When actor Tom Hanks decided to sell his 2004 Prius to the highest bidder for charity a couple of years ago, an unintentional conflict was set in motion.
His chosen cause was Welcome Back Veterans, a group that helps returning troops adapt to civilian life. The organization is a pet cause of Major League Baseball, and the auction was also supported by the Entertainment Industry Foundation, a leading Hollywood charity.
“With five entities [including Hanks] who are all very protective over their brands and media assets, all of them wished to participate in promoting the same charity auction, but none of them would want to send their own traffic to someone else’s site,” says Israel Schachter, co-founder of Charity Bids, which created Club Charity for Johnson and had the solution.
“Essentially we embedded the same one-item auction interface into all their web and social media properties, so they were each partaking in the same auction.” That way everyone shared in the mitzvah — and not incidentally, the good publicity.
“Instead of us having to spend money in order to find the potential bidders and buyers, we took the auction to where those buyers already are — on the websites and fan pages of these celebrities/brands/charities,” Shachter said.
Online giving is on the rise. The nonprofit research group Network for Good found proceeds up 12 percent in the second quarter compared to the same quarter of 2011.
Nonprofits use the Internet to reach out to small donors, said Robert Evans, a principal at EHL Consulting in Willow Grove, Pa., which advises Jewish and other organizations on fundraising.
“Internet-based campaigning techniques really focus on the small gift,” he said. “We’re starting to see great efficiencies happen there.”
Schachter has developed something of an obsession with not only making it easier for people to give, but for nonprofits to keep more of their money and stay connected with their donor base and building on it with donors they may otherwise not be able to reach.
A successful entrepreneur in other high-tech areas, he and two partners devote their spare time to Charity Bids and other applications that help charities avoid “third-party” sites that charge high commissions, such as eBay, Charity Folks and Charity Buzz.
“We came into this space from a very different background,” says Schachter, 31, who is a founding partner of Integrated Solutions, a Toronto-based Internet incubator specializing in the development if web and social media commerce-driven platforms.
“My two partners and I came from volunteer fundraisers with a very different outlook and approach: when we identify certain holes or voids in a system we looked to see how we can plug those holes. We don’t look at what’s in it for us, but what are the needs of the charities.”
Schachter says he and his Charity Bids partners, Ronen Lazar and Charlie Ifrah, have collectively raised more than $20 million for various charitable causes since joining forces in 2009.
Charity Bids does collect a flat fee to cover operating costs, but it’s cheaper than up-front fees, annual fees and per-transaction fees charged by competitors. “This is not a business for us,” he said. “The three of us have ventures that are doing just fine.”
Clients have included Easter Seals, The Cancer Research Foundation, United Way and the Ronald McDonald House Charities as well as the philanthropic arms of for-profit corporations like The Sharper Image and Olympus.
Schachter, a Washington Heights native now living in Toronto, believes that when it comes to fundraising there’s no place like the home page. “We want charties to be to identify branding and be in control of navigation,” he says.
Hanks’ Prius, expected to sell for $12,000 to $15,000, actually sold for $24,000, and Schachter believes it was the ability to reach more fans via multiple websites that boosted the price. “If not for our piece of it they would not have made anywhere near what it costs to find fans who have enough money to buy the car [for that price],” he boasts.
He said another of his applications, FanFunderApp, also allows causes to ceate grass roots micro-giving campaigns and bring multiple people into micro-giving opportunities. For example, few can pay $10,000 for a new hospital bed at Mount Sinai Medical Center, but hundreds of people can chip in. Users can create a sub-campaign and reach out through social media to raise money toward the bed. “Auctions specifically prove that not only will people end up supporting a cause they do not identify with, but that they will end up giving way more money that they would have otherwise, simply because they are getting something in return,” adds Shachter.
When Met Council on Jewish Poverty and the Jewish Community Relations Council recently launched Gift Card Relief to aid victims of Hurricane Sandy, Charity Bids provided a commerce engine and tax receipt solution that will work within their specially created web site. The Social Giving Network created by Shachter and his partners facilitated the tax deduction.
Yonatan Ben-Dor, founder of IsraelGives.org, which helps over 700 nonprofits in the Jewish state rake in cash from abroad, calls Charity Bids “A nice app I’m sure, but nothing revolutionary and certainly just one tool in a charity’s fundraising arsenal.”
He cautions that nonprofits must be careful not to get so caught up in reaching the masses that they forget how to develop individual relationships with donors.
“If the relationship is developed well and the donor connects to the cause, it’s less important whether you’re using an auction app, a Facebook campaign, or just a well-phrased e-mail — the donor will respond because he’s connected to your organization,” says Ben-Dor.
“But if the donor doesn’t feel connected to your cause, it doesn’t matter what bells and whistles you throw at him — they won’t distract him from the fact that he’s not connected to the organization or its mission.”
Schachter counters that Charity Bids allows better relations with givers by keeping them connected to the site, and Fan Funder collects data on donors that helps them build such relationships.
“Data generation is the most valuable asset of a charity,” he says. That’s why it’s important to keep donors on the charity’s own site. “The worst thing they can do is expose that information to third party sites and potentially lose them.”