Raising Funds in Second Life (R)… or rather NOT?!
“Millions of Linden™ dollars change hands every month for the goods and services Residents create and provide”, says the website of Second Life (R) under the tab for ‘Economy‘. Indeed, there is an economic cycle inSL and it is linked to actual pockets! The economics of SL has widespread implications for individual entrepreneurs, (virtual) consumers, performers, creators, companies, educational institutions and not least of these, public benefit organizations, also known as not-for-profits or in the USA and UK, as ‘charities’.
It is this realization that prompted me, as representative of our public benefit company in South Africa, to make a conference call to Linden Lab’s representative for international affairs in May 2007 and request the procedure to be authenticated as a legitimate and registered not-for-profit company using the platform. The answer was non-committed: “It is best left to the users like yourself to drive the process bottom-up”. So, I boldly approached some known inworld 501(c)3 companies (not-for-profit) who seemed to think – at the time – that their registration in the USA and quoting the registration number suffice and Uthango Social Investments, registration # 2006/001708/08 in South Africa, should spend some funds registering abroad in the USA in order to be legitimate inSL. Hmmm… We registered a group, called ‘Verified Charities of SL’ with the intention of developing a peer-profiling system , and decided not to raise funds until we see the way forward clearly, and seven months passed… Then, we set up a few simple systems, self-defined and self-induced and received our first 250 L$ for a virtual bicycle that we sold through a vendor. It was exhilarating to realize that we might be able to sustain our own presence in this great virtual space… (We only accepted donations once we had a simple record-keeping system in place). Time will tell if these are/were good enough in the eyes of the Second Life benefactors, such as the SL modeling agency associated with the SL Illustrated Magazine that rented The Porcupine Theatre for a fashion show (effectively donating funds to Virtual Africa sim via Wilberforce Rau):
In my time in Second Life, I saw how easily reputations could be destroyed inSL and was worried about the fact that our own company were relatively unknown and vulnerable to perceptions related to African “aid and other dirty business” as described by Giles Bolton in his brilliant book with the same title. More importantly, I recognized there were way too many other ‘fundraisers’ for interesting causes without any way to track their impact. It was basically a wild west environment without much regulation. And not much has changed since then… Nothing existed at the time and nothing exists now. Basically, accountability should be demanded from donors and systems designed by organisations to operate ethically in this very real (virtual) economy: In October 2006 already, the well-respected Indiana University professor, Edward Castronova and also the author of Synthetic Worlds: The Business and Culture of Online Games was quoted by Reuters in an article titled: “Second Life is a Virtual World with a real Economy“: “What they’re doing is monetary policy, there’s no question about it. All the standard theories of micro- and macroeconomics absolutely apply…”
Countless financial experiences of ‘avatars’, with actual credit cards attached to these virtual representatives of actual people, are very real. The seriousness of the economy for digital persons could be seen in the community’s reaction to comments about the Linden currency, that I first experienced in a so-called ‘backchat conversation’ during an event hosted by Metanomics : The guest speaker, Gene Yoon of Linden Lab consistently tried to refer to the Linden Dollar as “a product” and encouraged users like ourselves not to think of the world as possessing an economy. The interviewer, Robert Bloomsfield, as well as audience were not impressed. (View this interview at SLCN). It bothered me then – and it bothers me still – that this may indeed be the odd position of Linden Lab on the economy that it facilitates on the servers provided – and if so, it will permeate into all strategic and operational decisions and will certainly affect landowners, content creators and community builders detrimentally. This is not to mention the subtle (yet strong!) message that it sends out about Second Life (R) just being a game, in spite of the fact that there is clearly no ‘gaming objective’ or rather “game over” (unless you kill off your avatar of course!) .
