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Uneasy Web partners – Nonprofits, businesses compete online

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Businesses and nonprofits alike are putting more charity sites online, hoping the Internet will transform philanthropy by cutting fund raising costs and expanding donors, the Chronicle of Philanthropy reported on June 11.

But seasoned fund raisers are skeptical about the Web’s potential, warning that potential donors might be deterred by the percentage of each gift some sites take to cover overhead costs – as much as 15 percent in some cases.

The Internal Revenue Service has also raised questions about whether online contributions are tax-deductible.

Perhaps the greatest obstacle for nonprofits online is the prohibitive marketing cost –millions of dollars, in some cases – needed to continuously draw visitors to Web sites.

Founders of giving sites often hope to attract visitors by offering a multitude of services. By offering features like volunteer opportunities, shopping, and communication with like-minded donors, sites hope to attract high enough numbers to draw advertisers.

As giving sites have expanded, the competition among them to attract charities has intensified. Some sites lure charities with the opportunity to win cash prizes, and one site – 4charity.com – has even offered participating charities stock in the company.

Other sites fail to secure an agreement with the charity altogether, instead obtaining information about charities posted by the IRS and offering site visitors the opportunity to donate without the charity’s permission.

Celia Roady, a Washington lawyer who specializes in nonprofits, is worried about the potential for fund raising abuses by companies that use charities to seek online revenue.

“The question posed by many of these sites is whether you can be a fund raiser for someone who doesn’t even know you’re raising money for them,” Roady said.

Putnam Barber, president of the Evergreen State Society, a Seattle organization that strengthens nonprofits, says the current e-charity competition between nonprofits and businesses will ultimately improve the charity process.

“We need an active marketplace in which people try out these models,” Barber said. “Donors will ultimately benefit from all this. It will keep the costs of giving down.”

For the full text of the article, go to the Chronicle of Philanthropy.

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