The GiveWell Blog

Network for what now?

Help me understand this. For those of you whose browsers don’t support hyperlinks: Charity Navigator processes direct donations to charities using Network for Good, which processes credit cards and applies a fee of 4.75%. Charity Navigator claims that this fee is a good deal, comparable to what the charities themselves would have to pay for processing your credit card, and further states that “Network for Good’s giving system is so efficient and inexpensive that we at Charity Navigator use their service to process online donations to our own organization.”

Sounds good, right, until I started doing a little research of my own into the cheapest way of processing donations online. Turns out: it isn’t Network for Good, it isn’t close, and it took me all of 12 seconds to determine this.

Exhibit A: standard PayPal processing rates. Just looking at the simplest, quickest, no-special-deals, for-profit version of PayPal, it’s 2.9% plus $0.30 per transaction. That beats Network for Good for any donation over $18.75. And that’s using the system that’s available to any schmoe who wants to sell donuts or c1@lis or whatever. Anecdotally, I’ve heard and read about way lower fees offered by PayPal for nonprofit organizations, not to mention for doing more volume.

And that’s PayPal: the most recognized, subscribed-to brand on the web (though to be clear, people without accounts can still use this service to process their credit cards). Google Checkout offers an even cheaper option, and it seems safe to say that prices will continue to fall in the extremely competitive online-merchant sphere.

So what’s the advantage of Network for Good? After scratching my head over this for some time, I Googled my way to this (from here): “While JustGive and PayPal offer nonprofit organizations the ability to collect donations online, Network for Good is the only organization with a substantial media presence. Through the generosity of our corporate partners – and two of the largest Internet properties – AOL Time Warner and Yahoo!, we are able to promote our site and service via millions of ad banners and links on these Web sites. This traffic to our site results in increased awareness of charitable giving, volunteerism, and the issues that organizations like yours support. No other resource can provide as broad a reach and can deliver as many funds.”

Read that over again and see if you can make sense of it. If I didn’t know any better, I’d intepret it as follows:

“While JustGive and PayPal do the exact same thing we do for lower fees, we have so much money and backing that we can advertise ourselves a lot! That means we can convince you to use us instead of the better deal! After all, who’s heard of PayPal? We’re Network for Freaking Good! Wait, you’re not convinced? Well consider this: let’s change the subject and say some vague stuff about increased awareness of charities. Now you don’t even remember what we’re talking about, do you? That’s the power of well-financed marketing! Now use our service!”

If I didn’t know any better, I would say that we’re looking at an extremely well-financed and -backed nonprofit organization, set up explicitly to serve charities and serve the public good, charging its clients over twice what they would pay a standard for-profit merchant operating with none of the tax breaks or charitable contributions. If I didn’t know any better, I would say that Network for Good even appears to recognize this, and rather than concede to the more efficient for-profit organizations for the public benefit, is giving a completely smoke-and-mirrors argument that it’s hard to describe as anything but a swindle of the organizations it was created to serve. If I didn’t know any better, I would conclude that Charity Navigator, an organization created expressly to ensure accountability and financial efficiency and help people avoid swindles, is among the swindled.

And I don’t know any better. If you do, please help. Otherwise, when we start setting up our own online donation program, we’re going to use one of the many cheap and reasonable options that’s been set up by for-profit corporations rather than “charities,” and we’re not touching Network for Good with a ten-foot pole.

Note: after discussing this with Katya from Network for Good, I’ve concluded that the issues are more complex than this post implies. It still seems to me (though others disagree) that PayPal is more efficient than Network for Good, but the “swindle” accusation is definitely off base. See the conversation for details.

Comments

  • Hi, thanks for posting on this. A couple of things — we cost more than PayPal for nonprofits because we do several things that nonprofits don’t. First, we register in every state that requires nonprofit registration for online fundraising. The nonprofits appreciate this because when they use our system, they don’t have to file with each state attorney general’s office – we do it for them. A nonprofit can’t use PayPal unless they register themselves in states their donors are based in. Second, we issue tax receipts after each donation to the donor and track for every nonprofit the donations through our system so they can thank and cultivate donors. We also store each donor’s giving records so they can access them any time and print tax receipts as needed. This is why it costs more for us to process donations than it does for PayPal. Last, unlike JustGive, we don’t ask for a donation to Network for Good as part of your transaction. If you’re a nonprofit, that’s good because we’re not confusing your donors with additional solicitations. And last – we let donors ADD the fee to the donation if they want. Most do, so most nonprofits actually pay less then 3% when they use our system. Please be assured, we DO NOT profit from our fees – they are used to cover all that I just described. Sorry this is long, just wanted to explain our system and encourage further discussion. All best.

