Proof of Concept: Online Charity Shopping

Thanks to the steadily increasing trend to shop online, a number of so-called 'charity shopping platforms' (also called shop-and-donate or cause-related shopping) have arisen that leverage this growing shopping behaviour by using it to generate donations for good causes. The idea is simple – but does it work? We take a closer look.

Autor*in Anna Rees, 12.03.15

Last minute trips, tablet PCs, a new electricity supplier…almost everything is available to purchase online via countless shops and service platforms. If we would donate as eagerly as we shop, it would help many aid organisations. This is where charity shopping comes in. This concept provides an opportunity to connect online shopping and donations for social good. For aid organisations, it is a form of fundraising, for users, it is an alternative way of doing good – without having to spend an extra penny as the sale price of particular products remains the same.

Making a Pop Online

Here’s how it works: instead of buying goods from Amazon or other big online shops, users can head to a platform such as iGive, Give as you Live, Perkle or another charity shopping portal and select the desired shop and preferred aid organisation that should profit from the transaction. From here, users are redirected to the shop’s page (or in the case of Give as you Live, you can install a browser app) and can shop as normal, with the same prices and conditions they would find if they went direct to the site. For each purchase made this way, the shop pays a commission to the charity shopping portal which then passes it on to the aid organisation. The only difference is that the charity shops do not keep the commission but rather, they donate it directly to the organisations.

What’s behind the commission? Within the framework of so-called affiliate marketing, online retailers pay commissions to anyone that brings customers to them. The amount of these commissions depends on the shop but can be anywhere from two to 10 percent of sale prices. With charity shopping, these ‘middle man’ platforms are obliged to pay a certain percent – mostly between 80 and 90 percent – of the commission to non-profit causes. For example: you want to buy a camera from the website Groupon for 96 USD. You head to Perkle’s list of causes on the Perkle website and see that Groupon is supporting (among other causes) Camp Kesem, a camp assisting children with cancer in the United States. Eight percent of any purchase made on Groupon via the Perkle redirect will be donated to Camp Kesem, while Perkle itself receives a 10 percent commission (a small portion of which also goes to the cause). In our example, 7.68 USD would go to Camp Kesem and 9.60 USD would go to Perkle as a commission. Given that we are talking about percentages, the monetary amount donated naturally increases when more expensive or multiple items are bought. All kinds of charities and non-profit organisations can sign up to these platforms, they just need to prove their non-profit status.

This video explains how Give as you Live works:

Generally speaking, it’s quite a good thing that these platforms are doing, taking already existing marketing budget and directing a portion of them towards good causes. However, the question remains as to whether this concept really works and whether charities really benefit from it.

Proof of Concept

Let’s take a closer look at the numbers and a few examples. PlanetHelp (a platform for Germany and Austria) has been around since 2001 and states that it has generated 68,000 EUR to-date (as of November 2015). Larger organisations like PETA Germany or Médécins Sans Frontières have generated about 5000 EUR via the platform while smaller NGOs usually only generate three-figure sums. iGive, founded in 1997, is one of the stalwarts of this sector and has, according to their website, donated more than 8.4 million USD via their platform. Smaller, domestic non-profit organisations tend to fare better on this platform – among the top earners in 2014 were the National Mill Dog Rescue (which received over 4,000 USD) and the California Clean Money Campaign (which brought in over 2,000 USD that year). Give As You Live (established in 2010) has generated over 6.5 million GBP in donations (an average of 2.5 percent per purchase is donated is charity). AmazonSmile, the charitable arm of Amazon which launched in 2013, donates 0.5 percent of purchases to charity, an amount that has been criticised by various press outlets and organisations.

The overall conclusion is that large differences exist between the platforms and within amounts donated. This may on the one hand be due to sites’ self-promotion. Tools such as Give as you Live’s browser plug-in might help boost charity shopping. Among other functions, the plug-in alerts people which online retailers support their preferred charities.

The main reason behind the the difference in the volume of donations perhaps lies in the fact that donations are mainly initiated by the charities themselves. So charity shopping platforms are not really a self-running method of gaining income – charities must actively promote their involvement with them. Smaller clubs, schools and day care centres have a closer relationship with their members and supporters and may able to use this kind of system to their advantage better than others. Charity shops probably work best in the way that donation platforms work by collecting donations for specific projects that have a concrete start and end (such as installing a new roof at school X) so that the call-for-donations drums can be sounded for an intense, short term period. According to Alexander Clement, founder of German-language platform Bildungsspender (translated: education donor), a Kindergarten is the perfect example for this type of campaign: engaged parents who can be addressed and motivated easily as well as manageable goals that can be quickly reached.

Our Conclusion

Consumption won’t save the world and charity shopping is certainly not a good replacement to donating directy to an organisation or project. Viewed through the lens of sustainability, charity shopping platforms also don’t make much sense, given they are actually an incentive to consume more. But they are an interesting way for people to get involved in philanthropy with little fuss. Therefore: if you anyway shop online at one of the many retailers signed up to charity shopping portals, the small and easy detour via these portals is worth it and you can put your money towards good causes.

There is however one drawback. Premiums that are paid for ordered books or similar products cannot be passed onto non-profit organisations as this would be in breach of the Fixed book price agreement that is in place in some EU countries. In this case, you can decide to make these purchases via charity shops and also support them directly. Or you can support the small bookshop around the corner.

Do philanthropy and consumption mix? As part of a broader analysis of sustainable consumption, we will take a look at charity shopping, the sharing economy and put tech tools that help consumers make more sustainable choices to the test. The aim? There’s a lot of hot air, labels, trends and movements when it comes to ‘going green’ but what actually has an impact and what is just marketing? As part of our latest RESET Special, we are on the hunt for proof of concept – check out all the articles in the series here.

Proof of Concept: the Buy One, Give One Model

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RESET Special: Searching for Proof of Concept in Sustainable Consumption

Do philanthropy and consumption mix? As part of a broader analysis of sustainable consumption, we will take a look at charity shopping, the sharing economy and put tech tools that help consumers make more sustainable choices to the test. The aim? There's a lot of hot air, labels, trends and movements when it comes to 'going green' but what actually has an impact and what is just marketing?