Charity Begins at the Home Page

Nonprofits and donors are linking online faster and cheaper than they ever have before. Here’s how marketers can join in.

Robin Lee Greiner sounds more like an activist than a Harvard Business School grad. As vp-marketing for Working Assets, Greiner is both. She sees “a new paradigm of capitalism, where the social bottom line is as important as the traditional financial bottom line.”

Her business plan? “Progressive social change,” she says.

“It’s almost incidental what business we get into, as long as it’s something people do every day,” like talk on the phone, pay with credit cards, or go online, Greiner says.

Working Assets, now 15 years old and managing three new “e-philanthropy” sites, is proof that marketers can make money supporting nonprofits. The San Francisco company sells financial services, long distance, and Internet access and donates nearly three percent of its revenues to 50 nonprofit groups. Its revenues hit $140 million last year (putting donations near $4 million).

Working Assets’ three new sites – shopforchange.com, donateforchange.com, and volunteerforchange.com – are among several cause-based sites launched in the last six months. There are at least two other new philanthropy portals: AOL’s helping.org, which launched in October, and another expected to launch this quarter. The Hunger Site, where consumers click and sponsors donate food, has received worldwide attention since its June debut.

Online fundraising has become all the buzz among nonprofits looking to connect with consumers more cheaply and personally than by mail or phone. An Oct. 22 White House Conference on Philanthropy discussed how to increase charitable giving online.

The strong economy makes more consumers more generous: Two-thirds of American households donated an estimated $150 billion last year. The average online donation is two to three times bigger than the average offline gift, according to online processor Donornet. But fewer than one percent of donors make gifts online, reports charity coalition Independent Sector, although other sources say it’s as high as seven percent among heavy Internet users: A study quoted by the National Charities Information Bureau reports 3.5 million of the 48 million weekly Internet users have donated online.

Online donors tend to be younger consumers who don’t donate offline, tech-savvy folks, and pragmatists who want more of their donations to go toward the cause and less toward administrative costs (which traditionally eat up 25 percent to 40 percent, but around 10 percent online).

The question is, where will marketers fit into this new equation?

Depends. The two kinds of cause marketers each need a different approach. Companies that support nonprofits as part of their business model like Working Assets (or Ben & Jerry’s, or Newman’s Own) can take their current message online, mostly targeting existing customers who evangelize the brand by e-mail (which is faster and broader than old-fashioned word of mouth). The vast majority of marketers – those who do cause-related promotions – need to reinforce existing relationships with nonprofits, or forge new ones online.

“There’s been a sea change [in cause marketing] with Baby Boomer management, and consumers driving their own [brand] decisions,” says Carol Cone, president of cause-branding consultancy Cone Inc., Boston, which was bought by Omnicom Group in December (January promo). “A groundswell of companies have embraced cause-branding in the last year. There’s still a battle for funding, but it now goes into the millions from the hundred-thousands.”

U.S. marketers will spend $700 million on cause-related sponsorship fees this year, projects sponsorship consultancy IEG, Inc., Chicago. Marketers could spend as much as $2.1 billion on cause marketing this year.

The Net brings new outlets, but it also brings new competition. Many dot-com start-ups eager to build awareness will ride the coattails of existing nonprofit brands to keep themselves steady in the coming shakeout of e-commerce sites.

“One year online is like seven dog years,” Cone says. “Dot-coms grow so fast that they embrace traditional marketing techniques at an accelerated rate. Within one year we’ll see cause-branding online,” compared to five to 15 years in a brand’s life cycle in the real world.

At the same time, dot-coms looking to differentiate their brands and create profitable, long-term business models are asking how they can work with marketers beyond one-off traffic-building promotions, says Stan Friedman, president and managing partner of marketing and philanthropy consultancy WorldCom, San Francisco. “As dot-coms seek to create value beyond `feel good’ and retail status quo, their answers – and their pitch to marketing managers – will become more apparent over the next 18 months.”

In the meantime, there are five ways to use the new online equation as a cause-marketing platform: Join a charity-driven commerce site like igive.com; link to a nonprofit portal like AOL’s helping.org; sponsor a non-commerce site like The Hunger Site; host a charity auction; or put a charity overlay on a brand’s own site.

Join a charity-based shopping portal

Numerous sites donate a portion of sales to nonprofits. At igive.com, launched in November ’97, five percent or more goes to the shopper’s charity of choice. Greatergood.com, started last February, guarantees charities get five percent by making up the difference if marketers pledge less. Other sites include charitableway.com, 4charity.com, and mypoints.com. Marketers use these portals to attract new users to their own sites, and they’re a good, quick hit for brands new to e-commerce.

