Dear Sandy, I've seen more organizations request donations via text message lately, especially after the earthquake in Haiti. Is this a cost-effective way to donate? How does the overhead charged by phone companies compare with credit card donations or the trouble of processing checks? Are there any downsides?
Mobile giving isn't particularly new. Giving via text message was popular in the wake of Hurricane Katrina ($400,000 in the first 24 hours) and successful for nondisaster fundraising such as the Keep a Child Alive program ($500,000), but we've never seen anything like the response to the Haiti quake. More than $30 million has been donated by text in the past two weeks—mostly in $10 increments.
Despite its clear fundraising potential, I have to admit that I'm still skeptical about mobile giving—and not only because I think it may be less efficient. But since you asked about that specifically, Erin, let's start there.
How does mobile giving work? First a charity partners with a not-for-profit organization—such as the mGive Foundation or the Mobile Giving Foundation in the United States—that acts as a broker with major cell phone carriers. They come up with a short code that the user can text to a set number, and upon confirmation (remember—you must text back "Yes" in order to finalize the donation) your donation is added to your monthly cell phone bill. The cell phone company pays the intermediary, and the intermediary cuts a check to the charity of your choice.
Mobile Giving passes 100 percent of your donation on to the charity (as do the cell phone companies) but often charges the charity a small amount for processing costs. MGive regularly charges a few cents per donation, plus software licensing fees between $400 and $1,500 a month. They are waiving these charges for all Haiti-related donations, so, for now, 100 percent of your text donations will go directly to the charity of your choice.
In many ways, this is no different from donating online. (Many credit card companies are waiving processing fees for Haiti donations, too.) It is fast and tax deductible, and your donation gets there quickly, right? Well, that part is a bit more complicated. It is definitely fast for you, the donor, but not necessarily for the charity. Generally it takes 30 to 90 days for your donation to wind its way to the charity. Not exactly ideal in the wake of a disaster, when help is needed immediately.
Luckily, everyone realizes this is a problem. After the Haiti earthquake, cell phone carriers promised to try to send money along as it is pledged instead of waiting for their clients to pay their bills. The American Red Cross, whose donations make up the vast majority of the $30 million total, is basing its disaster relief expenditures on pledges instead of actual cash flow.
So if they've figured out how to make mobile giving nearly (if not just) as efficient as online giving, why am I still skeptical?
First, I worry that if we make it so easy for donors to give $10 instead of $20, $60, or $200, people will start giving less. The median individual donation in response to the Sept. 11 attacks, tsunami in Southeast Asia, and Hurricane Katrina was $50. It's great to make sure that people can give at any level—but if you could donate $100, and the text only accepts $10, are you going to go back and donate more elsewhere? I'm not sure.