Ice Bucket Challenge rewriting charity model

Ice bucket challenge a game changer

It's the ice bucket that opened the floodgates of charitable giving.

Ever since golfer Greg Norman challenged NBC's "TODAY" host Matt Lauer to toss an ice bucket over his head in mid-July to raise money for the Hospice of Palm Beach County in Florida, the Ice Bucket Challenge has become a social media and media sensation.

But aside from raising awareness and more than $20 million for amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig's disease, over the past month, the challenge also may be unleashing a new model for the $300 billion-a-year business of charitable giving.

"This campaign is a real breakthrough," said Melissa Berman, president and CEO of Rockefeller Philanthropy Advisors, which advises charitable donors and foundations. "It's raised a huge amount of money for something that's an ongoing condition not a natural disaster or immediate crisis. That's a very fundamental shift. And I think it should cause the nonprofit world to take notice."

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The business of getting people to give to charity has changed remarkably little over the 125 years since Andrew Carnegie first ushered in modern philanthropy with his book "The Gospel of Wealth." Most nonprofits have basically followed the same three-step model: Find rich people in a community, solicit them for dollars by phone and mail, then hold dinners, fundraisers, walkathons or similar events to expand and honor collections.

Massachusetts Park Rangers take the ALS Ice Bucket Challenge in Boston.
David L. Ryan | The Boston Globe | Getty Images

The Ice Bucket Challenge, however, may have just thrown cold water on that model. Charities may now look to use social media to reach a broader base of donors, rather than just a select few wealthy givers, Berman said. And they will look for more creative and entertaining ways to raise awareness about a cause.

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Berman said that the challenge is successful because it's combined something that's real, tactile and fun—throwing ice on your head—with social media and digital reach.

"That's a very powerful combination," she said.

Others say nonprofits may now learn to be less controlling of their message and donors. While the ALS Association has supported the challenge and provided its website, information and fundraising links, it's let the bucket dumpers and donors tell their own stories and issue their own challenges.

"Sometimes nonprofits can be too controlling," said Michael Dougherty, online and social media marketing manager for Krissoff & Associates, who has also worked with the National Wildlife Federation and Chesapeake Bay Foundation. "What this tells them is that your community knows how to talk to each other on their own. "

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Others, however, worry about too many nonprofits trying to emulate the challenge. Some say the challenge has become more of a silly stunt than an education about ALS and the importance of the cause. Others say that a one-time burst of giving is less valuable than having a committed group of donors giving over a longer period of time.

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Glen Macdonald, president of the Wealth & Giving Forum, said there could even be a backlash against the bucket challenge because the serious message of a disease is getting lost in all the stunts and videos. Some Facebook users have already criticized challenge participants for pouring water on their heads instead of donating to the cause.

"When a little bit of silliness enters in, it can undermine the core essence of the cause itself," Macdonald said. "A serious social issue should be able to stand on its own merits. The question is whether this is really the sort of spirit behind philanthropy and acts of kindness."

Macdonald also said that creating a one-time media sensation that raises millions may actually hurt a nonprofit, since they don't know how much of their giving will be repeatable.

"I'm of the view that what nonprofits need for is consistency in fund flows," he said. "The best way to do that is to have a committed group of donors who believe in the cause and continue to contribute over the long haul. Not just because it's a trend or it grabbed people's attention."

Perhaps in the end, the Ice Bucket Challenge won't revolutionize charitable giving. But it has given the sleepy nonprofit world a brief, bracing splash of cold water—and brought home the idea that social media and fun, easy-to-do challenges can have a big impact on social causes.

"I still think that the way nonprofits build personal relationships with ultra-high-net-worth individuals is going to continue," Berman said. "But this is showing that there are other avenues and other channels. I wish I thought of it myself."

—By CNBC's Robert Frank