Yesterday I wrote a blog post about how sites like FirstGiving (and JustGiving, Facebook Causes, etc) are a great way for web savvy people to raise money for their favorite charities and non-profits. What most people might not know, is that such sites charge a service fee for every dollar donated. I’m not at all against people earning a living from innovative services – even if those services are meant for charitable uses.
Rather, I was hoping to start a discussion on what is a reasonable service fee for being a middle man. In my original article, I pointed out charities like Save the Children (a vast international charity with staff in thousands and offices around the world) takes only 8% for their overhead costs. Sites which act like a fundraising middle man, like FirstGiving for example, can sometimes charge service fees as high as 7.5%.
Many of you left great comments – both on the original blog post and in the version of this that is attached to my facebook profile. I’m honored that FirstGiving also decided to make an official comment, which I’m including here:
Hi Shawn, this is Beth, Marketing Coordinator at FirstGiving. It’s good to see so many people concerned about donors’ money getting to nonprofits as efficiently and transparently as possible. All of us at FirstGiving are concerned about that as well.
Both FirstGiving and JustGiving’s fee are structured the same way and are under 5% (plus credit card charges). In the UK, tax payers can claim Gift Aid. This covers the cost of our fee and automates the tax rebate directly to the nonprofit.
With the fee FirstGiving earns on donations, we provide our nonprofit partners with secure donation processing, unlimited customer support for staff, supporters and donors, fundraising planning and strategy sessions, event management, data management, and a product that constantly evolves with the market and in response to our client’s needs. Average costs of professional fundraising can be upwards of $0.20 on the dollar, so many nonprofits are willing to partner with FirstGiving for the exceptional value we offer. Additionally, we frequently hear that the costs of building and supporting their own their own system in-house far outweigh the benefits of using FirstGiving.
FirstGiving’s product is not the right fit for every organization, but for thousands of small and mid-sized organizations, FirstGiving pages have allowed them to benefit from the support of people like John and Sarah Green. We’ve helped nonprofits to exceed their fundraising goals and garner donations from networks they would only have access to through our fundraising pages. And we’re really proud to have helped thousands of people like John and Sarah raise over $120 million online for causes they care about in our mission to expand the world of giving.
If you’d like to speak further; please feel free to contact me. I’d be happy to speak to any additional questions you may have.
Warmly,
Beth Pickard
What are my thoughts? Find out after the jump.
First, I think this blog post demonstrates just how committed the staff at FirstGiving are to delivering a great service. If you’ve ever @replied a charity on Twitter – you’ll realize a great many of them don’t even bother to respond. FirstGiving isn’t some faceless company – it’s a way to fundraise that’s very personal. And, it should go without saying, it’s not a scam. This is a transparent service that’s a member of the Better Business Bureau.
Beth’s response also makes a great point: just because there is a service fee doesn’t mean 100% of the service fee goes into the pocket of the company charging the fee. Part of the fee goes to cover things like credit card transaction fees. At the same time, these intermediary (or “middle men”) service fees mean that part of your donation ends up somewhere other than the charity you are trying to support.
So my advice? Shop around. Here are the current service charges that various sites offer (these are total service fee charges):
- FirstGiving: Of a donation, 7.5% will not reach the charity.
- JustGiving: Of a donation, 5% will not reach the charity. Except for UK citizens where 100% of your original donation goes to charity.
- Facebook Causes: Of a donation, 4.75% will not reach the charity.
I also want to thank FirstGiving to responding to my blog post. I was very worried that my blog post would be seen as needless bashing – which is all too common on the internet.
Shawn,
Thank you for all your hard work and for this great discussion.
I too am a donor and I like to give regularly. I wanted to raise the following issues:
The percentage a middle man takes is less important than what they actually do with the money. Just like in the debate on charity salaries – people forget that while that is important it is often less important than other issues. I am willing to pay more to get more. Without FirstGiving, for example, who knows how much of that 120 million would have been donated and how many mosquito nets purchased.
Furthermore, you keep comparing Facebook Causes to other websites but that is like comparing mom and pop stores to Walmart… It seems to me a billion dollar company can waive its fees altogether and use Facebook Causes for marketing purposes. Then again, just like in the Walmart debate, maybe smaller sites have no legitimacy because they give the same service but charge more (why doesn’t Google come to out rescue?).
Most importantly, we should be careful when voicing opinions like those in this blog. People can use such arguments not to give anything at all. Are we not hurting the causes we fight for?
Finally, what we need in terms of diclousre is more than detalis about fees, we need something more along the lines this website offers: http://www2.guidestar.org/Home.aspx.
Hey Shawn,
Have you heard about Wikileaks? Well they’ve leaked a lot of corrupt documents from governments and corporations all around the world. But now they’re out of money and need our help. It would be awesome if you could make a YouTube video about their cause, or at least plug them on your blog.
Check it out.
http://wikileaks.org/
Hey UK – great points. Just thought I’d address them one-by-one
First, while it is a good question as to how much of that 120+ million that FirstGiving has helped raised would have otherwise been donated, the majority of the people donating probably didn’t know that 9+ million of those donations would never reach the charity they were supporting.
Second, comparing “Facebook Causes” to “FirstGiving” isn’t like comparing “a mom and pop” to “Walmart”. Because, Facebook Causes isn’t owned by Facebook. How do I know this? I have a good friend who works there. Facebook Causes (or “Causes” as they are more formally known as) is a small company based out of Berkeley and independent from Facebook itself. If anything, given their location, they have more overhead given higher rent there.
Finally, I’m all for free speech – so I don’t at all agree with your sentiment that we need to “be careful when voicing opinions like those in this blog”. People donate and they should know where there money goes – it’s their right as a donor. I do, however, agree that we can sometimes debate the timing of when we talk about such things. Like, now is not the time to debate efficiency in the Haiti emergency while there are people dying. But, no charity topic should be taboo – and all should be discussed, addressed, openly and in good time.
The First Givings etc. aren’t non-profits for tax purposes and they don’t hide this fact. It’s true that the average person who uses a site like this doesn’t think to himself, “hmmm… in essence what this site is doing is exploiting people’s desire to donate to charity for some easy money.” If they did think that, they would be correct, but exploitation is in abundance in business, so these sites aren’t a special case. There’s also no real alternative if you want to easily raise money for charity.
But as you pointed out, you’re not against the premise of these for-profit sites, just exuberant service fees. And I would argue that a reasonable service fee is whatever the site feels is reasonable since these sites weren’t founded based on noble principles to begin with. So any fee, 7% to 40% seems reasonable to me. They’re private, for-profit companies.