About $2 billion was donated to charities through the Internet last year, according to estimates by the likes of the ePhilanthropy Foundation. But anyone who wants to get a slice of that high-tech financial bonanza should first talk with the Center on Juvenile and Criminal Justice.
A little more than a year ago, the San Francisco-based center signed up with Network for Good (www.networkforgood.org), a service that processes contributions through “donate” buttons on agencies’ websites. So far, the center says, that service has yielded about $500 for an agency with a $2.3 million annual budget.
Clearly, says center Executive Director Dan MacAllair, it will take a lot more than a donate button to turn the Internet into a significant source of funding.
That’s what youth-serving agencies around the country are finding out. As “donate” buttons began proliferating on nonprofits’ websites over the past several years, many agencies worried about being left in the dust by the online fund-raising trend. But agencies experimenting with the tactic have gotten little money online and are still figuring out how to make online fund-raising work.
YouthBuild USA, for example, has registered with AmeriDollars www.ameridollars.com) and School Pop (www.schoolpop.com), shopping sites that donate a percentage of each sale to charity. The donations range from 1 to upwards of 18 percent (on rare occasions), depending on the retailer and the shopping site.
Despite sending a flier trumpeting the arrangement to supporters in February, YouthBuild has seen few donations from the partnerships. Dorothy Stoneman, president of the Somerville, Mass.-based YouthBuild, believes that shopping affiliations like these are “a great idea,” but that they need support and promotion. “It’s not as if you just get listed and the money flows,” she says.
Others also report disappointing results. Massachusetts Citizens for Children is affiliated with two shopping sites, iGive (www.igive.com) and WellSpent (www.wellspent.org), but says it has reaped only a couple of hundred dollars from them over the past few years.
At the National Center for Missing & Exploited Children, spokeswoman Tina Schwartz reports very little has come in from an online affiliation with AmeriDollars. But it costs nothing to register, she says, and the potential is unexplored because her agency has been too busy to promote it.
Mike Graham-Squire, co-director of Seattle Young People’s Project (SYPP), goes a slightly different route, with a site called Groundspring (www.groundspring.org). Groundspring is one of several services that process credit card donations online. No shopping is involved. Contributors click a “donate here” button on the SYPP’s home page (www.sypp.org) and Groundspring charges the credit card, sending the contribution and contributor information to SYPP.
Graham-Squire tried Groundspring a few years ago, then dropped it when it instituted a fee. But when he wanted help processing credit card purchases for an auction, he decided the potential for donations was worth the cost. His agency pays Groundspring 3 percent of each transaction, plus $15 a month.
Despite initially disappointing results, several youth agency managers say they expect such Internet tools to become more valuable with greater promotion. As Stoneman says, “Now we have to do the hard work of driving people to our website.”
It seems obvious: Draw lots of visitors to your website, and a proportion of them will click the “donate” button. It rarely works that way. The Center on Juvenile and Criminal Justice has gotten less-than-expected results from its button, operated by Network for Good, even though the center’s site (www.cjcj.org) gets 40,000 visitors and 150,000 page views a month.
Network for Good is supported by grants from Cisco Systems, AOL Time Warner and Yahoo!
None of this surprises Ted Hart, executive director of ePhilanthropy(www. ePhilanthropyFoundation.org), a nonprofit educational organization that promotes ethical philanthropy online. The daydream that online philanthropy would be somehow different from its plain and cumbersome direct-mail sibling is dissolving for youth agencies. Hart’s tough-love message to his consulting clients: No matter how huge the number of people using the Internet, “there are not millions of people waiting by their mouse to leave a gift to you.”
Fund raising, he says, “is done by relationship-building, and by people known to the charity.” The old rules of fund raising still govern – most notably, that it’s built on relationships. Hart advises clients to view online options not as fund-raising tools, but as relationship tools.
It’s unrealistic, he says, to expect to successfully pitch someone to donate without a great deal of cultivation. “You wouldn’t just walk up to somebody on the street and say, ‘Hi, hello, I’m Ted Hart. How about a gift?’ ” he says. “You need to educate them, cultivate them, steward them and ask for a gift once they know what you are all about.”
Hart suggests not hooking up with shopping sites. “We are very concerned about nonprofits, particularly small nonprofits, being lulled into thinking that they are doing fund raising by having [links to] shopping” sites on their own websites.
While iGive claims on its site to have raised $1.4 million for causes, $376,000 of it this year, no individual charity appears to be getting much money. No contact numbers are posted on the site. In an e-mail exchange, an unnamed representative said the average shopper generates $20 to $40 for charity in a year.
(In its tips for online giving, ePhilanthropy says, “A reputable charity will make certain contact information is readily available in case you need assistance with questions, problems, or service.”)
Here’s how iGive works: Merchants pay the costs; registering is free for shoppers and agencies. Donations are disbursed 75 days after they are contributed.
From a list on the iGive site of 4,054 checks sent out in the past 120 days, most agencies appeared to have received single checks, the vast majority for less than $50.
David Goldin, president of AmeriDollars, another shopping affiliate site, insists that charities can earn substantial money through such arrangements. He declined to say how much the average charity receives through his site, but says average rebate is 5 percent and the average shopper spends $100. He notes, however, that that number is skewed, because the firm began business in during the holiday shopping season last November.
To make money through such sites, Goldin says, nonprofits “have to actively encourage their employees, their friends and families, supporters of the cause” to shop at those sites. “The power of the Internet through viral marketing is unbelievable.”
The ultimate online donation disaster story is PipeVine, in California. A third-party vendor spun off from United Way of the Bay Area to process charitable donations, PipeVine went out of business in June 2003, taking with it about $20 million in donor’s money that had not been distributed. Network for Good had used PipeVine to process online donations, and had to reimburse charities $3 million to cover lost donations, says network President Ken Weber.
The lesson, says Hart, is not that online businesses are shakier, but that they are just as susceptible to poor management practices as brick-and-mortar firms. Use the same care in entering into relationships with either model.
Eventually, online processing services – used not just to make donations but to promote, organize, sell tickets and help conduct events like online auctions – may reap benefits. But they are most likely to succeed as part of a strategy to build relationships between an agency and supporters.