As a related aside: The Swedish National Institute of Public Health notes correctly that “the emotional investment of the gamer with their character or avatar and virtual socialization has reached an all time high”. At the same time, it is commonly admitted that economics and emotion are interrelated and common practices in the business sector such as customer relationship management and target market advertising rely heavily on emotive responses. And in all honesty, altruism, fund-raising and advocacy are all emotionally charged. For the longest of times psychologists and economists have not spent enough time on collaborative research, but the new development in economics brings the field of Neuroeconomics to the world (and to virtual worlds!): it is essentially a combination of neuroscience, economics, and psychology to study how people make decisions. It will become increasingly important to understand this field of research when designing virtual economies for augmented and immersed avatars. “It looks at the role of the brain when we evaluate decisions, categorize risks and rewards, and interact with each other”. (Source: Wikipedia)
My own interest in economics relates to the so-called emerging ‘third sector‘ – with the private and public sectors being well defined. This sector also functions according to basic principles of economics, and it is in this sector where our own organisation operates. It is also called the civil society sector – and it is neither public (government-led) nor entirely private (like businesses with profit as main objective). It is perhaps the closest sector to the very communities it serves. It is therefore also no wonder that communities would hold the providers to this sector accountable for the way in which they run their day to day business. The Second Life community is no different, and today there was yet another call to the SL third sector (NGOs), and to Linden Lab specifically, via Harper’s Bizarre, a blog maintained by Harper Beresford inSL, where she simply states: “To be honest, I suspect I have been scammed out of more Lindens giving to ‘charitable’ causes than I have to anything else in SL”. I am convinced that she represents a substantial portion of good-intentioned virtual philanthropists that are at times exploited by unregulated ‘fly-by-night’ activists that represent one of the other organisation or cause (some times with them not being aware of it!!) . Chris Woodill wrote about his own reservations, when he advised: “If you cannot verify, I would not donate a single L$ as you have no way to ensure the money is actually going to charity”.
Early on, we realized that we should tread carefully with fund-raising inSL as it could (like in first life!) be potentially damaging if the environment is not conducive for generating an income in an accountable way. However, it was (and still is) of critical importance to be sustainable in our activities in virtual worlds – even if some leeway is given for research and development. The development of sustainable models in relation to non-profit organisations operating in Second Life has been one of the key questions, and we continue to experiment in this respect – specifically with the notion of social enterprises, such as “selling virtual bicycles” as an income-generator (combined with ‘donations’) to the organisation.
And being on the receiving side of many Linden Dollars (from our own social enterprises at Virtual Africa, SLPeaceFest and Extropia Solstice 2007) we have been able to raise L$ 586 077 or USD 2115,80 to date. With the help of good inworld accounting systems offered by Hippo-Technologies combined with a separate accounting avatar in Wilberforce Rau inSL, we have managed to document all income carefully. In terms of SA Reserve Bank regulations, we also record secure credit card donations via our website directly with our auditors. Donated virtual products and goods get recorded in this blog or acknowledged in notecard format inSL. Visual processes such as a small hand-over ceremony by the SLPeaceFest group has also been helpful, such as the picture below where we receive L$86970 as one of ten organisations beneficiated from the grid-wide event:
And then, of course, the question remains: How do you measure impact of donated L$ (a virtual currency) in the first world? The answer for us started with defining the fund-raising goal as clearly as possible and making it transparent: We either raise funds for a real life specific activity, or for inworld expenses. The donor needs to know what they sponsor and then needs some feedback. I have discovered that the Giving Tree of KIVA is an exciting initiative in this regard – linking specific avatars with specific entrepreneurs in developing countries. In our own case, and as example, we have tied our African virtual bicycle project to a specific school in Atlantis, Cape Town and will deliver actual bicycles as the new term starts to form part of a Road Safety project as per request of Mr. September of Vaatjie Primary. It has taken way too long from the point of raising the funds to implementing the project in Africa, and we did not foresee the bureaucratic delays via the South African Education Department to donate a few bikes to a school!! We can only thank our donors for their patience with this SL/RL fund-raising first for Uthango, and keep them informed of the process. On the other hand, the virtual meerkats we sell at Virtual Africa are unrelated to any real poverty alleviation efforts of our organisation, but assist in covering some inworld expenses such as maintaining the island. (This is probably also the best time to thank Aayia Jun Services for pro bono estate management services for our project. Highly recommended!).
