Corporation
of New York
Vol. 4/No. 1
Fall 2006
Nuclear Doomsday: Is the Clock Still Ticking?
Hands Across the
Internet: How Nonprofits Reach
Out Online
The School Leadership Crisis: Have School Principals Been Left Behind?
Also in this issue:
Without Precedent The Inside Story of the 9/11 Commission
Past Issues:
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Hands
Across the Internet: How Nonprofits Reach Out Online
It’s noteworthy that, according to a report by Craver, Mathews, Smith & Co., the fundraising consultancy that Roger Craver founded, online donors “give significantly more money on average; they appear more loyal in their reported giving behavior; and they indicate different giving interests than offline (i.e., non-online) donors.” Yet the report also notes: “The vast majority of donors have yet to make an online contribution. Online penetration is greatest for political campaign giving, disaster relief, and issue advocacy.”
That means outfits like Network for Good have plenty of room to grow. As things stand, Network for Good’s budget this year is just $4.2 million, and while the three percent fee it charges takes care of transaction expenses, it does nothing to support the organization otherwise. Andresen says the organization needs to earn an additional one-to-two percent of the donations it takes in to cover its costs. To keep itself afloat, Network for Good asks donors to consider giving some extra to help sustain the operation and, Andresen says, 25-to-35 percent do so. Also, Network for Good is able to charge some nonprofits for providing services beyond the basic “donate now” button. Thanks to its merger with Groundspring (www.groundspring.org), another nonprofit service venture, which was established by the Tides Foundation and is funded by Carnegie Corporation as well as others such as the Ford, W.K. Kellogg and Surdna foundations, Network for Good offers customized donation buttons and help with managing donor communications. In the fall, it will launch a web-based donor management function to help nonprofits do targeted outreach to donors.
Strathmann says the goal is to achieve self-sufficiency by 2008. “We’re very much about being a sustainable organization,” he notes. In the interim, Network for Good has been supported by Carnegie Corporation, the Kellogg Foundation and others. AOL also provides help by hosting the organization’s web servers.
Voluntarism: Another thing the Internet excels at is helping supply and demand find one another. VolunteerMatch is a great example; it’s like Network for Good, but instead of making it easier for people to donate money, VolunteerMatch (www.volunteermatch.org) makes it easier for them to give time. At last count, in fact, the organization has made more than 2.5 million volunteer referrals, and was offering more than 36,000 volunteering opportunities on behalf of more than 40,000 nonprofit organizations. VolunteerMatch, which says it is the largest online network of its kind, exploits the well-established power of the Internet to bring buyers and sellers together, except in this case the transactions aren’t commercial. It reported that in 2005 its nearly 500,000 member volunteers gave an average of 86 hours of their time in volunteer service.
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Although VolunteerMatch still relies on some foundation support, in 2005 it took in $1.2 million, or 41 percent of operating revenue, from corporate partners and sales. The great bulk of that was from corporations; VolunteerMatch has helped organize voluntarism programs at such major companies as Charles Schwab, Dell, Gap, Merrill Lynch, Microsoft, Nike and Verizon. At Dell, for instance, VolunteerMatch has helped employees get involved in community service projects, and since the year 2000, Dell employees have responded to more than 5,000 volunteer opportunities nationwide. VolunteerMatch and Dell have also extended their efforts to Dell employees in Brazil and the United Kingdom. Although most of VolunteerMatch’s earned revenue comes from corporate partners, the $1.2 million also includes $89,000 from such fee-based services as “Multi-Zip,” which helps nonprofits recruit more effectively at the city, county, state, and national levels.
Political action: Mobilizing people around a cause is yet another of the Internet’s strengths, and this is the one that MoveOn best exemplifies. Because of federal election and nonprofit law, MoveOn consists of two main organizations: a 501(c)4 nonprofit membership organization called MoveOn Civic Action, which advocates for political causes through the media, and MoveOn Political Action, a federal political action committee, which spends money to help elect candidates to office.
MoveOn grew out of a 1998 Internet petition launched by Joan Blades and Web Boyd, Silicon Valley software entrepreneurs without political experience who were dismayed by the impeachment of then-president Bill Clinton. The petition called for Congress to “Censure President Clinton and Move On to Pressing Issues Facing the Nation.” Hundreds of thousands of Americans signed on within days, clearly demonstrating the power of the Internet for organizing people around a cause. “We’re definitely a product of the medium,” says Eli Pariser, head of MoveOn. “You simply couldn’t communicate on a daily basis with three million people, without spending a fortune, before the Internet.”
Pariser points to the business-world distinction between “clicks and mortar” operations such as Wal-Mart, which operate both traditional stores and growing web sites, versus “pure plays” like Amazon.com, which exist only on the Internet and have no physical store that you can visit in person. Pariser observes that MoveOn is firmly in the latter camp, and the organization’s viral growth is in keeping with how word spreads online. Virtually all MoveOn’s members, Pariser says, joined as the result of hearing about the organization from other members. That’s in contrast to the pattern for more traditional organizations, which might buy a list of likely suspects and try to recruit new members by direct mail.
