The Green Sheet Online Edition
November 24, 2008 • Issue 08:11:02
The power to pay it forward
The payments industry is hyper competitive. Payment professionals can be territorial and ruthless when it comes to business. But our industry has a generous side, too, that often gets overlooked amid the hurly-burly of lawsuits and mergers and new product rollouts.
In fact, many among us have already stepped up, independently creating a collective engine of charity. Additional help is needed now more than ever.
The recession has leaders of nonprofits biting their nails and preparing worst- case scenarios. The floundering stock market affects not only large donors but the endowed funds of many nonprofits themselves. And the underprivileged are the first to feel the pinch of rising food and oil prices.
A recent survey conducted by The Chronicle of Philanthropy and the Advanta Bank Corp. found the economic downturn has already started to hurt small businesses' philanthropy.
Even a small decline in donations can add up quickly. The National Federation of Independent Businesses estimated small companies donate about $40 billion in cash, products, services and volunteer time each year.
But in the payments industry, corporations, ISOs and merchant level salespeople (MLSs) are giving their time and money to help the less fortunate.
MLS Ed Paez donates food and clothing every November to hundreds of people in the Philippines.
"The recession has hit many of us pretty hard," Paez said. "Don't ask me how, but we have actually managed to gather a little bit more to send this year to the less fortunate in the Philippines. Hard times have a greater impact on the poor, and they need our help more than before. We have been blessed, and it's a shame to keep it to ourselves."
Lisa Lineback has noticed a similar trend. She is Senior Vice President at American National Payments, a St. Louis-based processor.
"We're still going strong - maybe even stronger than in the past," Lineback said. "The Dow is going up and down, and some people stop giving in uncertain times, but we don't believe in taking it out on the poor. Nurses for the Newborn, for example, (one of our causes) provides newborn care. Those newborns still need care no matter what the Dow is doing."
Lineback, who serves on four nonprofit boards, said, "We tend to service children's charities a lot, and we stay away from political stuff. It's divisive for our employees."
The Chronicle on Philanthropy's study showed social service charities won the largest share of support - 62 percent - from small companies, more than any other cause. That statistic seems to hold true in the payments industry.
For the 2008 holiday season, North American Bancard, an ISO headquartered in Troy, Mich., is looking to increase the number of children it sponsors in the Michigan Department of Human Services Foster Care Program.
"The need is greater than ever and especially here in Michigan," said Julianne Gordon, Director of Under-writing at NAB. "So although times are tough, we have been exploring ways to creatively keep up our holiday charitable activities."
NAB employees will provide children with gifts. The company is also footing the bill for a holiday party for the kids.
Merchant cash advance provider AdvanceMe Inc.'s contributions have also remained steady in the face of the economic downturn. "The recession has not altered AdvanceMe's commitment to giving," said Chief Executive Officer Glenn Goldman.
The Kennesaw, Ga.-based company supports youth-based initiatives and causes in New York, Atlanta, and San Jose, Costa Rica. For several years, AdvanceMe has also contributed to the Devereux Georgia Treatment Network, a nonprofit residential facility that houses youths aged 10 to 18.
In addition to monetary contributions, AdvanceMe sponsors an annual Winter Wall of Wishes to provide every Devereux child with a holiday gift.
The company also donates computers to the facility's transitional residence house, participates in on-campus activities like Build a Playground Day, and supports employees in the collection of books, magazines and DVDs to supplement the Devereux Library and Entertainment Center.
Almost 1,000 media items have been collected to date.
In spite of the recession, AdvanceMe has expanded its involvement by creating a mentoring program for Devereaux. "We are excited that every year we have been able to find new opportunities which help us expand our contributions," Goldman said.
One way United Bank Card Inc. has found to give back is through its Charity Poker Tour. In 2008, proceeds from the tour - totaling about $16,000 - were given to various charities, including the Make-A-Wish Foundation and the National Cancer Coalition.
For several years the poker tournament has been held at every regional acquirer show: Northeast Acquirers Association, Southeast Acquirers Association, Midwest Acquirers Association and Western States Acquirers Association.