So, when issues are raised about ‘charities in SL’ , we have a few experiences to share and there were a few important lessons learned. It is paramount to share intentions and practices on request, and to have a healthy respect for legitimate questions. In conclusion, it is maybe equally important to highlight a counter-argument: “If we were to focus instead on measures that make a difference, rather than measures that are countable, I think we would have more accountability,” says Professor Alnoor Ebrahim in his book, “NGO’s and Organizational Change: Discourse, Reporting and Learning” (Cambridge University Press, 2003). Maybe, then, part of the answer for Second Life ‘residents’ is in asking for accounts of where their contributions made a difference; and for fundraisers to be careful in selecting an appropriate cause that has the potential for rapid feedback in order to build trust. (In this regard, we are looking forward to see how Save The Children, the first UK-based charity inSL will be received by residents! Welcome!)
The reality for many not-for-profit organisations is that Second Life is expensive – in terms of human resources, accessibility and actual hardware requirements. It is similarly true that the platform has enormous potential for enterprise, training and collaboration. Indeed, Virtual World News refers to a new study that shows that there is strong ROI in virtual worlds in terms of collaboration and training, and it has been our own experience inSL that these! (and NOT fund-raising in any traditional format) are the real gems of the platform at this stage. However, do not underestimate the fact that L$ has significant monetary value given global exchange rates and that it may in the future increasingly be explored by reputable not-for-profit ‘charities’ based outside the USA. We hope that the pioneering NGO community would have set some standards as the platform opens up to the rest of the world.
It is always a good time to look at the trend in Second Life to raise funds for a ’cause’ without any checks and balances in place – this could be anything from ‘help me pay my mortgage’ to ‘save dying children in Africa’. Of greater concern is the flaw that it is not necessary to provide Linden Lab with a country-based not-for-profit registration number on purchasing an island at the discounted rates! Surely, this could be the ideal starting point for creating a database of NGOs with a dedicated LL allocated account/number for fund-raising – even if it is simply to be able to subsidize increasing tier fees ?!? In addition, there is the possibility of integrating a donation option in the SL transactional systems itself, such as suggested in JIRA by Miffy Fluffy – it is created by residents after all, so anything is almost possible. Supporting legitimate ‘charities’ will go a long way to make our stay more sustainable… because, at the moment, it really is a financial battle for an African NGO to have a presence inSL.
Emotion and Economics cannot be divorced. Emotion and Philanthropy also go hand in hand – with the following mechanisms the most important forces to drive giving: (1) awareness of need; (2) solicitation; (3) costs and benefits; (4) altruism; (5) reputation; (6) psychological benefits; (7) values; (8) efficacy – according to Rene Bekkers and Pamala Wiepking, two reputable academics in The Netherlands. These forces exist inSL and the community of users – especially fellow non-profit organisations – has the opportunity to shape the nature and impact of the forces through collaboration. It is exciting and necessary to have practical and non-judgemental discussions on beneficiary and organisational needs, appropriate ways to solicit, costs and benefits inSL, appreciating and respecting altruism of users, reputation-building in the VWs context, psychological benefits for users to participate in meaningful activities, values expressed digitally and especially the creation of an enabling environment for organisations to add value to the experience of fellow virtual worlds’ users.
The opportunity to impact VWs is far beyond the creation of rules, regulations, standards and a code of conduct – it is, in actual fact, the creation of a shared language and common behavior across the metaverse – a shared culture with its own norms and ways. One that is easily transferred to newcomers through word-of-mouth and modeled behavior, simply because it works and is respected… And while we are doing this, creating our culture, we request that our supporters voice their opinions, shape our processes and continue to believe in VWs for the greater good as much as we do. Challenge us. There is an opportunity cost, real expenses and high risk to be involved inSL, but for us, these are overshadowed by opportunities for advocacy, possibility, innovation and creativity…
Thank you for taking the time to read this entry… We appreciate your interest.