Bring Light or Bring Fees
by Michael HoffmanWednesday, May 30th, 2007
Today at the NetSquared conference a new online social network for charitable giving launched called Bring Light. Bring Light joins an increasingly crowded field of sites trying to change how we give and get more people to donate money, volunteer and otherwise get involved with organizations.
Some of these organizations are nonprofits and many are for-profits companies trying to figure out how to make a business out of doing good — which you know I am all for. What I am not all for is hiding important information about how you operate. For example, I am not really happy that Change.org is a for-profit with a .org extension. Call me old-school, but I think the dot-orgs should be for the orgs and not for businesses.
I think Bring Light is starting off on the wrong foot this way as well. It takes a little digging to figure out that they are not a 501(c)3 charity but rather a business. I am all for them being a business — and I will say it again — I am all for it! We are also a business in service to nonprofits. But they are not clear about how all of this works.
From their site:
How does Bring Light make money?
Bring Light was founded to provide a more efficient and cost-effective way for charities to realize the promise of web-based fundraising and connect with new donors. Traditional fundraising methods are expensive and often do not generate a high return. For example, a direct mail campaign entails design and production fees, printing and postage costs, etc. And since a very small percentage of people respond (typically less than 2%), much of those costs are wasted. On Bring Light, charities pay a service fee (on a sliding scale, but never more than 10% of funds raised) after their project has been funded. We also offer optional services (such as online fundraising and marketing consulting) that charities may purchase if they desire.
10%… Holy Moly. Change.org’s fees are maybe in the 4% range. Changingthepresent.org’s are less than that. 10%?? Wow. Now, is this less than it might cost you for direct mail? Sure. Is it less than an event might cost per dollar? Sure. Is that the point? I don’t think so. If this is found money for a charity it might be OK, I guess, but that fact that there are lot of other sites with much much lower fees I think makes me wonder whether donors and organizations are better off going elsewhere. If I am a donor, why not hang out at a site that offers similar functions but gets more of my money to the charity.
OK… It gets worse. If they want to charge 10% and they are upfront and clear about it, no problem. If someone wants to pay it, fine. But it is buried in a place a regular user will not likely see. And then came the email.
I donated $10 to what is surely a great cause and then I got an email acknowledging my gift. In the email it said:
“American Endowment Foundation collects donations in the Bring Light Donor Advised Fund. Based on your recommendation, AEF then assembles grants to the charities that you selected on www.bringlight.com. When a project is complete, 100% of the funds raised are granted to the charity.”
On their help page, above where it says they charge a 10% fee — it says:
How much of my donation goes to the charity?
100% of your donations go to the charity.
Hmmm. Which is it? 10% fee or 100% of funds raised granted to the charity? This is terribly misleading. 100% of my donation goes to the charity. Later, the charity gets charged 10%. So… really 90% of my donation goes to charity.
Guys, you have to clarify this and quickly.
The innovation at Bring Light is the ability to put money in a donor-advised fund. Similar to the funds of Fidelity or community foundations, a donor-advised fund allows the giver to get immediate tax benefits of a donation but to distribute the money to charities over time. Another question this raises that is not clear is what happens to the carry on this money. My guess… the American Endowment Foundation that manages this takes a piece and shares a piece with Bring Light.
In another post I will offer a run-down of all of these sites with some notes on each.
May 30th, 2007 at 9:41 pm
Hi. I’m Drew McManus, co-founder and President of Bring Light, Inc. Thanks for your interest in Bring Light and for making a donation to one of our charities.
I’d like to respond to some of your feedback. First off, it is certainly not our intention to be misleading. We hope that our language is not confusing, and we are open to suggestions on how to be more clear.
The way the system works is as follows: When a donor gives on Bring Light, 100% of the amount charged to their credit card goes into the donor advised fund at American Endowment Foundation. And when those dollars are granted to a charity’s project, 100% of the amount is given to the charity. Separately, we charge a service fee to the charity based on the funds they have raised on the website. This service fee is determined by a sliding scale, and never exceeds 10%. You are right to make the comparison to running a direct mail campaign or other fundraiser–in those cases, the charity gets all the money you give to the them, but they have also spent money to reach you. The advantage to using Bring Light is that there is no up front risk (you only pay based on money you raise), and that the efficiency is high and gets higher as you raise more.
I’ll also note that AEF is not charging any fee for their service (neither to us or to the charity), and we do not have any type of “share” arrangement with them.
It’s true there are other sites out there, but there are significant differences. Many of the other sites are simply directories of 1M+ charities that allow you to process a donation. Bring Light is a community where all the charities are present because they have chosen to be, are available to engage and interact with donors, and are raising funds for specific projects. It is also a place for donors to interact and band together in support of causes that are important to them. For donors, we are bringing the benefits of a donor advised fund to donors who might not otherwise qualify.
Thanks for the interest. We are always looking for feedback, and we will look at our FAQs to ensure we are as clear as can be about how it works. Please feel free to contact me directly if you have other questions or suggestions for us.
Drew
May 30th, 2007 at 10:06 pm
Drew - thanks for the clarification. Its great to hear the other side of the story.
May 31st, 2007 at 11:00 am
Drew — Thanks for the response and being upfront about it. I am very encouraged that these initiatives have been growing. It will be interesting to see how organizations and individuals react to the fees and whether individuals can take advantage of the donor-advised fund opportunity.
June 1st, 2007 at 9:41 pm
You mention www.ChangingThePresent.org, so let me describe the way it works.
ChangingThePresent.org is the website of a 501c3 nonprofit.
The total transaction fee at www.ChangingThePresent.org is just 3% and 30 cents. That goes primarily to pay the cost of processing the credit card transactions. It is about the same as the nonprofit would pay if it processed a credit card donation on its own site.
The nonprofits are mailed a check the end of the month following the donations (to protect against chargebacks). They do not have to wait until some amount is raised. They do not have to pay fees in advance of receiving their money.
The information and photos describing the hundreds of nonprofits and the thousands of specific donation opportunities are provided by the nonprofits, themselves. The nonprofits have signed an agreement that they will spend the money for the purposes designated by the donor.
The group behind ChangingThePresent brings extensive expertise and deep credibility. The Board of Advisors includes the heads of the heads of over 125 prominent nonprofit organizations, such as Sierra Club, Sesame Workshop, Save the Children, Global Fund for Children, United States Fund for UNICEF, Rainforest Alliance, Ashoka, Grameen Foundation USA, Lance Armstrong Foundation; International AIDS Vaccine Initiative, and Family Care International.
Other nonprofits that are interested in participating are encouraged to visit the site and register.
June 2nd, 2007 at 7:19 pm
Drew — the enormously misleading part is that, if I decide to donate to a charity, it seems that the charity is going to have to pay a fee for that donation. I understand likening this to direct mail or some other fundraising effort, but I’d be much happier to cut a check to the charity directly and avoid these crazy fees. I get the idea of donating through a third party — there are features that make giving fun and more of a community effort. However, I’d be just as happy to use a site like Changing the Present to do the same thing and bear the cost of a minimal “donation fee” myself.