirsh Foundation and the MCJ Amelior Foundation to back Think MTV (think.mtv.com), a social-networking site. She declined to disclose the investment, but noted that the Case Foundation typically spends $8 million to $10 million a year. Case says her children did not influence the MTV deal—it was a high-profile way to reach young people.

“We’re using that co-investment with our partners to try to make sure that visibility is given and there’s some promotion of doing good as part of what you’re doing when you’re online as a young person,” she says.

Judging success in this arena can mean applying a different set of standards than for traditional philanthropy. Case notes that with PlayPumps there are clear ways to measure and evaluate the results: Progress includes solving the basic problem of disease and helping more girls go to school instead of spending their time fetching water. When judging Make It Your Own, however, Case is interested in expanding the pool of givers and promoting greater civic engagement.

She hopes new approaches like online contests and Causes on Facebook will allow many more young people to make giving a regular part of their lives—even if they aren’t familiar with that old-fashioned word “philanthropy.”

“We think it’s healthier if a million people give $10 than if one person gives $10 million,” Case says. “We just think it makes a healthier society.” 

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Catherine Curan is a senior correspondent for Worth.