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Is social media better at distributing wealth than Governments?

Friday, February 13th 2015 by Tristan Wilkinson
Industry maven and Cable.co.uk tech columnist Tristan Wilkinson explores whether crowdsourced funding can teach budget holders a thing or two.

There have been several heart-warming stories recently that involve the public donating at times large sums of money to individuals who need help.

In the US, there was the story of James Robertson who walked 21 miles a day to get to work. Following a social media campaign he has now been given a new car and money for insurance and petrol.

In the UK, there was the tragic story of Alan Barnes who, after suffering a physical assault, was the subject of another social media campaign. So far it's raised over £300,000 to help house him somewhere that he will feel safe.

What struck me about both of these stories was how quick and effective the response to a situation was. Can you imagine what a government led intervention would have looked like? The endless form filling, the various levels of bureaucracy to break through, with the likely outcome being far from satisfactory. There are several reasons why I feel this happens.

Firstly there is the emotional association. These are powerful human-interest stories at an individual scale, not an abstract amorphous mob without any identity. Many of us will look at these stories and feel, ‘that could be me’.

At times there are discussions about how technology is getting in between people and acting as a barrier – I think these stories show the power of technology to connect.

Secondly, there is the direct link or peer-to-peer effect. If you donate £1 to a cause, that donation goes to that cause: not to an administrative layer that has its own costs and perhaps other priorities.

Crowd funding site Kickstarter has seen 5bn USD pledged for projects since launching in 2009

Lastly, there is the closed loop effect, when there is a high level of media interest in a story it takes on a life of its own. By getting involved you are able to participate and feel part of something bigger than you. Often there is also the ‘and finally’ moment when the story has a happy ending that you have directly contributed towards.

It isn’t just social conscience that attracts funding like this. There is now a well-established ecosystem of peer-to-peer lending such as Kickstarter, Funding Circle and many others that connect supply and demand in a way that the banks and established lenders have never been able to do.

The relationship between the lender and the beneficiary is immediate and transparent, the lender is able to see how their money has been invested and monitor performance, making further lending more likely.

What all of these examples have in common is the amazing power for people to connect across cultures, times zones, geography and any other obstacle that the ‘real world’ may possess. In the early days of the internet the marketing folk got very excited about communication moving from one to many, then one to one and finally many to many. We are now in the era where one to one has taken on a new meaning.

Maybe governments could learn something from this direct feedback and transparent approach: technology not only has the power to connect but also to disrupt and transform. It would be a brave government that trusted and empowered it’s citizens to take more direct control over spending and allocation of public resources – but it would be kinda fun to try.

Tristan Wilkinson, Cable.co.uk technology columnist

Tristan has worked within the technology sector for over twenty years in a variety of leadership roles for organisations such as Intel, PSInet and most recently digital skills charity Go ON UK. He regularly speaks on digital skills and inclusion topics and worked closely with the strategy unit at No. 10 on the Tech City and Start Up Britain Initiatives. Tristan now runs his own consultancy, Digital Citizens

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