The Giving Apps: How Venmo And Cash App Upended a Century-Old Charity Model
Source: OneZero, Caitlin Dewey
Photo: Deb Lee
Raised in a six-bedroom mansion in Philadelphia’s outer exurbs — the kind with a grand circular driveway, tucked 100 yards from the street — 25-year-old Jake learned from an early age that wealthy families like his had a moral obligation to give back through charity.
Jake, who asked OneZero to protect his last name, shares his surname with a major college that renamed itself in honor of his late grandmother. His grandfather, the millionaire founder of a family-run tax software firm, cut $2,500 checks each Christmas to the charities each grandchild selected. Growing up, Jake watched his parents primp for charity galas and endow scholarships. They would casually pick up the tuition of kids they met on their international vacations. For a period in his childhood, Jake’s parents even operated their own children’s health nonprofit.
Despite that white-gloved lineage, Jake — who voted for Bernie Sanders in the Democratic primary, and still struggles to explain the wealth he inherited — does not exude Carnegie or Rockefeller vibes. In conversation, the freelance film technician is boisterous and self-deprecating and very, very earnest, prone to incidental overshares and meandering asides. On Twitter, he posts about movies, indie rock, social justice, and the guilt of growing up in a family rich enough to rent the occasional private plane.
As the Covid-19 pandemic deepened this spring, so too did Jake’s shame. “Being unwoke and rich seems great, but I’m rich and aware of other humans so I wanna die,” he tweeted.
Over the course of several days, Jake sent more than $5,400 in direct payments.
So in early spring, Jake embarked on a charity spree of his own. He sent a few laid-off buddies money to help cover their rent. He donated to a series of small bail funds. Then — scrolling through Twitter one afternoon in May, inundated by racial wealth gap statistics and “high out of his mind” on Xanax — Jake hatched another, more unusual idea: He promised to Venmo or Cash App funds directly to anyone in need who tweeted at him.
Over the next couple hours, and then less frantically for several weeks after, Jake says he sent $200 and $300 deposits to dozens of strangers from North Carolina to Ohio, California to London. He only stopped, he said, when friends called and urged him to get off Twitter, concerned that some of his new followers might take advantage of him. OneZero confirmed that over the course of several days, Jake sent more than $5,400 in direct payments.
While Jake’s online giving spree may have looked extreme, even reckless, both his methods and motivations are increasingly common. The coronavirus pandemic has mainstreamed a once-radical form of charity — or solidarity, depending on your politics and vantage point — in which strangers use peer-to-peer payment apps to give money directly, and instantly, to each other.
“Technology is enabling this really interesting, full-circle shift back to very old modes of giving,” said Rhodri Davies, the head of policy for the U.K.-based Charities Aid Foundation, which promotes charitable donations. “It’s very much about interpersonal connection, rather than an intermediating organization.”
The phenomenon encompasses a range of distinct practices, from formalized mutual aid networks and so-called “reparations” payments to ad hoc appeals for the internet’s help. Curated threads compiling the names and Venmo handles of people who lost work, got sick, survived a natural disaster, or otherwise needed aid this year have been shared hundreds of thousands of times on Twitter, Facebook, and Reddit. “Give people, lots of people, cash,” the journalist Yashar Ali wrote in a March tweet storm that more than 14,000 people retweeted.
The anonymous Twitter user @guatemamii may have articulated the philosophy best in an August tweet that racked up more than 18,000 likes and 5,000 shares: Donating to individual Cash Apps and Venmos, she wrote, “will go further than donating to a non-profit.”
It’s impossible to say how much money Americans now give through direct digital donations such as these. Based on data that comes in part from Giving USA, Lucy Bernholz, the director of the Digital Civil Society Lab at Stanford University, estimates that informal online giving now totals in the billions of dollars — surging to new heights this year, even as formal 501(c)3s fought to keep their doors open.
