Actually, zero-cost transactions are only the beginning of Google Checkout. It also makes micropayments very feasible. And I think all the smart readers out there can imagine the opportunities afterwards. You’re right on this Dan, nonprofit business models are going to have to change but I’ve seen very little open discussion about this because most nonprofit fundraisers don’t tend to be very experimental in their fundraising strategies. I’ve discussed it a little bit here on this blog but few seem to grasp the possibilities. I know a few nonprofits don’t charge anything at all for credit card transactions, Kiva is one, the nonprofit I run, socialmarkets, is another. However, I don’t think anyone has really exploited the potential of zero cost transactions.

When 501c3s sign up for a Google Checkout account, they are required to email or fax their 501c3 paperwork, which Google verifies (presumably by a look up in Guidestar). Then, the email that the organization used to setup the account is matched with the 501c3, so google can (presumably) take a tax break on the transaction.

In other words, Google verifies all nonprofits that sign up for accounts through the 501c3 fax/email process….the result of this process is what I want to verify via api.

So, if a nonprofit wants to use my nifty XYZ donation service that creates fun widgets on top of google’s donation checkout, then I can take their 501c3 number or their email address for the google checkout account and pass to the google api which returns a “Yes! this is a valid nonprofit google checkout account”.

The problem with widget-based donations becoming freely available (i.e. no % deducted from the donation) is that a third party always has to 1. process the transaction through a money-making % per transaction service and 2. verify that the organization is indeed a 501c3 and not a front for some crazy person trying to dupe people out of money.

The development foundation triangle if you will of this process:
Donor
Myspace(ie)
Donation Widget
WYSIWYG Widget-making
3rd Party Verification/Processing
Payment Gateway/Shopping Cart/501c3 Account Signup

Outfits like Network for Good or Causes eat the cost of the bottom 2 layers (on top of the coding for the widget-making software), which is why they have to charge for their service as a percentage of every transaction.

Well…Google is eating the bottom 2 layers. They have an api out for the bottom layer…now we need an api for the result of the 2nd layer. Then, anyone can create widget-making software for donations, and completely circumvent the per transaction % cost.

Google benefits from tax deductions, marketing, and of course, sign ups and increases in the market share of users (over paypal and others)…nonprofits benefit b/c the cost of donations becomes essentially 0 per transaction (Wired article was fantastic – Kudos to Chris Anderson) and thus the business model of accepting donations will have to change to software as a service subscription or advertising.

This would be great if it could exist but does Google have the right data to perform this check reliably? I don’t think they have a database of all nonprofits, just the ones that have signed onto their system. My guess is that they would have to rely on Network for Good or Guidestar for more thorough list. Those two orgs are the only ones who have it down to an API and they serve as this kind of authentication mechanism for numerous startup online donation aggregators. Personally, I’m not sure if I would rely on a check of e-mail as an authentication mechanism since it’s so easily spoofed. There’s no other way this can be done?

On the google 501c3 verification….I dont think it’s that big of a deal. We can already access limited information about a seller through google check out, why not just make the same information available for a nonprofit…..here’s the problem. If I want to create a widget that allows an organization to widgetize their googlecheckout process, I want to make sure that no random persons are pretending to be xyz society. So, a simple process of me submitting a verification check on an email, and it returning a 501c3 number registered with that email address (or not found) would ensure that the organization is indeed who they say they are…that would be huge, and should be pretty easy to do since google tags all checkout accounts as nonprofits with a gmail address.

Are you saying that Google AdWord campaigns are going to be interrupted every quarter by Google’s manual verification that the ad variations you’re creating don’t go beyond the terms of the Google Grants agreement? To be honest, I didn’t know that that would be the case for people using Google AdWords. I haven’t gotten my Google Grants yet but I’ve been gathering lots of regular AdWords experience. I know on the paid-for side of Google AdWords you can roll out ad variations like crazy without any vetting. I’ll check and see if this is actually what Google is going to do.

Also, it would be helpful if they would abandon the grant option and allow developers like myself write code to allow nonprofits to launch/manage adwords campaigns…not have them checked out every quarter.