The Nonprofit FAQ
| What about 'charity malls' or 'shop-to-give' websites? |
| aNote: The FAQ includes a list of online fundraising websites at http://www.nonprofits.org/npofaq/misc/990804olfr.html. This list identifies several charity-related shopping sites. Bob Ellsworth of eContributor (http://www.econtributor.com) wrote to CyberGifts (a service of CharityChannel.com) on 6/20/01: While I do not know anything in particular about this particular organization, it is a similar model to the iGive or ShopToGive, etc. model in that your organization will receive a percentage (typically 2.5-8%, depending on the merchant) of all sales made by your designees. So, is this a good deal? If you look at it like this, you can be the judge: If K-Mart came to you and said, if you mail this promotional catalog to your donors with a coupon that states that everyone who comes and shops at K-Mart and brings this coupon, we will give you 5% of what they purchased, would you do it? Before saying Yes! To what seems like a great fundraising opportunity, here are some things to think about. 1. I am sending (yet) another piece of solicitation to my patient and understanding donor base. However, rather than asking them to support me directly, I am asking them to support me indirectly by directly supporting a merchant. 2. Through the support of the merchant, which they know supports me indirectly, does the donor/shopper know that I am only getting a small portion of the purchase. Do they think, OK, I bought this VCR for $150, but that is OK, since my favorite charity is getting a big portion of that and since I was planning on giving them $25 this month anyway, I have now given them more by buying this and now I don't need to give them $25 for this month, so the VCR really only cost me $125! In reality, you get $7.50. 3. Does K-Mart say "Thank you for supporting your charity?" Do you get information so that you can thank the donor/shopper for their support? Or do you (most likely) not have any idea who did what or how much and have no real idea if this was effective or not? 4. Is the shopping experience consistent with my mission? This is of particular concern for the shop to give sites that have hundreds (well, less now that the dot com nuclear winter has hit) of commerce sites with a variety of products. If you are anti-gun, K-Mart would not be a great partner because they sell firearms. Likewise, if you are an animal rights group or a conservative religious group, Omaha Steaks or Amazon (they sell soft porn DVDs) respectively would not be pro-mission for you. Of course, it would not really be that great for the shopping site either because they would be hitting the wrong consumer demographics. One advantage to shop to give sites is that they could become viral marketing tools if (and this is a very big if) your donors pass on the information to their friends, etc. One big disadvantage is that they only way you get credit is if they first log-in through the shop-to-give functionality so that the site knows that your organization gets credit for it. As one VC once told me, "exactly how hard is it to type in Amazon.com?" I typically suggest that non-profits avoid these types of new economy adventures because it really does not enhance the relationship between you and the donor nor does it really build the relationship. There are some cases where this makes sense, but for the vast majority it does not. Lenny Esposito, author of "The Developers' Corner" (http://www.NonprofitWebsites.com/) added: This type of program has been around for a while. It's a form of affiliate marketing where you receive a small percentage of each purchase made at the site. The most well-known one out there is Amazon.com's program where you can place books and search boxes on your website. If anyone buys a product through one of those links, your organization gets 5% of the sale price. I know of several nonprofits who have joined such programs, but the payout is usually very small as most people forget to look on your site (or the merchant's program site) when purchasing. I also know of some religious organizations who caught some backlash as their donors felt an affiliation with Amazon implied an endorsement of their product line. But, it doesn't cost anything to implement except time. So if you're interested, I'd check out the vendors and test-drive the process before promoting the service. Robert N. Grosshandler, founder of iGive (http://www.iGive.com) responded with some notes based on the experience of his firm: It really isn't too good to be true, but the model isn't for everyone. When we founded the space in 1997, we believed that volume would be one of the key success factors, and we were right. Margins are tight in this business, making it hard, just like any other business. Last year, a researcher counted over 57 companies that followed in our footsteps. Talking to some of the 250 stores we work with today, only three or so of us produce sufficient volume to be interesting. When we launched, we worried that successful organizations would see a drop in other contributions. Experience has shown that fear to be false. As to results, with over 225,000 participants and about 16,000 causes, we've found that it's the dedicated supporter that makes the difference. That supporter / shopper typically generates $50 - $100 per year for their cause. Some causes find that number appealing, others do not. It certainly won't be everybody who signs up. The keys to making it successful are few.