  • Sorry above post didn’t show, I’m with Network for Good (www.networkforgood.org) and http://www.nonprofitmarketingblog.com

  • Jason R on February 12, 2007 at 2:40 pm said:

    I wonder why paypal has not gone through the trouble or registering with all states for fund-raising for non-profits. I would also think its relatively easy for them to set-up a system with online receipts. Likewise I would think that Google would be more than willing to do it (they are supposed to do good). It would be in their own interest to get the fees for non-profit donations, and everyone would benefit through lower cost (i.e. a greater share of donor dollars would reach their recipient). Cut out the well meaning but less efficient (lower economies of scale) non-profit middle-man. Disclaimer: I work about 2 desks over from Holden (and yes he is obnoxious in person).

  • Thanks for your comments. Katya – this information confuses me (and apparently Jason) somewhat, but it is definitely better than what your website says on this topic, which is what really got me questioning Network for Good. I think it would be good to consider updating the website.

    RE JustGive: they have a checkbox that says “Donate $3 to JustGive” that the donor can uncheck. This seems very similar, both in terms of confusion factor and in terms of function, to asking the donor whether they want to add another 4.75% to cover processing costs.

    As for PayPal, I am planning to call them for their side of the story on registration, because I agree with Jason that this seems strange. You are right that Network for Good provides more functionality for storing donor info, but PayPal’s basic operation (providing a receipt to the donor and an email including contact info to the recipient) facilitates thank-you notes and receipts for anyone who can save the emails.

  • Katya Andresen on February 13, 2007 at 5:07 pm said:

    We will definitely update our website! If you want more information on state registration, check out http://www.uwnyc.org/technews/pf_v8_n2_a2.html and http://www.paperglyphs.com/nporegulation

  • Kirt Manecke on January 8, 2008 at 10:04 am said:

    I founded and run a small non-profit 501c3 organization (LandChoices. We use Network for Good’s online donation services and are very satisfied with the excellent service and record keeping. I run this non-profit during my time off from my full time day job, so ease of use and trust are very important to me, and I can’t afford to waste time. Network for Good has been a huge help in assisting me with configuring our new website giving pages. Their customer service is top notch and their people always respond to my inquiries within 24 hours.

    Network for Good and Katya Andresen have been extremely helpful in helping grow LandChoices and making it more effective through the excellent training classes and by even answering my e-mails personally! I used PayPal in the past on our website but I found it to be a clunky service, tricky for a novice webmaster like me to add to our website so I removed it from our website last year. Perhaps they have improved it by now and I imagine that is the case as I do know that some people prefer to pay using PayPal. Thank you, I simply wanted to add my comments as a user of Network For Good’s services. Kirt Manecke, LandChoices’ founder and president.

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  • ROI (Results on Insights): Nonprofit Examples of How Listening Returns Value on February 4, 2009 at 2:14 am said:

    […] Correcting Misconceptions and Improving Customer/Stakeholder RelationsThe AirForce Blog:   The image above is of the US Air Force Blog Assessment and Engagement process.  It is an excellent example of working through how an organization might respond to comments on a blog, but even better it is map for insight harvesting.    As David Meerman Scott notes in his analysis of their social media strategy, the goal is “to use current and developing Web 2.0 applications as a way to actively engage conversations between Airmen and the general public.”  If you were still thinking about ROI as Return on Investment you’d never be able to make a case!  With such a clear policy for response, it is obvious that the blog generates valuable information to shape and improve a marketing strategy. As Pudding Relations suggests “Take a look and see if you can use it to enhance your own thinking around social media with, ahem, military precision.” Gulf Coast Regional Blood Center is listens by searching for discussions about blood donations in their local area says Courtney Martin.   Although there is low volume, the listening has provided a lot of value. “We’ve been able to answer questions for people who want to donate blood but don’t know the rules, or who have misconceptions. When we found someone who’d had a negative experience at one of our facilities, we were able to respond to her concern and leave her with a good feeling about our organization.  It was our first true social media success story, and helped validate our social media use to the powers that be at our organization.”   No doubt, the listening also provides great content ideas for their blog. Network for Good has some terrific stories about noisy, angry people becoming champions for their services because of active listening and then open engagement with them on social networks or in the comments of blogs.  One example is from the GiveWell Blog which posted a complaint about the Network For Good’s fees. Network for Good’s Vice President,  Katya Andresen, left a comment in response which lead to a conversation and this follow up post from GiveWell.   After some back and forth conversation, including asking for his input when they changed their fee structure, GiveWell became a supporter and user for Network for Good’s services.Getting Ideas for Campaigns or Programs GreenPeace Whale Trail  asked their online visitors for campaign ideas and they got some great ones, like the Great Whale Trail, where they tagged whales and then tracked them using GPS/Google maps. This drove traffic. (Hat tip Miriam Kagan)Improving Program and Service Delivery […]

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