January 18, 2010 | Categories Fundraising Strategies, Nonprofit News

Mobile Donations provide Help for Haiti

Update: DonorPerfect Offers Text-to-Give Mobile Giving Technology

In the years since this blog post was written, DonorPerfect has expanded its nonprofit fundraising toolset to include DPText. DPText is a multi-purpose mobile fundraising engagement system that allows nonprofits to accept donations, pledges, volunteer signups, and initiate other communications via mobile SMS (text messages).

I believe DonorPerfect has solved many of the problems with mobile giving I raised in my original article, so I will leave the piece in place below, un-edited. You may find my comments useful when evaluating text donation providers.

Fundraising for Haiti

The tragedy in Haiti is horrific and the outpouring of financial support to aid in the relief efforts demonstrates, once again, the compassion and generosity of Americans. As with other recent disasters, much of the support is coming via online donations, but there has also been much press attention paid to substantial sums being raised by the Red Cross and a few other charities via text message initiated gifts.

What is “Text-To-Give”

The approach is simple: just text a simple keyword to a “short code” to donate a fixed amount (usually $5 or $10). The donation is added to the donor’s cell phone carrier bill and the funds go to the designated cause. So if giving by mobile phone is so easy, why hasn’t this caught on before?

When we last looked into mobile giving, the cell phone companies wanted to keep a huge percentage (40-50%) of the funds collected, which made it a very costly fundraising method. I don’t know the details, but Mgive, the company facilitating the donation process, seems to have convinced the cell carriers to provide the service at much more reasonable fees — by funneling the donations through a nonprofit foundation they have created. That’s great, but I think there are still several major issues that are likely to confine text message giving as a worthwhile technique for only relatively large nonprofits.

Should you offer Mobile Giving?

Here are some issues to consider:

• Significant fixed costs

  Mgive is charging a minimum of $5000/yr. ($500 setup plus $399/mo.) and up to $18000/per yr. plus transaction fees. That may be fine for the Red Cross, but will be prohibitive for most nonprofits.

• Timeliness of payments

  Although several of the mobile carriers have agreed to transfer a portion of the donated funds to Haiti faster, the standard arrangement is that it can take up to 90 days for the donation to reach the nonprofit. That is far longer than a typical online donation where the funds get deposited into the nonprofits bank account almost immediately.

• Publicity

  The success of a text message really requires two things: free publicity and a social network viral effect. Of course if you can get Hillary Clinton to mention your cause at a nationally televised news conference, or Ryan Seacrest to give you a plug on American Idol, you can drive a lot of visitors to your online donation page as well. The same viral effects can come from people passing on a donation link.

• Very limited gift flexibility

  The relatively small gift amounts associated with the text message gifts is certainly part of the success, but a basic tenet of fundraising is to tailor the “ask” amount to the donor’s ability to give. A good online donation form makes it very easy to offer donors a choice of giving levels or to encourage an ongoing monthly pledge instead of a one-time gift. That’s one of the reasons the average online donation is much larger — roughly $120. Perhaps equally important is that an online donation form allows you to build your constituent list by collecting at least some information from donors, such as their name and email address.

Is Text Giving A Novelty?

Other potential issues include questions about fraud risks, extra challenges of donation receipting and how much of the current success is driven by the novelty effect. Time will tell. As text giving is adopted by a wider array of nonprofits, the industry will need to adapt to provide tools that meet nonprofits needs more effectively. If text giving is a novelty and is only successful for massive campaigns like the Haiti response, it is unlikely the technology will catch on and grow with the demand.

I hope my comments are not interpreted as a criticism of the current efforts to use text messages to raise money for Haiti. These campaigns seem to be generating absolutely wonderful results and rebuilding Haiti will certainly require every dollar that can be raised, but at least for now I don’t see text message giving as a panacea for most nonprofits.