According to data from Apptopia, a firm that tracks mobile services, new downloads of payment apps including Venmo, PayPal, Cash App, and Zelle grew 94% between March and October. And while analysts attribute some of that growth to larger changes in banking behavior, even Venmo, among the largest of the P2P payment apps, noted a surge in giving so significant that the company planned a spring marketing stunt around it called #venmoitforward.
But direct digital giving comes with its own perils, both for donors and recipients: Scams are not uncommon on both sides, and the users most in need of direct help often don’t have the access or platform to attract it.
The movement toward direct giving could also threaten some parts of the charitable sector long-term, particularly given its current vulnerability. Americans’ trust in nonprofit organizations has been falling for years, and charitable giving almost always drops during economic crises.
“I don’t know if I went about doing it the right way,” said Jake, reflecting back on his spring Cash App spree. “But I felt like a traditional charitable avenue wouldn’t be fast enough or efficient enough, and I didn’t know if it was going to help the people I wanted to help.”
“Part of growing up in a family of wealth is that you get educated financially to a level most people don’t,” he added. “And one thing I know is that charities and philanthropy, in general, are incredibly inefficient.”
Charity is inherent in human nature — even young children will share with others who have less. But the way people give, and to whom, often shifts in moments of crisis. Most of the world’s major religious traditions preach the spiritual virtue of giving “alms” — direct, often unmediated donations — to anyone in need of them. As early as the first century A.D., the Christian St. Paul lectured believers in Greece that charity ranked first among the Christian virtues they could practice.
Many communities have also long embraced a type of collective, non-hierarchical, two-way giving dubbed “mutual aid” by the 19th-century Russian anarchist Peter Kropotkin. When neighbors band together to raise money for an acquaintance who gets sick, or found a lending circle or benefit society, they are practicing a form of mutual aid — distinct from alms-giving, Kropotkin argued, because the horizontal structure of mutual aid grants the giver no spiritual or moral “superiority.”
But for the past 100 years, Americans have primarily funneled money to strangers through formal charities, foundations, and other nonprofit institutions, said Benjamin Soskis, a researcher and historian of philanthropy at the Urban Institute. These organizations developed in the United States in the second half of the 19th century, at a time when economic panics, the Civil War, and recurring waves of European immigration swept large numbers of itinerant poor into northeastern cities.
Early charities aimed to “rationalize” the human inclination toward generosity, Soskis said, by weeding out fraud and duplication and channeling aid to only the most “deserving” individuals. Writing in 1889, at the dawn of the modern philanthropic movement, the uber-philanthropist Andrew Carnegie argued the rich should throw their money into the sea rather than donate to “the slothful, the drunken [and] the unworthy.”
Almost 130 years later, Americans still donate hundreds of billions of dollars to charities each year — $450 billion in 2019, according to the Giving USA Foundation. But almsgiving and mutual aid never disappeared, particularly in Black and diasporic communities long denied care and support from America’s institutions.
Within those communities — as well as within queer, disabled, indigenous, and working-class circles — mutual aid has functioned as a kind of ongoing, holistic community support, a way for people to care for each other outside unjust social systems. In an October book about mutual aid, the activist and Seattle University law professor Dean Spade argues such communities have embraced the practice not just to “meet people’s survival needs,” but also to address their “shared understanding that the conditions in which we are made to live” are racist, classist, and exploitative.
“By starting Twitter Philanthropy, I am able to directly deposit money to people most in need.”
These older models of giving often surge to prominence in the wake of disasters, such as Hurricane Katrina, when grassroots community networks distributed groceries and operated health clinics in New Orleans. Groups associated with Occupy Wall Street organized door-to-door donation drives and food distributions when Hurricane Sandy hit New York City, publicizing their efforts under the hashtag #occupysandy. Even then, a mere three years after the launch of Venmo and a year before the release of Cash App, organizers asked supporters on Facebook and Twitter to send them donations directly through online payment apps.
