With the U.S. in the throes of what could be the worst recession in decades, consumers have made dramatic cutbacks in discretionary spending.
That includes donations to charitable causes and nonprofit organizations, many of which supply critical aid to vulnerable populations both in the U.S. and abroad.
“It usually takes nonprofits about six months to feel the effects of a recession, and we’re now starting to hear that many are struggling,” Sandra Minuitti, vice president of marketing at Charity Navigator, told the E-Commerce Times.
That’s not surprising, considering the National Bureau of Economic Research announced on Dec. 1 that the U.S. has been in a recession since December 2007.
Thanks to technology, though, consumers can still make donations to the charities they most care about without breaking the bank.
A variety of Internet services are available to those who may want to give a little, even when household budgets are tight.
Los Angeles-based tech entrepreneur Ken Ramberg sold his first company, called “JobTracker,” to Monster.com in 2000, and then spent the next few years making his own investments and working with nonprofit companies.
“I was struck by how much time and effort these nonprofits spend, day in and day out, raising money,” Ramberg told the E-Commerce Times. “I thought to myself, ‘What if we could direct a portion of the advertising dollars on the Internet to nonprofits?’ That was the inspiration for GoodSearch.com.”
Launched in November 2005, GoodSearch.com differs from Internet search engines like Google in that every time a user conducts a search, a little more than a penny is donated to the individual’s favorite cause.
Consumers can select their favorite charities and nonprofits when they visit the site for the first time. Today, GoodSearch.com has 70,000 nonprofits and schools in its network and gets about 100 new ones every day, Ramberg said.
The company has 12 employees, and Ramberg is the CEO. Some of the charities receiving donations include the American Society for the Prevention of Cruelty to Animals, Save Darfur and the Elephant Sanctuary in Tennessee, a haven for former circus elephants.
In the last two years, donations through GoodSearch.com for the ASPCA have totaled US$22,000. Save Darfur and the Elephant Sanctuary have received $9,600 and $9,300, respectively, over the last three years.
“The thank you notes and stories we get from these charities are amazing,” Ramberg said.
GoodSearch.com foots the bill for the administrative costs of running the site and gives 50 percent of its top-line revenue to nonprofits.
“We track the number of searches,” he said, “and at the end of the year we send the nonprofits a check.”
GoodSearch.com has a sister site, launched by Ramberg in September 2007. It operates under the same guidelines as GoodSearch.com and has about 800 merchants that participate in the service.
Instead of donating a portion of revenue from searches, GoodShop.com donates a portion of every sale, ranging from 1 percent to 30 percent, to whatever charity a shopper chooses.
Merchants participating in GoodShop.com do not raise prices on offered items in an attempt to make up for lost sales — in effect, passing the cost onto the customers, Ramberg said.
However, the practice is all too common in a world where for profit and nonprofit businesses collide.
“Ultimately, that’s what’s happening in a lot of cases,” Charity Navigator’s Minuitti said. “Companies raise the prices of products and pass off the cost of donating to consumers.”
That is why Charity Navigator advises people that the savviest way to donate to a charity is to do so by writing a check or donating directly through an online mechanism at a charity’s Web site.
“It’s pretty standard today for charities to have a way to collect donations online directly,” she said.
What about those who simply can’t afford any monetary donation this year?
Try Good2Gether.com, a Boston-based startup launched in the spring of 2006 by Internet entrepreneur Greg McHale.
McHale’s entree into the nonprofit world came in 2002 when he started an online auction platform, CMarket.com. The site provided nonprofits with a way to hold auctions over the Web for an expanded, virtual audience.
“Thousands of nonprofits use [CMarket.com] today,” McHale told the E-Commerce Times, “but I started thinking one day that the Web isn’t as efficient for nonprofits as it should be. The vast bulk of nonprofits on the Web don’t keep their Web sites updated, and they don’t reach nearly as many people as they could.”
McHale also observed that local newspapers get a great deal more Web traffic than the average nonprofit. He saw an opportunity to get nonprofits more Web exposure.
“During [Hurricane Katrina], I was reading content online, and it pissed me off that I wasn’t seeing any links to nonprofits that could have helped in the rescue effort in New Orleans,” he said. “The local newspaper dominates local Web traffic, and is full of actionable content that can get people involved in nonprofits.”
Today, Good2Gether has partnerships with The Boston Globe, The Atlanta Journal-Constitution, the St. Petersburg Times in Florida, The Houston Chronicle and the San Francisco Chronicle. More newspaper partnerships are on the way, McHale said.
Here how it works: Nonprofits go to Good2Gether.com, register their organization and create a profile, including information about their programs and events. Then, Good2Gether’s technology finds relevant content on newspaper sites and creates a widget that pairs the news content and the nonprofit’s content.
For example, on Boston.com, there’s a small ad-like display next to a great deal of holiday content. The Good2Gether widget in this case is for Globe Santa, a nonprofit that helps people donate items such as hats, gloves and winter clothing to vulnerable populations during the cold season.
HandsOn New Orleans
Tech entrepreneurs aren’t the only ones trying to be Web-savvy when it comes to online donations these days. The nonprofits themselves are actively engaging technology companies, both large and small.
HandsOn New Orleans, a nonprofit dedicated to rebuilding efforts following hurricanes Katrina and Ike, has a number of partnerships that utilize the broad appeal of the Internet to raise money for its activities.
One such partner is online auctioneering giant eBay.
“When you sell a product on eBay, you can choose a charity that will receive a portion of the proceeds of that sale,” HandsOn New Orleans Executive Director Kellie Bentz told the E-Commerce Times. “It works for both parties, because the person selling an item can promote that a portion of the profit goes to a charity — and the charity receives money it otherwise wouldn’t.”
HandsOn New Orleans also works with a New York City fashion group, Human Intonation. The group has a designer who creates T-shirts emblazoned with nonprofit logos, and one such logo belongs to HandsOn New Orleans.
“A portion of the T-shirt profits, about 10 percent, comes back to us,” Bentz said.
The nonprofit also just started working with TuneTake.com, which sells digital songs by independent musicians. Like Human Intonation, TuneTake sends about 10 percent of the profits from its digital music sales to HandsOn New Orleans.
Web Charity Down the Road
The amount of money being donated over the Web is dwarfed by more traditional modes of donating, noted Charity Navigator’s Minuitti. However, Web donations are growing fast.
For his part, Good2Gether’s McHale believes nonprofits will have to take the Internet into consideration if they want to remain relevant to younger populations.
“Efficient use of the Web will separate successful nonprofits from unsuccessful nonprofits,” he said. “It won’t change overnight, but an entire generation of young people are coming that won’t respond to direct mail or even e-mail campaigns. They’ll interact through Web tools and online social networking tools.”