Theodore R. Hart, CFRE, President and CEO, ePhilanthropy Foundation (http://ePhilanthropyFoundation.Org) offered further comments: In the book, Fundraising On The Internet: The ePhilanthropy Foundation's Guide To Success Online to be published by Jossey-Bass and to be released this fall (2001) we offer the following advice, in addition to covering in detail every aspect of online giving. [CLIPS FROM CHAPTER 12, AUTHOR GEORGE IRISH] 'The emergence of commercial giving portals, affinity shopping sites, and other Web-based services that assist nonprofits in raising money online has added a new creative energy to fundraising.' 'Be careful to keep your own mission and mandate  and your own fundraising efforts via your Web site and e-mail messaging program -- as the primary focus.' NOTE: The ePhilanthropy Foundation encourages Nonprofits to review the 10 Rules of ePhilanthropy Every Nonprofit Must Know, Rule # 6, available at our website. 'As with all new things that appear on the Internet, it will take some time for the leading services to emerge, so you should be cautious. Experiment, test various options, and always keep in mind that you’ll succeed online only if you cultivate and strengthen the relationships you begin online.' 'Unfortunately, few nonprofits have raised significant revenue from any of these sites, even from well-capitalized dot-com sites which spent millions on marketing.' 'The "affinity rewards" percentage that the nonprofit receives from an online sale varies according to different vendor arrangements, from a tiny proportion to as high as 20%. So far the reported revenues from nonprofits using affinity shopping portals have have been very low.' In the ePhilanthropy Code of Ethical Online Philanthropic Practices, Section E: Transactions #2. we encourage nonprofits to insist that vendors: 'Insure that legal control of contributions or proceeds from online transactions are transferred directly to the charity or expedited in the fastest possible way.' There are many ways to engage donors and supporters online, but remember THE RULES STILL APPLY, it is the relationship and not the technology (or shopping) that must come first between a charity and its donors. Robert N. Grosshandler, founder of iGive (http://www.iGive.com) replied 6/21/01 with more notes from his experience: Ted Hart...quotes from the book to reiterate that the cause's mission is paramount, which we'd agree with wholeheartedly. I'd like to offer up a different viewpoint on the success issue, from our unique vantage. We've been doing this since 1997. 1. Many, many causes have built a sustainable revenue flow using this model we've pioneered. 2. These causes tend to be small, typically few or no paid staff, certainly no development professionals, and possibly not generally visible to the denizens of the CyberGifts list (or perhaps the writers of the book). 3. In many cases, the couple of thousand of dollars a year they see is a big chunk of their budget. 4. We've been able to reach profitability, which suggests something about the viability of the model. 5. By some estimates, there are 2,000,000 + of these organizations out there. It's your neighborhood swim team, the Church nursery school, the no-kill animal shelter. Impassioned people, able to do more to help causes they care so much about. What we do will never replace direct donations, it was never supposed to. But as a complement, and in some instances an important complement, iGive.com and its followers deserve a place in a nonprofit's fundraising mix. Ted Hart clarified his organization's stand the next day: To be clear, the ePhilanthropy Foundation does not advise charities against the use of charity and shopping portals (including iGive.com). Actually the opposite, we encourage the appropriate and balanced use of charity portals in an overall fundraising strategy. We do encourage caution in their use. We believe nonprofits should not use portals as a substitute for other forms of fundraising and they should not be used as a substitute to building a relationship with the donor. The Foundation urges nonprofits to remember that it is the relationship with donor both online and off line (and not shopping) that should be the primary focus of cultivating support and it should be the mission of the organization that is promoted in the cultivation effort. Posted 6/27/01 -- PB |