Over the last 10 years, a broader swath of Americans has grown more familiar with the once-foreign concept of direct digital giving. Patronage platforms like Patreon and Kickstarter, and crowdfunding platforms like GoFundMe — which still offer some guarantees against fraud and deception — acclimated their users to the concept of sending and receiving funds from distant acquaintances or all-out strangers. So too did Twitter sweepstakes like the much-hyped “Cash App Fridays,” in which Cash App’s marketing team sent money to random users and which drove much of the app’s initial growth. The Detroit millionaire Bill Pulte, who claims to have used Cash App to send more than $834,000 to his followers in viral giveaways, coined the term “Twitter philanthropy” in 2019.
“By starting Twitter Philanthropy, I am able to directly deposit money to people most in need,” Pulte tweeted at the time. “There is no other cause like this. This will be the future of giving.”
The trend goes hand-in-hand with Americans’ plummeting trust in institutions, including the charitable institutions that some mutual-aid backers collectively pan as the “nonprofit industrial complex.” To their critics, large charities waste money on fundraising and overhead expenses, act too slowly to help the most desperate, and — in some cases — apply condescending, bureaucratic criteria for aid that mimics the Victorians’ obsession with “deservingness.” While it’s impossible to generalize across a vast sector, there’s little doubt that these criticisms hold some water. Many detractors point to the Red Cross, for instance, which infamously raised half a billion dollars for Haitian earthquake relief — and for years, according to a ProPublica investigation, failed to provide much, if any, help on the ground.
In its last annual “Trust Barometer,” released in January, the communications megafirm Edelman found that only half of Americans say they trust nongovernmental organizations. Generational declines in annual giving seem to reflect that disillusionment: The average young adult household now gives $443 to charity in real terms, one 2018 study estimated, compared to $624 two generations ago.
So when more than 20 million American workers lost their jobs in March and April — and later when Hurricane Laura flattened swaths of Louisiana, a chemical explosion killed 200 people in Beirut, and the death of George Floyd sparked a national reckoning over systemic racism — tens of thousands of Americans reached for Venmo and Cash App, said Amy Gaeta, a PhD candidate at the University of Wisconsin, Madison who studies disability and tech.
Gaeta, who is disabled and active in online disability justice circles, said mutual aid as a form of giving thrived in her peer group already. But it exploded as more communities looked for ways to move money, food, and other aid to neighbors hit by the pandemic. Since Juneteenth, in particular, Gaeta has personally Venmo’d a number of both individuals and small, unaffiliated organizations.
“One of the few positive things that has come out of all this, I think, is that it ‘de-shamed’ needing help,” Gaeta said. “Because everybody realized on a mass scale, ‘oh, it’s not me that’s fucked. We’re all fucked’… and the internet has increased the visibility of that.”
Sure enough, tweet-length tales of need and desperation have become a hallmark of the 2020 internet, as emblematic of pandemic life as doom scrolling, Zoom, and sourdough bread. In Dallas, Nikkole Robinson, a 21-year-old Black trans woman and aspiring esthetician, publicizes hundreds of Black women’s Venmo handles, including her own, in viral donation threads. In Chicago, 23-year-old Claire Sundbye, a retail worker and recent college graduate, griped on Twitter that someone stole an Uber Eats order she already couldn’t afford; strangers offered to cover the cost of both her grocery bill and a replacement order.
Across the country in Seattle, Jordan Roberts, a 26-year-old IT professional whose company cut hours at the start of the pandemic, tweeted in September that he feared he and his laid-off partner could no longer afford their rent. The couple made marginally too much money to qualify for food stamps or similar assistance, the state told them; a follower tweeted to Roberts to “drop his Venmo,” instead. They received a total of $1,800 from seven individuals and Seattle’s Mutual Aid Socialist Task Force, which also solicits its donations through Venmo, Paypal, Cash App, and Zelle.
“We were told our government would take care of us, that someone would be there to take care of us when we need it, but I asked for help and they told us no,” Roberts said. “It seems like the only thing we can do is help each other.”
