Posts Tagged ‘transactions’

 

Why 15% Makes Sense

Posted by john hecklinger on February 17th, 2011

People sometimes ask me why we charge a 15% transaction fee.  My cheeky answer is, “So I can be sitting here having this conversation with you.”  As Chief Program Officer at GlobalGiving, my job is to make GlobalGiving more valuable to more organizations around the world.  We work with thousands of organizations, qualifying them, supporting them, disbursing funds to them, monitoring their activities, and maintaining an online platform for them to connect with donors.  Work at this scale would be impossible with an all-volunteer team.  Without great people and robust systems working full-time, GlobalGiving does not work.

Could we find a large donor to fund operations, making the ongoing transactions free?  Maybe, but we believe a transaction-based fee is a better idea.  Funders like Skoll Foundation, Omidyar Network, Hewlett Foundation, Packard Foundation, Rockefeller Foundation, and Kellogg Foundation have invested in our effort to make the transaction-based model work, and we’re almost there.  The model gives GlobalGiving a strong incentive to invest in the performance of our marketplace, which aligns nicely with our partner organizations’ goals and the needs of donors – the more funds flowing, the greater the social impact.  We are motivated to build better tools for donors and project leaders, we aggressively court corporate partners, we attract donors through a strong social media presence, we offer free training and development opportunities to our project leaders, and we find innovative ways to demonstrate results.  We strive to earn our 15%, and GlobalGiving only works if we deliver the value.

So, why do organizations decide that 15% is good value?  We connect them with new donors, we provide donor management tools, and for some organizations we save the expense of maintaining a transactional web platform.  For international organizations, the ability receive tax-deductible contributions in a secure, transparent platform is worth the 15%.  We do not charge organizations an up front fee to participate in GlobalGiving, so fees only exist when donations flow, and we’re careful to explain the fee to all prospective organizations.  Donors should feel good giving to organizations on GlobalGiving, because each organization calculates that our platform is worth 15%.  Donors always have the option of covering that 15%, and over 50% do just that.  Donors should expect to receive quarterly updates and can exercise the GlobalGiving Guarantee if the experience doesn’t meet expectations.  We just finished our best year yet, delivering more funding to more organizations than ever before.

That said, our 15% does not work for many organizations.  For organizations that maintain a web site with transaction processing, or have a staff dedicated to donor management, or do not like to accept project-specific funding, GlobalGiving is probably not a good fit, and that’s fine.  If a donor simply wants to fund general operations of a US nonprofit, that donor should give through that organization’s web site or a portal like Network for Good, both of which have lower fees.

Our commitment to this model holds us directly accountable to the donors and organizations connecting on our platform.  Organizations and donors do not have to use GlobalGiving  If we are not worth our 15%, people will stop transacting, and GlobalGiving will not survive.  If we are worth our 15%, more transactions will happen, we will continue to improve the platform, and we might just improve the efficiency of giving to the most effective organizations worldwide.