Should Your Business Use an e-Commerce Philanthropy Platform? What You Can Gain and What to Be Wary Of

Yesterday I wrote about some of the ways that small startups with limited resources can create a social mission.  Today, I came across a tool that makes it easy for your company to try out a buy-one-give-one model called B1G1.

Traditionally, buy-one-give-one refers to like products. TOMS Shoes and Sunnight Solar are great examples. Every time you purchase a pair of shoes or a solar flashlight, an identical item is donated to an individual. B1G1 uses the term more liberally  to include any type of donation triggered by a purchase.

Here’s how it works. After signing up, your business can choose from more than 600 projects to support (clean water, sanitation, education, housing, etc.), which are searchable by region, organization or cause.  Decide how much your company will donate each time a (particular) product is purchased. At the end of the month, you tally up eligible products and B1G1 will process the donation for you. There are no transaction fees but there is a fee to use the software.

There’s been a recent crop of e-commerce philanthropy platforms recently that are marketed as plug-and-play philanthropy for retail sites (Benevity is another that iStock Photo is working with). Some are better than others, but as a whole, because they are set up as for-profit companies they charge business too much for the service in relation to the micro-donation amount they encourage from the business or consumer.

The upsides of B1G1:

  • The concept is worthwhile. Portals that make it easy for a company to systematize giving is positive.
  • Businesses can pretty easily use the platform to test out what engages their employees and consumers. If they are supporting several organizations and regions at once, B1G1 simplifies the accounting and funds distribution.
  • 1,258,761 giving transactions have been made through March 2010.  The site measures donations through what they achieved, the number of children educated or meals provided, for example.  I’d like to see the total amount donated in addition to the impact of the donation.
  • It can be an efficient tool, but can’t be your company’s only effort.  Twitter is a tool to help a company communicate, but it’s not its entire communication strategy.

The downsides of B1G1:

  • It simplifies a social mission.  B1G1 or a similar platform should only be one tool in the toolbox.  There’s tremendous benefit from engaging with the communities or causes you’re supporting. In interviews and articles, I spend a lot of time talking about how to find and structure partnerships between your business and nonprofit organizations because the deeper these relationships are, the greater the benefit for the business, the nonprofit, consumers and the community.
  • Your business is vetoing the option to get support from the nonprofit. B1G1 offers to write about your company as part of its service, but when you don’t engage directly with the nonprofit, you miss out on the publicity and customers they drive to your business.
  • The system relies on the companies to report on how many products they sold that triggered a donation. There’s no accountability.
  • It costs money.  $395 for small businesses with 15 or fewer employee and unspecified prices for larger businesses. While 400 bucks isn’t a lot to spend on a program, it’s disproportionate to the encouraged donation amount of 1 or 2 cents per product.
  • It’s easy to overrepresent your do-gooding. This is the hardest point for me to articulate because it’s a perception I have rather than a direct figure I can point to.  B1G1 doesn’t push for real impact. The site seems marketed as a way for a business to check off an ethical obligation because a) it’s shown that customers like this, and b) as a business, you’ll like it too.  While I agree with these points, I take issue with the lack of information on the site. I can’t find a business listed that shares how much it’s donating per an action or purchase.  If you market your company as supporting others in need (even with something as innocent as a link on your website), you better follow through…with more than a couple of dollars per month.

It’s tempting to use a tool like this–particularly if you’re small and strapped for time and money–as a quick solution (even if you are giving substantial amounts). I encourage you to develop other partnerships and programs (either within your company or with your suppliers or consumers) in addition to using B1G1 or a similar platform.

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  1. Jana de Lottinville May 26, 2010 at 7:52 pm #

    I recently came across this blog post, which of course focuses on B1G1 though it does include reference to Benevity. You note that “There’s been a recent crop of e-commerce philanthropy platforms recently that are marketed as plug-and-play philanthropy for retail sites (Benevity is another that iStock Photo is working with). Some are better than others, but as a whole, because they are set up as for-profit companies they charge business too much for the service in relation to the micro-donation amount they encourage from the business or consumer.”

    From Benevity’s point of view, we’d like to clarify that Benevity is quite different from B1G1 and address your comments about the pricing and for-profit nature of our business.

    Although I don’t pretend to know the details of B1G1′s business, I can see from their website that they are a destination site: individuals, businesses and charities need to visit the B1G1 site to join and that for businesses, the amount donated is transaction based, but it is not embedded within transactions. Benevity is the opposite of a destination site: Benevity helps companies build charitable giving into existing business interactions, using companies own brands, systems and processes. The idea is to make it easy for people to give as part of already occurring transactions and to build brand and goodwill directly between the end user (customer, employee etc) and the company that is embedding Benevity. Branded tax receipts from the host business help to this end. Another key difference is that Benevity’s platform has been built by design to help businesses engage their stakeholders through user-empowered social responsibility and is designed to benefit the host business, their relevant stakeholders, and ultimately, a much broader demographic of both donors and charitable recipients.

    Second, to the statements around the for-profit model and pricing. Benevity is a “hybrid” corporation, in that although it has a for profit model (and some of the discipline around capital deployment and returns that flow from that) the company and all whom are attracted to work for it are also passionate about its social mission. Through gaining a measure of ubiquity through integrating our platform into as many businesses as possible, we hope to help transform the landscape of philanthropy from one that is overly reliant upon high net worth individuals and large charitable brands to one that is more grassroots in nature, democratizing access both to the ability to give back regardless of one’s means and also democratizing access to charitable choice beyond the handful of large charities that might typically make the radar of large companies. In short, we hope to make giving to the charity of one’s choice as easy and prevalent as leaving a tip at a restaurant (and we’ve got the platform to make it happen!). We strongly believe in the the hybrid model for ensuring sustainability, focus, talent, etc. The third sector is highly flawed, and there is a reason why people like Bill Gates and others are espousing “Creative Capitalism”, 3BL companies, social entrepreneurships, etc. The status quo in the non-profit sector doesn’t work!

    Benevity is and always will be very transparent about it’s business model, which is that there is a 7% transaction fee per donation that flows through the platform. Your comment about the charge relative to the size of the donation is relevant, though not entirely accurate. There is simply no cost effective way to enable microdonations unless there is significant aggregation of all of these small donations across a platform like ours. Charities and existing payment methods are not cost effective in micropayment amounts, and most charities will not even accept donations below a certain threshold. In addition, not only is 7% wildly lower than many aggregators in the non-profit world (as you may know, aggregators typically charge their recipient charities a range -often anywhere from 12-25% – for funds it distributes) but a 7 cent dollar of revenue is a vastly cheaper fundraising expense than virtually any charity anywhere will be able to realize to generate that dollar.

    I apologize that this response is lengthy (quite a babble!) but we are passionate about what we are trying to achieve and want to make sure that right-thinking people like yourself and your readers have balanced information.

  2. admin May 27, 2010 at 12:44 pm #

    Jana,

    I really appreciate your comment. I think it’s critical that companies engage in these types of discussions. I’m a proponent of socially driven for-profit companies; I hope to see Benevity become another well known example.

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