"We averaged about $4,000 per show," said Jared Isaacman, CEO of UBC. "That was down a little this year, but it was not dramatically lower."
Philanthropy has become part of the corporate culture of the payments industry. It has been debated whether or not corporate giving trickles down to charity at the employee level. Frank Smith, President and co-founder of DonorDirect Inc., doesn't think it does.
"The simple fact that a leader donates to a cause, even publicly, has not shown to have a demonstrable impact on donations from his company's employees," he said. "However, he can become a substantial source of both new donors and increased donations by sharing his vision for the cause with the employees."
At AdvanceMe, Goldman believes its vision has found its way into the psyches of its employees.
"We take the responsibility of giving back to the community very seriously," Goldman said. "And we're very fortunate to have employees that are likewise passionate about serving the community as part of their work and personal lives. Having a team that wants to help others makes the corporate commitment - whether it's time, money or both - that much more satisfying, unifying and relevant for all of us."
The Chronicle of Philanthropy study showed that small business owners encourage their employees to give, but they do not necessarily provide the means to do so. Sixty-three percent of small businesses promote employee giving, but only 40 percent report their employees are involved in charitable work through the companies.
One way to encourage employees to participate is to allow them to volunteer during work hours or even to pay them for time spent volunteering.
"Ideally, we [AdvanceMe] like to work with programs that can support the involvement of as many of our employees as possible and allow us to see firsthand how our efforts are helping make the lives of others better," Goldman said.
In addition to a number of other volunteer opportunities at Devereux, AdvanceMe's new mentoring program will match employees with Devereux residents. Employees will serve as life coaches or advisers.
"Our employees will get a chance to share their unique skills and gifts," Goldman said. "Our goal is to help the children develop business and life skills that will serve them throughout their life.
"We're committed to maximizing corporate involvement," he added. "We are helping our employees schedule their mentoring efforts in two-hour blocks during company time."
Philanthropy can pay off in terms of increased morale, a more positive perception of the corporation and increased loyalty among employees.
Lineback believes ANP has attracted new employees who appreciate working for a company that gives back to the community through active charitable work. "At the end of the day, people like to feel good about their organization," she said.
Another way to encourage employee philanthropy is to match employee donations to Internal Revenue Service-approved charities.
Advanta Chairman and CEO Dennis Alter established the Advanta Foun-dation, which has provided over $14 million in grants, particularly for the communities in which Advanta's employees live and work.
The payments industry has made significant money for many people. As ISOs and MLSs work to grow their merchant portfolios, the ensuing residuals can give them six-figure incomes and higher, putting them into the top U.S. income brackets. And that wealth gives individuals choice.
"One of the reasons I love being in this industry is that it gives me a lot of control over my time and priorities," said Mark Jones, President of Merchant Services of Southwest Michigan. "I therefore choose to do a lot of charitable work."
Jones volunteers about 30 hours a month with nearby Kiwanis and Junior Achievement chapters, his church, a local historic village, and the chamber of commerce.
"I used to be a structural engineer, but in this field I can define the priority of my time," Jones said. "I make enough money to keep me fairly happy. People point out how much more I could make if I didn't volunteer so much, but I get a lot of satisfaction from what I do, and I feel good about being able to give back. I give money, too, but giving in a hands-on way is very important to me."
Donating at the POS
In 2008, search engine giant Google rolled out an alternative online payment processing service called Google Checkout. Part of the service enables consumers to donate to their favorite nonprofit organizations when paying for goods and services online.
On the other end, ANP offers reduced processing rates for nonprofit customers and a terminal loaner program for their special events.
"A lot of nonprofits hold occasional fund-raising events - golf tournaments, polo matches, auctions, fundraisers, etcetera," Lineback said. "If they had to buy a terminal for those only occasional events, they'd eat the profit from the event. They still pay their processing charges. And our employees often volunteer to work the event, too. The nonprofits appreciate the support, and it doesn't cost us much."
Furthermore, programs already in place allow merchants to donate a portion of their transaction fees to charity.