ClickRewards, a shopping portal that awards shoppers “ClickMiles” redeemable at 10 airlines, ran a Holiday Charity Program that awarded miles for donations to seven affiliated charities, including Toys for Tots and the Rainforest Action Network. Members also could donate their miles to one of 12 charities, including American Red Cross and Special Olympics International. The site plans to add more nonprofit partners this year.Here’s the c aveat: Of the dozens of charity-based shopping sites new in the past 18 months, few will survive the next year. “Charity malls won’t give you any incremental anything,” warns Cone.

Shopping sites that extend an existing brand with an established customer base – like Working Assets’ shopforchange.com – have better odds. “We’re very different from dot-com start-ups,” Greiner says. “We’ve been direct marketers for 15 years. We have an installed base of customers who are very targeted and interested in our niche. We know how to talk to [them]. And, we have other revenue streams.”

Shopforchange.com lists progressive merchants, has info on socially responsible shopping, and lets shoppers send “Citizen Action” letters to lawmakers on a different issue each month, adds Larry Litvak, chief financial officer and vp-Internet services.

Link to a non-commerce destination

The value-adds and loyal customer base also distinguish volunteerforchange.com and donateforchange.com, Working Assets’ non-commerce sites. The company surveyed its 500,000 customers on Internet use before launching those two sites. “That’s the demand side,” says Litvak. “On the opportunity side, there’s stuff we can do more easily online, like broker information for donations and volunteering.”

Working Assets supports a breadth of issues. “We don’t pick a particular group, and that sets us apart from credit card companies with affinity relationships and long distance companies affiliated with a single issue,” Greiner says. Marketers who don’t have as strong a consumer niche as Working Assets, however, may do better with a single tie-in.

Working Assets’ sites aim for existing customers and a tight target of new users. “A household may have only one phone line [for Working Assets long distance service], but many people in the household could be shopforchange.com customers,” Greiner says. “We also hope to attract people who haven’t donated before,” typically younger Internet users. People can e-mail the site to friends, so “there’s this viral nature to it. It’s more immediate and a broader extension of [the Tell-a-Friend referral program for long distance]. Word of mouth is very powerful.”

America Online launched helping.org in October through its nonprofit arm, AOL Foundation. Helping.org has 20,000 volunteer opportunities, info on all 620,000 nonprofits registered with the Internal Revenue Service, and a chat area for nonprofits to swap ideas. Partners include American Red Cross, America’s Promise (under retired Gen. Colin Powell), and GuideStar database management service. Helping.org is strictly nonprofit – totally funded by AOL with no ad space. Marketers can only participate by putting a link on their site to helping.org or one of its charities. AOL won’t sell or rent its list of donors.

Since destination sites offer multiple services, they’ll have different levels for marketers to tie into, says Cone, who sees “big opportunities” for marketers as the sites catch on with consumers. Sites will have to self-regulate, given the scrutiny of attorneys general anxious to prevent nonprofit “endorsements” of brands.

Sponsor a non-commerce site

These range from advertising sites where consumers can donate what they earn reading ads – like CyberGold.com or ClickRewards.com – to donation sites where consumers click and marketers donate. The best model is The Hunger Site (thehungersite.com), started in June by a computer programmer in Indiana. John Breen launched the site to donate school supplies in developing countries, but switched to food when he “found out that hunger was a major factor in preventing students from being able to learn,” Breen says. Visitors click on a “Donate Free Food” button, and another quarter-cup of grain for every sponsor goes to the United Nations’ World Food Programme. The more sponsors, the more food donated. Each visitor can donate once a day. A “thank you” page lists links to all sponsors.

The site boasts a click-through rate of three percent and more, far better than the 0.5 percent average for banner ads. An ad on the Hunger Site costs 0.5 cents per impression (all of which funds food donation), compared with the average 3.5 cents per impression for banner ads.

Some sponsors make site-only offers. World2market.com gives 15 percent discounts to The Hunger Site visitors, and Miadora Jewelry donates $25 to the U.N. World Food Programme for every purchase.

The Hunger Site encourages marketers to try one-day test sponsorships before contracting for 10 days or longer. Donations average 300,000 to 500,000 on weekdays, which costs sponsors $1,500 to $2,500. (There’s a cap in case donations suddenly skyrocket.) The site turns down individual and group sponsors to keep corporate sponsors interested. “It has to make sense for corporate sponsors to fund free food donations in return for the goodwill, publicity, and advertising that they receive,” Breen explains.

Some ad sites are thriving. CyberGold.com reports that members have donated $9,200, a third of the $27,000 the site has paid members to read ads. Twice last year, MyPoints.com let subscribers convert points earned reading ads into cash donations to the American Red Cross – once to help Kosovo refugees, another time to help earthquake victims in Turkey.

Host an auction

Auction fever is a boon to nonprofits – and their corporate sponsors. The Minneapolis Star-Tribune Co. sponsored a two-week auction in November that raised money for the Harriet Tubman Center for family violence.