Direct givers often say urgency motivates them — rent payments and utility bills don’t wait, after all. But the choice to Venmo or Cash App aid is often also political, a commentary on the role and efficacy of conventional nonprofits. Critics of waste and redundancy in the field, including Pulte, the Detroit millionaire, frame direct giving as more efficient: “Think about how much ‘overhead’ goes into charity balls and dinners,” he told OneZero by email. Meanwhile, progressive and left-wing activists see mutual aid and direct giving as a means of subverting racist, classist, and ableist systems — philanthropy among them.
Within four days, Agbebiyi’s followers had raised $57,000.
As the pandemic began intensifying in March, for instance, K Agbebiyi, a 26-year-old social worker and community organizer in Brooklyn, launched a PayPal drive to benefit incarcerated people. “The nonprofit industrial complex,” Agbebiyi later told the New Inquiry, “has specific guidelines on who they can offer aid to that are incredibly ableist or tied to the carceral state.” Direct giving looked like one alternative.
But the full possibilities of that approach only became clear to Agbebiyi in September, when they joked to their 55,000 Twitter followers that if they each Venmo’d $1, it would pay off the majority of Agbebiyi’s student loans. The prompt came amidst several months of calls that urged white allies to provide more concrete support, including direct financial support, to Black organizers and individuals.
Within four days, Agbebiyi’s followers had raised $57,000, lowering their monthly student loan payment to $100 from $800.
“I was shocked, completely shocked, by how many people donated,” said Agbebiyi, who has since made their Twitter account private. “I think there are a lot of factors at play here. But people clearly felt empowered that they could do something immediately to help someone else.”
Direct giving does come with drawbacks, however — including some of the very issues the Carnegies of the world set out to fight more than 100 years ago.“The trade-off,” said Michael Heubusch, an economist and community organizer in Buffalo, New York, “is that you’re demanding some level of trust and vulnerability from both parties that isn’t necessary if you give to an established organization.”
Like many of the thousands of people who embraced direct digital giving this year, Heubusch never really thought about Venmoing money to strangers until he saw dozens of people in his community lose restaurant and service jobs. With the help of the Buffalo Mutual Aid Network, an informal volunteer collective, Heubusch set up a system of Google Forms and spreadsheets in the spring that coordinated direct Venmo or Cash App donations between interested local donors and recipients.
But the project faced challenges, Heubusch said. Donors frequently didn’t “get” it: Who were they sending money to? How were these people vetted? Prospective recipients, on the other hand, sometimes didn’t live in the Buffalo area or spammed the form with multiple, simultaneous requests. Organizers had hoped to keep donations peer-to-peer, in part to foster a sense of solidarity and egalitarianism. But after a few months, Heubusch stopped fighting the tide and opened a parallel GoFundMe account, which he redistributed to the individuals who had applied through the Google Form for help.
In this uncertain, unmediated space, scammers have proliferated. Any tweet mentioning Venmo or Cash App donations prompts a torrent of suspect direct messages. In one common hustle, a would-be donor promises his mark a huge amount of money, but first requests $50 or $100 to cover unspecified transfer costs. In October, the New York Times reported that reviews mentioning the words “fraud” or “scam” spiked for several payment apps this year, including Venmo, Cash App, and PayPal. (Representatives for the three companies did not respond to emails seeking comment.)
Donors frequently didn’t “get” it: Who were they sending money to? How were these people vetted?
Direct-givers also widely understand — and accept — that some people seeking help misrepresent their circumstances, or use the funds for other purposes than they requested: “If someone wants to buy M&Ms with money raised to help them make rent, so be it,” said the writer and labor activist Talia Jane in an email. “Those M&Ms do more for their psyche than throwing money at a landlord ever will.”
But the ethics of alleged cons and “fakers” become messier when they appear to exploit both potential donors and other disadvantaged communities. Robinson, the aspiring esthetician who curates aid requests on Twitter, said she became demoralized by the number of people who she believes masquerade as Black women in order to score Venmo donations.
“It’s made me more realistic and more protective of the spaces I try to curate for Black people,” Robinson said. “It’s just made me more wary of the internet in general, I guess. A lot of people have ill intent.”