Fast Transact Inc. and Axia Payment Processing Solutions both work with A Charity for Charities to offer Community ¢ents, a split transaction-fee program that allows merchants to designate a charity to receive a portion of their transaction fees.
"It allows merchants to take some of the revenues we generate and give it to a 501C of their choice," said Randal Clark, President and CEO of Axia. "Charitable causes have always been important to us, even before we got into the ISO business. Over 25 percent of our merchant base is nonprofits. When we were approached about offering Community ¢ents, it just seemed like putting our money where our mouth was."
That sentiment is shared by UBC, where its Pennies for Humanity program is incorporated into its merchant applications.
"Essentially the merchant can select which foundation they are interested in donating to and a dollar amount they would like automatically donated to that foundation on their behalf," Isaacman said.
The donation can be as little as a penny a transaction. The merchant uses signs or stickers to alert their customers that proceeds from every transaction are donated to charity.
Isaacman said the jury is still out on how well Pennies for Humanity will be received by merchants, but The Chronicle of Philanthropy survey highlighted facts that indicate this is an idea whose time has come.
The study found that more young entrepreneurs are beginning to incorporate philanthropy into their business plans. Older business leaders may give generously, but they are less likely to plan their giving in advance or incorporate it into operations. Transaction fee donations at the POS are one painless way for merchants to build charitable giving into their businesses from day one.
Making a difference
To survive and thrive in the payments industry, ISOs and MLSs must prioritize their time. Paez and his wife think volunteering is a priority. Every week they assist at Mary's Table, a meal program for the poor and homeless managed by San Bernardino, Calif.-based Mary's Mercy Center Inc.
"Everybody has some spare time," Paez said. "If you can sit down and watch college football, the NFL or NASCAR on weekends, or even post on the MLS Forum at midday, you have some spare time.
"I can't explain it, but it's such a rewarding feeling to be able to help someone. It would be great if every MLS could find it in their hearts and schedule to help our less fortunate brothers and sisters. Even just a little bit would help a whole lot."
Jones revealed a personal dimension to why he gives back. "We weren't well off growing up," he said. "Mom was a waitress raising four kids."
But Jones was able to take advantage of a scholarship he won through the W.K. Kellogg Foundation that gave him an opportunity to travel to Washington, D.C. "I know it made a difference in my life," he said, and he's determined to make that kind of difference in the lives of others.
In high school, Jones learned about business with the help of a Junior Achievement mentor. Out of gratitude for that tutelage, Jones acts as an advisor for the worldwide mentoring program. "So many students think work is like school," Jones said. "And the real world is not like school. It's great to watch students discover what it means to run a business."
Jesse Roldan, founder and President of Pennsylvania Payment Partners LLC, knows first hand what it means to struggle. When he and his family came to the United States from Puerto Rico, they lived on the streets and in a homeless shelter before moving into their home built by Habitat for Humanity International, which builds housing for low-income families worldwide.
"A lot of people get ahead and forget where they came from," Roldan said. But he is determined not to be one of them. He and his business partner, Curvin Martin, give to Habitat for Humanity and a children's home in Honduras.
Furthermore, Roldan and his sister created a 5013C charity - the Oasis of Love Inc. - which provides mental health counseling in English or Spanish and an emergency food pantry for people in need. They plan to feed between 10 to 20 families this Thanksgiving.
"We're a unique, faith-based ISO," Roldan said. "My partner and I are both born-again Christians and not ashamed to say it. My partner has roots in the Mennonite church. We both believe in tithing, so we've been in agreement since we started that we would incorporate these things in our business."
Lineback has instilled the spirit of giving into her two children. She and her husband are active in charitable causes, and generosity "rubs off on our kids," she said.
At her school, Lineback's daughter started a diaper drive for St. Louis-based Nurses for Newborns. Other kids at the school sold hot chocolate and gave the proceeds to the organization.
"These little kids can actually have an impact," Lineback said. "By your involvement, you are growing a whole new generation of volunteers and people who care. If one little thing can make a difference, you can be the catalyst."
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