Charity in the digital age: A startup links nonprofits, local businesses
Tom Stanley learned about the perils of marketing a business on the Internet the hard way, he said, when a Groupon deal he offered helped to crash his fledgling Philly cheesesteak shop. But he is an advocate of a new online effort that pairs businesses with local charities in an effort to help out both.
Stanley – who now operates the Little Old Fashioned Candie and Soda Pop Shop on Park Street – readily signed up with GiveGoods, a new social marketing website that offers businesses an easy opportunity to support local charities in a way that promotes charities and businesses alike.
“I’m hoping that once I get this up and going, that it will introduce me to more people in Alameda, and return customers. Worst case scenario, it’s going to a good cause,” said Stanley, who said he signed up to support Friends of the Alameda Animal Shelter, the nonprofit that runs the city’s animal shelter.
The concept marks a new direction in nonprofit fundraising and what may be a more advantageous social marketing concept for businesses than Groupon or other deal-based businesses. GiveGoods founder Christopher Grant Ward said some others, like NPR, are offering similar gifts to donors, but on a much more limited basis.
“It’s the first network for cause marketing that we can find, and especially one that does it in this way,” said Grant Ward, who started GiveGoods after working with dozens of charities that he said didn’t have scalable ways of raising money over the long term. “We see this as being the new model not just for charity fundraising and support but sustainable funding.”
Both charities and small businesses have struggled in recent years under a weak economy that sharply impacted the portfolios of big-money foundation givers and the pocketbooks of individual donors and also customers whose absence, coupled with the sparse availability of loans for small businesses, has evaporated what were thin profit margins to begin with.
The value proposition of GiveGoods, which aims to correct both problems, is simple: Charities get to offer something to their supporters in exchange for their support, while businesses contribute to charity in a way that advertises their shops, restaurants and services. Businesses gain a better class of customer than they would earn through Groupon or another deal site, and all the money stays local. And charities raise money without the effort or expense that fundraisers and other efforts entail.
Businesses and charities alike can sign up for the site in a matter of minutes, while potential donors can receive e-mail alerts about fresh rewards (instead of deals) for their giving.
“At the core of this is really just that merchants and charities both have something valuable. And they both want to support their community And we get them together in a simple, effective way,” said Grant Ward, whose outfit takes an eight percent fee off the money it raises.
GiveGoods allows business owners to decide what charities they wish to support and how many rewards they want to offer, a dramatic departure from Groupon, which he said requires businesses to offer a 50 percent reduction on their services and another 25 percent to the social marketing business.
Stanley said a Groupon rep told him he’d sell upwards of 200 of the $10 worth of food for $5 deals he offered through the company, and that he ended up selling 900 instead, costing him close to $7 for every Groupon deal he sold. But GiveGoods offers him more control, he said, allowing him to cap rewards at 50 per month. And it allows him a fresh opportunity to support local causes.
“I’m always trying to do something,” said Stanley, who said that he donated all the money he earned from an eating competition to the local school district.
GiveGoods started the beta version of its service here in Alameda in mid-May, with 29 businesses supporting four local charities and more on the way. Grant Ward said 98 percent of the businesses he has contacted have joined the site; its first campaign, for Alameda Meals on Wheels, raised $200 in 20 hours. Grant Ward aims to take the concept national, though he’s working to prove the model works here in Alameda first.
“We’re pretty excited right now about just doing some good stuff here in Alameda and proving the model for the product,” he said.
Local charities are excited about the concept, too. Diane Cunningham Rizzo, the Alameda Boys & Girls Club’s director of development and community relations, sees it as a nice way to reward donors for their support.
“I think the upside for us is exactly the way Chris has positioned it, which is to reward our donors. It really is a nice way to give them something back,” Cunningham Rizzo said.
She said that within 10 minutes of a Boys & Girls Club e-mail about the GiveGoods rewards for contributions to the club, she got a call from someone who wanted to use one for lunch at Dragon Rouge. “She got the concept right away,” Cunningham Rizzo said.
Mim Carlson, executive director of Friends of the Alameda Shelter, said she sees GiveGoods as a win-win for businesses and charities.
“There’s no cost, and it’s not labor intensive, so staff can focus on the animals, rather than doing events,” said Carlson, whose group will need to raise about $300,000 a year to keep the shelter running.
And Carlson, who said she has been doing fundraising for years, said she thinks efforts like Grant Ward’s will be more prevalent in the years to come.
“I imagine it’s going to be more common as we get into the digital age,” Carlson said. “But I think Chris and his group are on the cutting edge of something that’s really great.”