Guaranteed – Period.

Posted by dennis on November 16th, 2007

If I buy shoes from Zappos.com and they don't fit, I can send them back for a full refund — no questions asked. They even refund shipping costs! If I buy a coat from Nordstrom's and my wife doesn't like it, I can take it back to the store — no questions asked.
GGG
But what would happen if you asked your favorite nonprofit or charity group for a refund? Margaret Su, one of our colleagues here at GlobalGiving, asked this question earlier this year. "We claim that GlobalGiving is a 'whole new way to give.' We place a premium on showing donors exactly where their money goes -– and the impact it makes. Why shouldn't we provide a refund if a donor is not happy?"

I told Margaret, as gently as I could, that she was naive: "That is crazy, Margaret. Philanthropy doesn’t work that way. We can't do that." I had a thousand reasons to blow her off.

But her idea nagged at me, and I couldn't shake it. I brought it up at the management team and then at the board. The response was always the same: "That's crazy, we can't do it, it's impossible, etc. etc."

Over time, though, we started to think that the idea might be not only possible -– but critical. And not just to donors, but also to the organization. A guarantee could compel us to put front and center questions of how to amplify the impact of our work, hold ourselves accountable to our partners, and ensure donor trust. Each and every day.

Today we’re putting our money where our mouth is with the announcement of GlobalGiving Guaranteed. Starting today, if a donor is not happy for any reason with his or her experience on GlobalGiving, he or she can get a refund. The refund comes in the form of a voucher the donor can use to give to any other project he or she wishes. (If the IRS allowed it, we would even refund donor's money in cash.) The guarantee will cover up to $10,000 per donor, per year, at the beginning, but we may increase this ceiling if it makes sense in the future.

We see GlobalGiving Guaranteed as a new way to demonstrate the confidence we have in our project leaders, who are good people making a big difference with a relatively small amount of funding. But the guarantee also brings direct market discipline to bear on us. We make promises about the speed at which donors' money will get to the field, and we promise donors that they will get regular updates from the field from project leaders. Starting now, the guarantee creates a feedback loop with teeth.

We also believe that donors deserve to be treated at least as well as consumers. After all, they are trying to help improve the world with their dollars. They have the right to know how their money is being used — and to redirect that money to a different purpose if they are not satisfied.

You may be thinking this is a real financial risk for a small organization to be taking — and you are correct. But we believe that ultimately the benefits far outweigh the risks. Study after study has shown that the positives outweigh the drawbacks for providers of guarantees.

Does the guarantee mean that all projects listed on GlobalGiving will succeed in terms of their objectives? Of course not. Most projects on GlobalGiving succeed in improving hundreds or even thousands of lives. But, like anything else in life and business, sometimes development initiatives fall short, for all kinds of reasons. We will, however, guarantee that from here on out, donors can play an active role in the conversation.

Months ago, I told Margaret that a donation guarantee was a crazy idea. That isn’t how philanthropy works, I said. But today, I believe that it is. What do you think?

Note:  This post can also be found on the Philanthropy News Digest Blog

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