GivingTools.com founder Jason Smith weighs in on online giving trends and challenges and reveals how his company is helping nonprofits get more for less.
First off, tell us about your inspiration behind the launch of GivingTools.com, and why you felt there was a market for this type of site.
After years of providing printed materials for capital campaigns, we created a system to deploy capital campaign websites. We figured if we launched a site with each campaign and referenced it in the printed materials, it would enable more effective printed communications and a flexible online resource that could adapt to the communication needs of the campaign. A real one-two punch.
But more than simply securely collecting pledges online, we wanted to also offer an affordable way to collect payments. The problem was, with big gifts and recurring gifts, the existing model for online payments was just too expensive. 2.99 percent has been an accepted rule of thumb… and nonprofits are wisely unsure if they want a major gift to experience that kind of hit.
So we did some research. What we discovered was that the cost of online processing is pretty negotiable and that online giving services were taking bigger chunks of nonprofit budgets than they needed to. We launched a solution that would accept gifts online from donor bank accounts for zero percent plus just $0.25. It was and is unheard of.
We then launched GivingTools.com with a versatile online giving system that enables nonprofits to create many kinds of appeals: one-time gifts, recurring gifts, campaign pledges, product sales, events, and even volunteer signups. And we offered it all for just $14.95 per month.
Four years in on the online giving product, the biggest problem we’ve had was people not believing our rates were so low!
Online revenue for nonprofits continues to rise at a steady rate – it grew by 27 percent last year. Do you see traditional types of charity fundraisers (such as bake sales or walk-a-thons) going the way of the telephone booth?
Not at all. Fundraising is about raising funds, sure, but it is about raising awareness and cultivating relationships. The Internet is a great thing, but it will never replace the effect of a real person physically representing a group to the community. People give to people for people.
Social media is allowing nonprofits to reach an unprecedented number of online channels. What’s your best advice for charities seeking to implement a social media strategy?
Remember that the goal of online social media is to be social. So, if you are going to tap into social media, use the medium to its fullest by maintaining an ongoing conversation with your supporters. Dedicate time every day to reaching out, not just through online channels but surprise people with a handwritten social note at a key point in their life, or pick up the phone and thank somebody. “Social media” is not just the Internet. That’s just one medium. Use all your social media—online, email, phone, direct mail, and face-to-face to connect with, thank, and listen to your supporters.
The other thing I would say is to consider a news aggregator for your website. This is a way to display feeds from your various online social media accounts in one seamless stream. Pretty cool.
What are some of the latest trends you’re seeing in the online giving world?
A big trend is actually online giving outfits quietly being bought out by big conglomerates and turned into mere storefronts. The conglomerate homogenizes the core features and runs the gifts processing through one channel to maximize profits. Several very large outfits (Ministry Brands being one) are aggressively seeking to dominate the playing field. To them, it’s big business, with a lot of investors looking for a payout. Ministry Brands owns 25 brands and most nonprofits don’t know when they compare several services, they may be looking at just one service with several storefronts.
Is it a good thing? Well, I’ll just say that some nonprofits ask me to assure them that I am not affiliated with Ministry Brands in any way before they will sign on. I am not sure what specific difficulties they may have experienced, but they feel pretty passionate about it.
Some users have dubbed your GivingTools.com the Robin Hood of online giving. How did you earn that nickname, and do you feel it’s a suitable one?
Huzzah! Well, we are not shy in standing up to the conglomerates and keeping more donations in the hands of the nonprofits. That’s where donors mean it to go, and we do our best to honor their wishes.
For example, we offer that zero percent ACH rate. Just a $0.25 fee to process any amount from a donor’s bank account. Why can we offer it at zero percent? Because the wholesale price is zero percent. The conglomerates mark it up because they figure one percent will look pretty inexpensive beside a 2.99 percent cards rate, so they charge one percent. We refuse to take money like that. It just seems wrong.
We also refuse to lock nonprofits into one processor. BluePay comes baked in to our product, but nonprofits can link in Stripe, Base Commerce, and even PayPal to do the processing. We don’t make a penny on processing, regardless of the processor. All we make is our monthly fee.
Got that? We don’t make a penny on processing. That’s unheard of for an online giving company. And if that’s not Robin Hood-like, I don’t know what is.
Many online giving sites take a significant cut of donations by charging processing fees. How is GivingTools.com able to avoid charging those same fees?
Well, the processors charge fees. BluePay charges a flat 2.85 percent, for example. PayPal and Stripe charge 2.99 percent (or less if you negotiate). We don’t add a penny to that, we just charge a flat $14.95 monthly fee. It’s just a business decision. Nobody said you HAVE to profit everywhere you possibly can. Sometimes, a business can decide to give nonprofits a break.
Aside from the obvious financial aspect, how do your minimal fees benefit charities?
Donors want their gift to go to nonprofits…not to credit card processors. They like to know that the effect of their gift is maximized by low processing expenses. Now, from the nonprofit end of things, they want to do good in the world, and with more funding, they can do more. We were once told by a nonprofit that our low rates would enable them to save an additional child from homelessness each year. This stuff is not just about a bottom line. It is about people’s lives. Charities know that. Donors know that. We get it, too.
When seeking an online giving website, what should a nonprofit look for in both the short and long term?
I’d say that short-term and long-term, it needs to be affordable, to maximize gifts. The whole benefit of recurring giving, for example, is to reduce pledge attrition (missed payments). That averages about four percent of traditional donations. If an online giving service averages more than that, it is an expense.
That brings me to the next criterion: ease-of-use. Beyond saving you money, an online giving service is a convenience to donors and to you. Is the interface easy on the eyes? Is it flexible to your needs? Is it intuitive? We’ve spent a lot of time refining our experience to minimize barriers to giving. We listen hard to our customers and we work every day to constantly improve our product. That’s a short-term benefit and a long-term commitment.
On a personal level, tell us about your motivation for leading GivingTools.com, and helping charities get the most bang for their buck.
It is simply thrilling to build a system that enables people to help people. I’ve been involved in charitable work most of my adult life, I’ve run for office in an impoverished city, worked with troubled kids. I’ve seen a lot of need out there, and I’ve seen a lot of committed nonprofits, struggling to make ends meet to help people in desperate need. This isn’t a job for me, it’s a mission.
And finally, on a lighter note, we’ve noticed you’re having some fun with your site. (We love the roller skating Chihuahua!) Why did you decide to insert some personality into your page?
Ah the Chihuahua. Well, I have this hunch that people like to smile. As they say: “If you aren’t having fun, you aren’t doing it right.” The animated Chihuahua scenes in the admin area of GivingTools help demonstrate product features in a fun and memorable way.
I am no great fan of Chihuahuas personally. There was just a Chihuahua in one of our illustrations and we were trying to express how easy our product is to use. In a moment of desperation, we put a smartphone in his paw and added the headline “GivingTools is so easy, even a reasonably smart Chihuahua can do it.”
At that point, we were “up Shih Tzu Creek without a poodle,” as it were, so we just stuck with it. The little guy has been an inspiration, really. I even find myself singing “Chihuahua wind beneath my wings!” some days. Is that normal?
Jason N. Smith is founder of GivingTools.com. He has decades of experience in nonprofit fundraising and capital campaigns and is also owner of the multimedia firm, Fathom Studio. Based in Pennsylvania, he’s married with “innumerable” children.