While scams may attract the most attention, direct giving’s most gaping and inarguable shortfall is that it doesn’t reach everyone who needs it. While the same could be argued for formal charities, said Alan Abramson, the founding director of the Center for Nonprofit Management, Philanthropy and Policy at George Mason University, nonprofits don’t require that their clients possess a payment app account, an internet connection, and a social media presence sufficient to command strangers’ attention and donations.
As recently as June, economists at the Federal Reserve Bank of Kansas City estimated that 17% of U.S. households did not have ready access to digital payment apps. Meanwhile, studies of GoFundMe health care campaigns suggest that as many as nine in 10 never meet their funding goals, thanks in part to the high levels of “medical and media literacies” that successful crowdfunding demands. Direct giving also requires that those in need articulate some compelling, heartstring-pulling story, essentially proving their “deservingness” to a different, diffuse audience.
“Does anyone actually ever send money?” Asked Robert Kent, a 32-year-old single dad in Warren, Rhode Island, in an interview with OneZero. Kent tweeted in vain for help paying his rent after his company cut hours in April. He says he received no donations in response to his pleas.
“At the moment I was so desperate, I thought — it can’t hurt. Maybe someone will be kind,” he added. “But I’ve done it twice now, and I don’t know if I’m going to do it anymore after this.”
It’s too early to know, philanthropy researchers and advocates say, how the trend toward direct donations — or the pitfalls of this type of giving — will play out long-term. Part of that uncertainty lies with payment apps, Stanford’s Bernholz said: She advocates for new partnerships — or, barring that, new data transparency regulation — to reveal how much of Americans’ giving shifted to peer-to-peer platforms.
Among other issues, policymakers and nonprofit leaders want to know whether direct giving replaces donations to conventional charities, or whether the pie has just grown. If the former, said Davies, of the Charities Aid Foundation, some charities will need to adapt their governance structures, messaging, and operations to better fit both current preferences for direct giving and broader criticism of the charitable sector. Already, one recent survey found, 70% of U.S. human services charities cut programs this year in anticipation of donation shortfalls.
“Does anyone actually ever send money?”
“If traditional nonprofits put their heads in the sand and refuse to engage with direct giving and the motivations behind it, it will probably develop into a threat,” Davies said. But on the very local level, in particular, he added, small, grassroots groups are already blurring the boundaries between mutual aid collectives, social movements, digital giving networks, and formal, nonprofit organizations.
Those groups include Heubusch’s Buffalo Mutual Aid Network, which partnered with a local nonprofit in the spring and is now considering incorporation as a membership cooperative. They also, perhaps unsurprisingly, include Jake — the wealthy Philadelphia man who sent thousands of dollars to strangers over the summer.
Since then, Jake said, he’s come to regret his Cash App spree — not the actual donations, but his own impulsiveness. Did “throwing money around” make a difference in anyone’s life, or did it just make him feel better for growing up rich? What if he sent money to someone who used it to hurt someone else? What if he overlooked someone who needed it?
In the first throes of the pandemic, he reasons, people’s needs were too urgent and panicked to waste time deliberating over how he helped. But he’s since had time to contemplate other options, and — with the help of the $50 million he netted this summer from the IPO of his family’s tax software firm — he wants to start his own nonprofit, aimed at helping low-income people get treatment for addiction.
It’ll still qualify as grassroots, Jake figures, because he’ll fund it himself. Plus, he argues, a small nonprofit could maintain both the solidarity and efficiency of direct giving, with the added guardrails of knowledgeable employees and formal procedures and legal contracts. (Jake is himself a recovering addict, and entered treatment not long after his family’s company went public.)
“To be clear, I’m going to do more direct action,” he said. “Just in the responsible, appropriate way — with the right oversight and all that.”
“I don’t have mixed feelings about the amount I gave or who got it or what they did with it,” he added. “But I want to make sure dollars are going directly where they’re needed most. Isn’t that the point of all this?”