Note: As of 2017, this blog post no longer represents GiveWell’s views on Network for Good.
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.