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Listen to the podcast: Download audio file (plusthree-final.mp3)
Download the podcast with PlusThree here

Last week, I had an interview with PlusThree‘s Juan Proano. They’re an up and coming CRM vendor coming out of serving as a political fundraising tool. The John Edwards campaign used PlusThree’s software.

If you listen at 8:25 in the podcast, check out the fee structure for PlusThree. It’s not revolutionary but more indicative of the way donations processing fees and per-user licenses are going the way of the dodo — that is, extinct. PlusThree doesn’t charge for e-mail delivery or commission fees. One of the things that always drove me crazy in working out costs associated with operating a CRM was the way fee structures always militated against usage. That is, the more work you did with a CRM, like e-mailing or getting donations, the more you had to pay. PlusThree has a very flat fee structure in that regard. Listen to the podcast for more details regarding the pricing as well.

I think PlusThree has got the right target segment in mind when it comes to their pricing and their software’s capabilities. Databases for a nonprofit’s Web site and for the merge fields needed for e-mail fundraising are finally shared so there isn’t some sort of awkward integration involving .csv files if you find yourself moving your workflow and data back and forth between your Web site and CMS. If you’re looking for an integrated solution that’s pretty easy to alter and don’t have any internal developers to roll your own solution and you’ve got some pretty serious e-mailing initiatives go ahead, I suggest you might want to take a deeper look at PlusThree.

A Google search for “Burma” now turns up the following URLs that users are being directed to within Google Ads on the right-hand side of the page.

www.unicefusa.org
www.WorldVision.org
www.DirectRelief.org
www.FoundationBurma.org
www.charitynavigator.org
www.gfa.org/Burma-Cyclone
imcworldwide.org/cyclone_nargis
doctorswithoutborders.org

The potential for abuse of disaster relief-oriented keywords remains high. Clearly, opportunistic nonprofits could hijack the concern that donors rightly have for Burma and do a quick Google AdWords buy to redirect possible donations to their organization. One could make the case that nonprofits that had made buys on SEO keywords before the Cyclone Nargis hit should be given higher priorities than Johnny-come-latelies. Two of these new organizations, Direct Relief and UNICEF, also have Google Checkout accounts which I believe will lead to discussion as to the “purity” of Google’s presentation of contextual ads for this search. Is Google acting in a self-serving manner if two out of eight charities receiving top positioning for the “Burma” keyword also happen to be users of its Google Checkout service? Lucy Bernholz rightly raises that question in her post on this issue as well.

Although I don’t necessarily agree with the rest of her positions, like the creation of an online stockticker mechanism to track online fundraising (too many structural barriers to that currently), it’s important to note that one does not need to be a megacharity like UNICEF or World Vision to get good AdWords placement on Burma. It could also very well be the case that Google is just allowing the AdWords buys to ride for now without any cherrypicking on its end. You may notice the anomalous nonprofit in the list, foundationburma.org, which is run by the Foundation for the People of Burma. It’s a tiny 501c3 that had slightly under $900,000 in annual revenue in 2006. Clearly, they understood what this could mean in driving their fundraising. Kudos to them.

In this case, the keyword “Burma” doesn’t attract a lot of traffic so max suggested CPC for Burma is $1.25 with a monthly budget of $30. Be aware that these AdWords figures will rise along as more donors seeking to donate to this issue click on these ads. However, for now, for the cost of three tickets to the movies, your organization can be up there next to UNICEF and World Vision. As competition in the AdWords marketplace continues, it’s clear that future disasters are going to require bold action by relevant nonprofits to place their AdWords quickly and decisively. If your organization doesn’t know how to use Google AdWords and serves in a first- or second-responder capacity to crises either international or domestic, you should definitely ensure that Google AdWords knowledge is ingrained within your fundraising staff. This responsibility, I believe, is a good fit for the more business-oriented and math-savvy IT director.

UPDATE: Check out http://www.google.com/myanmarcyclone/. While I’ve touted Google Checkout for Nonprofits in the past (heck I even use it over at socialmarkets), I believe this is a pretty blatant signal that one should adopt Google Checkout if you want premium placement. That said, Google is matching up to $1 million in donations.

UPDATE (5/14/2008 11:42 PM): Google AdWords pricing for “Burma” has risen by 500% as competition continues for the keyword. Google AdWords is now reporting the following pricing for the keyword “Burma”:

Average CPC: $0.68 (at a maximum CPC of $1.25)
Estimated clicks per day: 143 – 182 (at a daily budget of $150.00)

And “Myanmar” isn’t any better:

Average CPC: $0.62 (at a maximum CPC of $1.69)
Estimated clicks per day: 284 – 356 (at a daily budget of $250.00)

Meanwhile, Google Trends is reporting very large increases in searches on both “Burma” and “Myanmar”.

Also, Lucy Bernholz on Philanthropy 2173 mentioned this article as well.

According to sources, Network for Good charges 4.75%, while FirstGiving charges up to 7% in transaction costs to the charities. In other words, only $0.93-0.9525 of each dollar of a donation actually reaches the charity. Network for Good, in fact, doesn’t actually get permission from charities, but rather has an opt-out program if charities do not wish to have Network for Good collect donations for them. According to the FAQ’s on the Network for Good’s website, they send the money on to the charities through electronic funds transfer or a paper check on the 15th of every month.

So, in other words, the Network for Good is taking 4.75% and then holds the money for up to 31 days before moving it on to the charity. Network for Good is itself a non-profit, but those fees and the benefit of that negative float provide serious financial benefits to Network for Good far above the cause to whom the donor actually wanted to provide money to.

As a sidenote, FirstGiving actually charges 7.35%. Network for Good’s transaction costs page is here.

It’s a known practice that online donation processors make a bit of money on the float. I don’t know if there has ever been a discussion of this actually online. Should this practice be ended? It’s hard to say since the case that FirstGiving and Network for Good always makes is that they handle end-of-the-year paperwork related to receipting and tax return information. Also, they have pretty good reporting tools for nonprofits to slice and dice with. The deeper question is whether those ancillary reporting capabilities and built-in business logic is worth the float plus the transaction costs that are passed on to the donor.

Personally speaking, the value of reporting tools and business logic capabilities depreciate in time as other and more capable credit card processors go into the market. My experience with Google Checkout for Non-Profits shows that it’s more than capable of handling those particular needs. I haven’t used Network for Good or FirstGiving myself though so I can’t really speak for them.

On the other hand, when I worked at the Coalition for the Homeless, we used IATS, one of the credit card vendors behind Blackbaud’s NetSolutions. Despite a similarly high transaction fee to Network For Good, it actually lowered our net transaction costs because IATS handled the fraudulent credit card problems we were constantly being hit with and because of the instant integration with Raiser’s Edge.

So in the end, that business case being made is predicated on the ability of FirstGiving and Network for Good’s continuing development of their backend processing tools. However, if other processors such as MPayy and Google Checkout for Non-Profits, with their lower transaction fee of 0% (yes, they’re both free) can provide equally compelling backend reporting tools then it’s a total no-brainer for nonprofits.

It also depends a lot on the maturation level of your nonprofit. I believe that if you’re starting out, MPayy and Google Checkout for Non-Profits are precisely where you should be heading. If you need back-end integration though with an existing system like Raiser’s Edge, you might consider just sticking with whatever Blackbaud solution is around. Ultimately, it’s more than just transaction fees that you have to consider but unfortunately as far as the public is concerned, those fees are part and parcel of your relationship with them. Clearly, the weighting should be towards lowering those transaction costs whenever possible.