Network for Good roundup
I wrote last week about the apparently high fees that Network for Good charges to process donations. Katya Andresen was good enough to stop by and give some clarifying info via comments (which you can see by clicking the link to the post). One of the major differences she pointed to between Network for Good and the simpler, cheaper PayPal is a potential legal issue: briefly, she argued that Network for Good takes care of the state-by-state registration that is necessary to solicit donations from all 50 states.
I did some research into this, starting from links that she sent me, and concluded the following. Warning: I just wrote this up and realized it’s really boring. Feel free to skip to the next section if you don’t care about the intricacies of payment processing.
- The legal issues are very hazy. You do need to register with most U.S. states in order to solicit from their residents, but there is no clear legal precedent or consensus on whether putting a “Donate” link on your website amounts to soliciting from all these states. Very few nonprofits are actually registered with all relevant states at this point … so it seems unlikely that this is a major short-term concern. However, it isn’t clear, and it’s probably wise for a nonprofit to cover its bases.
- If this registration is necessary, it is still far from clear whether using Network for Good “takes care of” this registration for you. I’d guess that it doesn’t – a “Donate” link is a solicitation to donate to your organization, not Network for Good, even if the funds go through Network for Good. (If it were a solicitation for Network for Good, that would be a whole different legal can of worms.)
- So I doubt this particular concern is relevant to PayPal vs. Network for Good … however, there is a larger issue that it brought up, which is that nonprofits have their own set of legal issues to deal with, and PayPal really isn’t set up specifically to serve their needs. This was confirmed by my attempt to get them to answer a legal question: I got passed through 5 people before finally getting a mailing address for their legal department, and being told I would have to use that channel. Not helpful. So there is an argument for using a processing agent that exists to serve nonprofits and deal with their legal concerns.
- But that said … why does the processing agent have to be a nonprofit itself?
- This seems to add so much unnecessary confusion – when considering Network for Good vs. JustGive, I can see that JustGive charges lower fees, but are they filling in the gap by getting more private donations that could be going to help people all over the world instead? I have no idea. And that’s what I really care about – not how much of a given transaction goes to the processing agent, but how efficient the agent is overall, which affects how much total money is left over to do other good things.
- Any time a business can feasibly charge to cover its full costs, it should do so, rather than undercharging and having Kevin Bacon (among others) help fill in the gap by fundraising from philanthropists. Network for Good and JustGive don’t serve the poor; they serve nonprofits that can afford to pay them.
- Conclusion: I’d still probably use PayPal over JustGive, and JustGive over Network for Good, but there are at least arguments for all three, counter to my original post. What I really want to see is a for-profit existing to serve nonprofits with their payment processing needs.
I am guessing Katya is rocking a Google alert, so I’m hoping she’ll correct anything inaccurate here.
Tactical Philanthropy makes me happy
Sean Stannard-Stockton just published a post that I think gives a really great characterization of us. He calls us the “pissed off donor model,” which I hadn’t thought of, but it’s accurate: GiveWell grew straight out of our attempts to donate, and our realization that the resource we wanted and needed doesn’t currently exist. It’s cool to see someone else describing the project in a way that really gets to the heart of what we’re about and what we believe in – and his claim that foundations should not do everything in-house, but instead should conduct “aggressive marketing campaign[s] to make sure other foundations can learn from their mistakes” – is exactly the mentality we wish we saw more of.
My next post (Tuesday or sooner) will be a story of nonprofit incompetence that will shock and amaze you. I am currently deciding whether to give the name of the nonprofit in question – I think at this point it would be distracting and also might get me knifed in an alley, so I’m leaning against, but feel free to send me emails calling me a wuss in the hopes of changing my mind.