In the aftermath of the longest recession in recent memory, U.S. nonprofits are keeping a watchful eye on year-end donations. While the verdict on charitable giving remains speculative, results from a survey by The Chronicle of Philanthropy indicate that America's largest charities are projecting a 1.4 percent increase in 2010 charitable contributions, following an 11 percent drop in donations last year.
Data collected by the Giving USA Foundation and the Center on Philanthropy at Indiana University revealed that U.S. residents, corporations and foundations gave $303.75 billion to charities in 2009, representing an overall decline of 3.6 percent from 2008. The foundation, which has tracked American philanthropic trends since 1956, publishes a report each June with yearly statistics on charitable giving in nine categories and a 40-year trend-line analysis.
"It generally takes about two years post a recession lasting longer than eight months for charitable giving to return to pre-recession levels," stated Edith Falk, Chair of Giving USA Foundation and Chief Executive Officer of Campbell & Co., a nonprofit consulting firm. "If we assume this recession technically ended in June 2009, we should see giving levels start to return to pre-recession levels sometime during the 2011 calendar year."
The Internal Revenue Service reported that over 1.2 million charities and foundations were operating in the United States as of 2009. ISOs interested in benefiting the expanding needs of this market should review the research available to help determine which types of causes have the greatest needs. One way ISOs and merchants are getting involved is through embedded giving at major retailers through optional contributions at checkout or donations built into processing fees.
As a nonprofit research aid, The Blackbaud Index of Online Giving offers an online fundraising index that reports the 12-month online revenue trends of 1,787 nonprofit organizations across multiple sectors; The Blackbaud Index of Charitable Giving reports overall charitable revenue trends.
Both indices are updated mid-month based on a three-month moving average of year-over-year percent changes in revenue.
A new breed of philanthropy has emerged, which many in the payments industry have embraced. "We're seeing more thoughtful and larger partnerships between nonprofit organizations and corporations, where there is a real match between the corporate social responsibility goals of the corporation and the work of the nonprofit organization," Falk said. "It's looking more closely at how the nonprofit organization is helping the corporation advance its social responsibility goals."
As a certified B Corporation, Dharma Merchant Services offers a unique business model. "The "B" stands for benefit," said Jeff Marcous, Dharma co-founder and President.
"There are only maybe 400 B Corporations in the nation, but to become a B Corp., you have to prove that you are committed to sustainable business practices, proper employee programs, volunteer efforts - somehow giving back to the community in the forms of supporting either environmental or social causes."
Dharma employs sustainable business practices throughout its enterprise, whether using recycled office products or working with a solar-powered web hosting service. The company also adopted an aggressive charitable giving program.
"We take 10 percent of our gross processing profits from the bankcard sales, and at the end of the year, we honor whatever charities our merchants choose by sending year-end donations to the charities they've selected," Marcous said.
Marcous realizes giving back 10 percent may not be feasible for everyone. "That's our model," he said. "I recognize that in the early couple years of our company, it was a bit of a hardship on the business to honor that, but there is something very satisfying about being able to provide support to the community."
To illustrate the interconnectivity that can exist between merchants and nonprofits, Marcous described a restaurant chain he works with in the San Francisco Bay Area. After introducing the restaurant owners to members of the Oakland, Calif.-based nonprofit From the Garden to the Table, a group that offers nutrition education to low-income families and connects them with local, organic produce suppliers, the restaurant chain earmarked its Dharma processing donation for the group.
The right match for charitable giving often strikes close to home. After a family member successfully overcame breast cancer, one of the founders of Century Payments Inc. approached the Susan G. Komen organization about forming a charitable partnership.
"He was really looking for a way to give back, and Komen was certainly a very beneficial organization to them," said Dana Pettit, Vice President of Marketing for Century.
Every Swipe Counts is the brainchild and umbrella program developed by Century to manage its corporate giving. For every merchant boarded through the program, a one-time donation of $25 is made to the nonprofit organization, with ongoing donations ranging from 3 to 5 percent, depending on the partnership.
Century said it added the American Society for the Prevention of Cruelty to Animals as a nonprofit partner in September 2010 and plans to include other organizations in the future.
"We have guaranteed minimum donations to both Komen and the ASPCA right now," Pettit said. "Komen's is $450,000, and we will exceed that by far. We are doing a minimum $300,000 donation to ASPCA. We're on track with both of these programs to deliver beyond the minimum commitments."
A similar type of embedded giving is the Pennies for Humanity program available through United Bank Card Inc. "The sales rep assists in the process, but basically the merchant picks one or all four of the charities they want to contribute to and how much they want to donate per transaction, and usually it's a penny," said Jared Isaacman, President of UBC. "The merchant's statement indicates how much we donated on their behalf that month."
While a penny doesn't seem like much, Isaacman said the compound effect of having thousands of merchants process millions of transactions can literally translate into tens of thousands of dollars for charitable organizations, which has proven to be the case with the pennies program.