The relatively low cost of communications on the Internet means that MoveOn can sign up members who don’t give a dime, and hope that they ante up later. In 2005, according to MoveOn’s web site, it had 3.3 million members but only 125,000 of those donated money, giving a total of about $10 million to MoveOn Political Action, where the overwhelming bulk of the money goes. The average donation was $45, Pariser says, noting that some people made more than one donation.
Information: If by lowering costs the Internet opens the door to all kinds of new nonprofits, how are donors to sort through this growing profusion in order to distinguish the worthy from the unworthy? The Internet itself offers at least the beginnings of a solution, thanks to such web-based nonprofits as Network for Good and GuideStar. The former will do the screening for you, but the latter provides donors with free access to information they can use in judging the legitimacy of a charity for themselves. The need is clear: American individuals, estates, foundations and corporations gave an estimated $260 billion to charity in 2005 according to the Giving USA Foundation, which tracks such things. At the same time, the public has come to hold a dim view of charities as the result of a series of pay and spending scandals, controversy over the disbursement of funds in the wake of the 9/11 terrorist attacks and the feeling that money may not have been used efficiently following Hurricane Katrina.
GuideStar, which makes available the federal Forms 990 that charities must file in lieu of traditional tax returns, offers donors a chance to find out what a given charity pays its CEO, for instance. GuideStar’s information is used by donors large and small, journalists and the charities themselves, many of whom supplement their 990 data with additional information. By shedding light on the financial reports of charities, GuideStar also strikes a blow for credibility by increasing transparency. The 990 forms have long been public, at least officially, but thanks to the Internet—and GuideStar—charities can no longer count on the “practical obscurity” of this information to hide their doings.
Like Network for Good, GuideStar too is focused on achieving self-sufficiency, no small task given the labor-intensive nature of what it does. While GuideStar offers free Adobe Acrobat images of the 990 forms, it also offers (for a fee) aggregated data from the forms served up in innumerable ways, and getting this data into usable form has meant an awful lot of keyboarding. GuideStar is working with the IRS to try and get this data submitted electronically in the first place, even going so far as donating some software code for this purpose. Nonetheless, in 2005 GuideStar managed to obtain about half its budget from sales of one sort or another, and in 2006 it anticipates getting 60 percent from sales of products and services and just 40 percent from philanthropy, according to Debra Snider, GuideStar’s vice president for communications and nonprofit relations. Bearing in mind that GuideStar got just two percent of its revenue from sales in 2001, that’s a big change.
Just what does GuideStar sell to bring in all that money? Extra-fee services include GuideStar Salary Search, which lets paying subscribers access a vast database of nonprofit salary information; GuideStar Grant Explorer, which lets grantmakers and grantseekers search for grant information by a variety of criteria; GuideStar Analyst Reports, which cover thousands of nonprofits complete with comparisons to peer groups; and GuideStar for Professionals and GuideStar for Grantmakers, which offer resources to help lawyers, donors and others with due diligence and research.
In addition, GuideStar offers custom data services, providing information carved to order for customers who pay thousands of dollars for it. GuideStar is even selling electronic data to the Internal Revenue Service. Financial services firms are also prominent customers; GuideStar’s data can help them market their services precisely to those segments of the nonprofit market who might be most in need of them and able to afford them.
Snider reports that GuideStar now has roughly 1.5 million charities in its database, including recently added membership organizations such as AARP and the National Rifle Association. And in the first five months of 2006, she says, the site garnered 3.1 million visitors, up from 2 million in the same period a year earlier.
International aid: Yet another of the Internet’s strengths is its ability to obliterate borders. One of the most creative Internet-oriented nonprofits with international aims is kiva.org, which has brought an interesting twist to the growing movement toward Third World microlending. Through the power of the Internet, Kiva (www.kiva.org) makes it possible to lend small sums of money to a specific borrower—a Third World entrepreneur who might want the capital to expand a grocery store, buy more fabric for making clothing, obtain a pig that can be resold later at a profit, or for any of countless other commercial enterprises. (Kiva is Swahili for “agreement” or “unity.”)
Founded by Matthew and Jessica Flannery in California, Kiva started in 2005 by funding zero-interest loans in the Tororo section of Uganda, where it had Moses Onyango, an experienced local pastor, on the ground to perform the labor-intensive task of finding and screening borrowers and then providing some minimal training in business. This is not typical banking; applicants were assisted in filling out a form that asked such questions as, how often do you eat, do you sleep in a bed, and do you own a blanket. “We have the poorest of the poor here,” says Onyango, who knows the region and its people intimately. A loan from Kiva, he says, “changes their lives so, so much.”