Bargainbid.com auctioned off Rodney Dangerfield’s stuff (including a decanter of sweat) to benefit the comedian’s Respect Foundation for chronic depression. Dangerfield stars in the site’s TV spots, themed “Auctions with Respect.” EBay.com began hosting charity auctions last summer. Marketers can sponsor an auction or donate prizes.

Auctions are “a good idea, but a short-term event,” says Cone, who advocates long-term cause branding over one-off promos. Still, for Internet neophytes, it’s a low-risk first step.

Put a charity overlay on a brand’s own site

The 81 million consumers online this holiday season were bombarded with a cyber-version of the annual glut of cause promos. Myriad sites donated a portion of sales to favorite causes.

Any brand that does cause promos off-line can translate one onto its Web site. Smaller brands can piggyback online sweeps like Webstakes’ Winner Wonderland, which pulled in 5.9 million entries and donated $15,000 to Toys for Tots.

A brand-specific promo “is a good idea if it builds off your real-world cause marketing,” Cone opines. “If you haven’t done cause marketing in another medium, it’s shocking. I’d get my philanthropy right in the real world before ever tackling e-philanthropy.”

In the end, it boils down to the brand’s mission, and the company it keeps. Greiner finds tie-in partners like Ben & Jerry’s, Whole Foods, and Newman’s Own through Social Venture Network, a 10-year-old group of socially responsible companies that meet twice a year. Nearly all are for-profit.

“If we were nonprofit, we wouldn’t have been able to grow as quickly and been as successful promoting social change,” Greiner says. “That’s the most exciting thing about being part of a traditional for-profit business whose mission is to make the world a better place. That combination is incredibly exhilarating.”

And profitable in more ways than one.

Discount retailer T.J. Maxx built its reputation selling national apparel brands. Last fall it introduced its first private label line, Save the Children clothing. A five-year licensing deal covers fall and spring collections in T.J. Maxx’s 650 stores.

Save the Children has 27 licensees. Fees and royalties raise $2 million a year, a fraction of the organization’s $120 million in U.S. fundraising, says licensing manager Colleen Nuskey. Most are two- to three-year deals, with royalties of five to 10 percent. “We prefer long-term deals to one-offs,” like Pepsi’s holiday promo that put kids’ artwork on 125 million cases of Pepsi, Mountain Dew, and Diet Pepsi. An on-pack deal offered 12 greeting cards for $3.75. Pepsi donated $1 from each order.

Long-time social advocate Timberland, meanwhile, added a new venture – and a new line of clothes – this fall. The Stratham, NH, company teamed with Ashbury Images, a San Francisco screen-printing shop that employs recovering substance abusers and homeless people, to sell 5,000 “Make a Difference” T-shirts with sayings like “Dig Deeper” and “Believe Nothing Can Stop You.” The holiday promo was Ashbury’s biggest job ever.

Best known for its boots, Timberland has long sponsored City Year, which shuffles teams of volunteer youths into urban assignments for one year.

Hospitalized kids get lonely. Starbright Foundation connects them via videoconferencing and the Internet, and Sprint picks up the tab.

The long distance company was all set to host a fundraiser in Vail last November and donate $5 to the foundation for every lift ticket sold to skiers that day. Trouble is, it never snowed. The fundraiser was rescheduled for Feb. 19.

Sprint won’t say how much it has donated in cash and services since Starbright’s `91 inception, but the system is worth several million dollars. Starbright is installing the voice, video, and data system in 100 hospitals after an 18-month test in `95-96 at seven pediatric hospitals. The system showcases Sprint’s technology for businesses, making it a sort of feel-good R&D lab. The ski event is Sprint’s first fundraiser for Starbright.

Procter & Gamble, Nestle USA, Kellogg, and Alberto-Culver are among the marketers who will put samples and coupons in one million Giving Back Paks this spring to benefit Easter Seals. Supermarket shoppers who donate $2 to Easter Seals get a pack with $50 worth of discounts and giveaways as a thank you.

As many as 1,300 Safeway stores (and maybe Dominick’s and Vons stores) will display packs early March through mid-April, timed to Easter Seals’ TV fundraising drive. Each store committed eight weeks display space for three to eight shippers, says Debbie Usery, president of Select Marketing Group, the Phoenix-based sampling company executing the program. Kits are packed at Easter Seals’ work centers.

“The program not only generates charitable donations, it also provides jobs for individuals benefiting from Easter Seals services,” Usery says. In-store signs, local TV and radio, and direct mail to Safeway Club cardholders support. Plans call for national expansion next year.

The kit was born in a brainstorming session between Usery and Easter Seals director of corporate marketing Sharon Watson. The two pitched it to Safeway, a 15-year sponsor of Easter Seals.

The Chicago-based charity hopes to reach kids six to 12 and their moms, a younger audience than its traditional older female donor. A Web site designed by pack participant Bonus.com has games and information on disabilities.