As the longtime host of the popular charity poker tournaments held at each of the regional acquirers' shows, UBC has donated between $60,000 and $70,000 to charities like the Make a Wish Foundation and the National Cancer Coalition from the proceeds collected through player entry fees. "The one that's always consistently our highest fundraiser is the Northeast Acquirers show, the winter show," said Isaacman. "And that's probably because people are locked into a snowy mountain. They can't go out and really do much, so they go to the party. But that's always our biggest fundraiser, and that's coming up soon."
Another venue for fun, spirited philanthropy at work are the blue jeans Fridays at Merchant Warehouse, where employees suggest a weekly charity and anyone making a contribution can demonstrate support by wearing jeans on Friday.
Marianne Rocco, Marketing Director at Merchant Warehouse, said the jeans days have raised about $25,000 for mostly local causes, including Boston Cares, a community support organization for the homeless and indigent.
Rocco said the way it works is that employees add the names of charities to a company list. When a charity is drawn, an email is sent to employees to the effect that, "Joe Smith would like for you to contribute to this foundation or cause, with a blurb about why he thinks it's important," she said. "Typically there's a personal connection to it as well. On Friday, when we get in, everybody contributes. Merchant Warehouse also matches employee contributions."
Auric Systems International, a developer of card-not-present payment software since 1994, said it would donate one year of software and technical support to qualifying 501(c)(3) organizations through next year.
According to Auric, its CN!Express payment application allows even the smallest nonprofit to accept donations securely online in a Payment Card Industry Data Security Standard compliant environment.
"This charitable gesture will enable a higher degree of donation and organization acceptance," stated Ray Cote, Chief Executive Officer at Auric. "These are challenging times. We want to make accepting payments easier and secure for organizations." For this purpose, Auric has established a landing page at www.auricsystems.com/giving2011.
Sage North America also offers a fully integrated fundraising management system for nonprofits. And Blackbaud Merchant Services is now on board with an integrated payment and donation processing solution for nonprofits through its secure Blackbaud Gateway.
The nonprofit-oriented brother and sister team of Ken and J.J. Ramberg paired up in 2005 with an innovative approach to philanthropy that has since blossomed into an online network involving over 94,000 nonprofits and schools nationwide.
"When we saw how much money search engines were making from advertisers, which at the time was $6 billion, we thought, 'What if we could figure out a way to redirect some of that money to good causes,'" said J.J. Ramberg, GoodSearch co-founder. "We called up Yahoo, convinced them to do it with us, and created GoodSearch.com."
GoodSearch is a Yahoo-powered search engine that allows users to designate a charity or school. A donation to charity is made each time a search is generated through its search engine. Ramberg said GoodSearch donates 50 percent of what it earns to charities, which amounts to about a penny per search.
"We have a sister site called GoodShop.com, where we've partnered with about 1,600 retailers: Amazon, PetCo, Toys "R" Us, basically anywhere you'd already shop," she said. Users designate a charity on GoodShop.com and click through to the retailer's website, where a percent of each online purchase is donated to charity. Inventive players are also vying for space in the mobile giving sphere.
Among them, CharityCall LLC offers a mobile platform that enables donors to support charities and causes through its interactive, web-enabled smart phone application. Digital messaging software company Waterfall Mobile recently partnered with Mobile Accord Inc.'s mGive to deliver a platform that allows nonprofit organizations to accept mobile donations charged to the user's cell phone bill.
The general consensus among ISOs interviewed for this article was that linking payment processing with charitable giving can send a powerful message to everyone involved with the transaction. Most found that offering merchants an automated giving program tends to generate more initial interest in their services.
Once signed, participating merchants and their customers remained loyal to the program, due in part to the fact that every transaction benefited a charity, the ISOs reported.
"Social responsibility isn't about writing checks all the time," Marcous said. "It's about caring and giving back and getting involved." He estimates that 80 to 90 percent of the leads he receives are one-call closes.
Many merchants and nonprofits call to sign up after visiting Dharma's website, where he said they disclose everything from the pricing matrix to details about the company's charity program. "Most organizations probably spend a lot of money on lead generation," Marcous said. "We don't have to do any of that."
Pettit said Century Payments has "seen interest in this program go up, and that's what we're trying to understand and quantify. I think part of it is that people are in a position where maybe they can't donate like they used to and this becomes a way where you really can. There's no out- of-pocket expense, but yet you're still contributing. I really believe that that's part of what's driven the success."
Nonprofit consultant Falk agrees. Over the past two years, she's observed that most individuals have either scaled back or consolidated their charitable giving. She believes this trend will continue but is optimistic the American philanthropic tradition will prevail as people search for creative ways to balance spending.
Marcous urges those involved in the payments industry to make a commitment, whether it's a donation of time or donating a portion of profits, to a cause. "Businesses are taking debit and credit already," Pettit added. "So why not take that and make it into something that is more meaningful?"
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