After working with the New York Marathon and seeing that they had 6,000 volunteers that were willing to help out but not encouraged to raise money for the cause, Edward Norton had an idea. The actor, best known for his roles in Fight Club and American History X, co-founded Crowdrise, a charitable giving platform that features sponsored volunteerism, where people who volunteer their time for a cause can also raise money similar to a marathon runner, in addition to traditional online fundraising campaigns. Instead of doing a telethon or large-scale dinners (the traditional fundraisers) he took his campaign online to reach the masses.
“I do actually think our culture at large is getting pretty conversing with social networking and social connectivity through web based stuff,” Norton tells Techland. “There’s a couple of generations coming along who are very used to rallying in a virtual way. They know that these tools give them an ability to assemble money. A better platform was needed for people to coordinate their activist life.”
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Moving your charity’s efforts online seems to be a trend that not only Crowdrise is following. Last year, the number of charities and private foundations registered with the INS increased to more than 1.2 million, according to the Chronicle of Philanthropy. At the same time, donations to the US top charities dropped 11 percent. But donations to online charities rose five percent, and although the rate of growth has slowed down, it’s important to note that this sector is still growing. Online donations cut down on the costs of $500 a plate fundraisers, Norton pointed out, where the expense of throwing the event often is so large it doesn’t even make what was raised worth it.
“I think everybody is realizing that more and more is moving online,” says CEO of BiddingFor Good.com Jon Carson. “It’s just got a convenience factor that a lot of stuff can be done over cell phone, a convenience factor that is permeating this major drive.”
Carson’s company, BiddingforGood.com, is an online auction tool to help charities run their annual fundraisers. His company works with everyone from the small local public school to Fortune 500 companies. While the organization still has to find the majority of products to use for the auction, Carson says with BiddingForGood’s list of local companies that are more likely to give and the ability to offer advertisement space on your auction website, charities are better off bringing their fundraising auctions online to them if they want to reach more people. “It’s a marketing benefit they can give merchants,” he said, adding that there’s a current plague of “donor fatigue” that’s slowed down charitable donations.
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Across the board, people who donate online tend to be younger and more adept with social media, although Crowdrise co-founder Robert Wolf made sure to test their website on his mother to make sure that it was easy for anyone to use. “Donors age 45 and younger favor text-based giving, while older givers migrate more towards giving online,” said James Lawrence. His company, Mogiv, is a SMS-based donation platform that enables the user to donate as much money as they want rather than be restricted to a certain small amount as many other text-to-donate platforms are. BiddingForGood.com tends to see a little higher average age, just because many of their fundraisers are run for schools, and parents are many of their frequent customers.
There is one major problem that online platforms that help raise money for charities are running in to: the size of donations. “The reality is, I’ll put on my board hat, the average gift philanthropic gift online, well they’re not terribly large,” said Carson.
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“At the end of the [average charity’s] day, they do their money for the year with $50,000 gifts, some stuff online and a capital campaign,” he added. “That’s one of the things that’s a huge factor in online philanthropy. Philanthropy has a very heavy relationship aspect to it. Online is not about relationships, it’s very transactional… If you talk to the development organizer at Harvard, it’s not about online donations. It’s about Bill Gates, and who’s going to give that big grant.”
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For sites like Crowdrise, however, they’re happy with the smaller donations they may be receiving because that’s the point of their platform. It also gives people a way to connect with celebrities who wouldn’t normally respond to their donations on telethons but do comment and post on their Crowdrise profiles, which is similar to a Facebook profile. Wolf points out that their company is not made for the person who wants to donate half their paycheck. “Crowdrise is for people who are involved,” he explained. “We want people knowing that’s cool and having the world knowing that they are doing it. We don’t need every dollar tomorrow; we built Crowdrise to build this brand about giving back.”
Mogiv’s Lawrence also mentions that it doesn’t mean that they haven’t received large donations, adding it’s not uncommon to see $2500 to $10,000 text gives. The spontaneity of the donation with a handset helps, he said, rather than putting it off to go home and write a check and forgetting about it. Unlike a lot of online charitable giving platforms they only take .44 cents per transaction, no matter what amount, plus whatever merchant fees are out there. All in all, it translates to about three percent of the total gift, and since Mogiv works with a certified banking partner instead of going through a microgiving platform like most text-to-donate programs do it allows Mogiv to take larger donation. This makes their platform a lot more appealing to people who want to make sure most of their donation gets to where it needs to go, especially since Apple has not allowed any donations applications in their App Store, and charities directly find out who is giving what donation, while the banking and credit card information is still protected. Like all the companies mentioned, though they are a for profit company, Mogiv only works with non-profit organizations and try to lower the barriers for costs when they can. Crowdrise is free to join up and only charges for transactional fees, while BiddingForGood.com tries to help with costs by helping out with additional items for your auction.
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“The immediacy and the ease of online donations means a lot of fundraising efforts have to evolve into having to using those online tools and methods,” Norton said. “I don’t think it’s ever going to replace mega philanthropy, but I do think on a grassroots level broad public sort of charitable giving is the future. I think that the organizations that are learning how to use a tool like Crowdrise are the ones that are going to succeed in the coming years.”