When a natural disaster or other tragedy strikes, the nonprofit sector is a critical force that mobilizes to aid in the recovery effort. And to keep these organizations funded, many of these groups are using payments technologies from providers like mGive and Groupon to connect with donors and more quickly and cost-effectively raise money.
Denver-based mGive provides the technology and infrastructure that allows mobile phone users to send a text message to make a charitable donation. When a user texts a custom keyword to an organization’s unique “short code”—a five-digit telephone number assigned to each group—the $5 or $10 donation is added to the customer’s wireless bill or deducted from the user’s prepaid balance. The platform is compatible with more than 60 wireless carriers, with mGive acting as a central processor, aggregating the donations as consumers pay their bills and providing a lump payment to the charities.
Groupon, which recently unveiled
Since launching its first text-to-give campaign with the United Way during the 2008 Super Bowl, mGive has helped more than 500 organizations raise in excess of $60 million. Groupon, which itself grew out of a collective action fundraising website called ThePoint.com, first launched the Grassroots program under the name G-Team in July 2010 and has facilitated more than 1,100 campaigns and raised more than $4 million.
The key to the success of these donation technologies is that they help nonprofits use new techniques to engage with donors. According to mGive CEO James Eberhard, text messages have a 97% open rate and the average person opens and reads a text message within 15 minutes of receiving it. And once an individual makes an initial text donation, they are asked to opt-in to receive future text message-based marketing and calls to action.
“It really just takes 15 minutes to mobilize a constituency base to take action on something that the organization needs to have happen,” Eberhard said. “Compared to email or direct mail or any other sources, text messaging is very simple and basic and it’s a direct connection to all the organization’s supporters.”
As Hurricane Sandy made its way up the Atlantic coast last month, 12 nonprofits were already at work, creating keywords for users to text to unique short codes. Wireless users who had previously donated to the Red Cross received a message asking them to donate to the Sandy relief effort. All a user had to do was send a text reply “Yes” to make a $10 donation.
Likewise, a Groupon Grassroots campaign solicited $5, $10 and $25 donations to New York City-based Accion East, a regional chapter of the nonprofit microfinance lender that provides small loans to credit-impaired business owners or companies that have short business histories, who typically find it difficult to borrow through traditional lending channels.
More than 1,000 Groupon users made donations, which will be used to fund loans to help support small businesses affected by Sandy. These loans will provide financing for reconstruction and equipment purchases, as well as inventory replacement and additional working capital. Another recent campaign for the New York City-based food bank City Harvest raised $70,000 in the first day of the promotion.
“We’re talking about a $10 donation, around the cost of a lunch, so it doesn’t take much to get people to donate if it really resonates with them,” said Patty Huber Morrissey, manager of Groupon Grassroots.
The convenience and rapid response time is what makes text message campaigns an effective fund raising tool, Eberhard said.
“We looked at 14 organizations that have been using text to reach out for donations for over a year and we saw that when they reach out and ask people to give, they see a 14% response rate,” he said.
Groupon relies on a similar approach, emphasizing the convenience and familiarity to encourage donor support, Morrissey said.
“Companies with access to consumers want to meet them where they are,” she said. “We’re not asking customers to go to a separate site and we already have their credit card info on file. All they have to do is click buy to support.”
All of the proceeds raised in Groupon Grassroots campaigns go directly to the organization featured in the campaigns. While the wireless carriers do not receive a portion of text-messaging donations, nonprofits pay a monthly subscription fee to use mGive’s SaaS-based platform to manage their campaigns. The company also charges a transaction fee of $0.39 and 3.5% for each text donation, about $0.74 for each $10 donation.
Further compelling consumers to donate is the credibility that Groupon and mGive (through its wireless carrier partners) lend to nonprofits, particularly with the local groups where Groupon focuses its efforts.
“Everybody is giving to the Red Cross right now and that’s great,” Morrissey said. “But we want to help small businesses and through the credibility that we have with our brand, we can promote these lesser-known organizations.”
Parallel to for-profit mGive is the mGive Foundation, a nonprofit that vets organizations that want to solicit text message donations, as well as audits payments from mobile carriers to the groups. Eberhard said the creation of phony websites soliciting donations is rampant any time there is a natural disaster, but the mGive Foundation deters would-be fraudsters from scamming the text message giving channel.
“Through text messaging, it’s a protected network,” Eberhard said. “You’re never going to have fraud on it because the mGive Foundation sits there and protects the whole industry.”
Groupon also has an approval process for nonprofits that want to be featured in its Grassroots campaigns. Organizations complete an application outlining their goals and in addition to vetting the nonprofit, Groupon helps develop an effective campaign, based on their experience with past initiatives.
“What they apply with and what the campaign usually ends up being is different because we know what’s going to be the most effective,” Morrissey said. “Most groups have never launched an online fundraising campaign or a group fundraising campaign. If they want to launch something later, they’ve learned a whole new set of skills that they can apply in the future.”
These payments technologies are also encouraging other businesses to promote charitable giving. Groupon is enhancing its holiday giving efforts this year with a campaign called the Big Give. A different organization will be featured each week for six weeks and the nonprofits have corporate sponsors that will match the donations made by individual Groupon users, making a $10 donation worth $20. Both the nonprofits and matching donors will be featured in the campaigns, providing the corporate sponsors more incentive to participate.
“The exposure we can give these brands for matching these donations is much greater,” she said. “Through our partnership and the exposure we offer, it makes it an attractive option.”
Eberhard said the versatility of text message giving has led some merchants to offer promotions to encourage consumers to make charitable donations. For example, a restaurant may offer a discount to patrons who make a text donation or a bar will let customers make a text donation instead of paying a cover charge.
“You send the text message and show them your phone and there’s your coupon right there,” Eberhard said. “It’s a way that traditional businesses can support the relief efforts and drive a mechanism for how they help and give back in the overall effort.”
