willopad wrote:Elizabeth, Thanks for your reply. I have no doubt that JustGiving represents one of the best and most cost-effective ways for charities to collect donations. However I'm still concerned by two things: 1 - where do the profits end up? (shareholders' pockets?) 2 - wouldn't a fixed commision per donation, rather than a percentage, be more representative of your costs and fairer to the donors?
The problem I have with the arguments given by justgiving is that they fundamentally miss the point. If Justgiving was a non-profit organisation there would be two big benefits:
1) Justgiving wouldn't have to charge VAT on their fee and would benefit from other tax breaks that charities can use; and
2) The residual money ("profit") would go solely towards the good of the charities and the activity of developing the Justgiving site.
This statement from your post above is a complete contradiction: "We became profitable a little while ago and our profits are re-invested back into Justgiving. We do believe in a fair profit for all our constituents: from board members to employees to charities. "
You can't say you are doing both! You are either reinvesting all the profits in the busines, or your are distributing the profits by way of donations, bonuses to staff or dividends to shareholders.
Furthermore 'fair profit' is quite a different concept to reasonable remuneration. Reasonable remuneration is what charities pay their staff by way of salary. A fair profit would be how you decide to divide up the profit between those that have a 'stake' in the organisation if not simply giving out dividends to shareholders.
If Justgiving can confirm that this statement is true "We became profitable a little while ago and our profits are re-invested back into Justgiving", for example by confirming that there have been no distributions (dividends) to the shareholders of Justgiving, then I would be very, very surprised. But if it is true, I don't understand why Justgiving would not make use of the tax breaks available and incorporate as a non-profit company limited by guarantee.
In short, individuals involved with Justgiving appear to be profiting personally from charitable donations. It might not be illegal (as it is clearly stated what fees Justgiving charge) but I think it is a pretty grotty thing to do.
All things being equal, a non-profit organisation set up to rival Justgiving would be able to charge a lower fee and ensure more money goes to the charities.
The accounts filed at Companies House would reveal dividends to shareholders but not much else - private ltd companies are just that - private (as those who are used to looking at Balance Sheets and P&L accounts know all too well).
I don't understand why Justgiving wouldn't work as well as a non-profit organisation - what exactly would be lacking? Investment could have come from the charitable sector by those that you claim to represent - keeping the profits within the charity sector. If investment really had to come from the private sector then there are plenty of structures that could have been implemented that allow for good rates of return on the investment (by way of a loan) and yet ensure the organisation benefited from not-for-profit status.
Perhaps if justgiving are happy to be completely open about this, maybe they could publish some of the information they file with Companies House on their website? I'm sure the public would love to know what the rate of return on investment was for the shareholders of justgiving!
Hi,
For what its worth I would like to add my twopeneth to the debate....
I can see where you are coming from Scedwar and think you are raising some interesting and valid points however, personally I dont see that 'profit making' and 'charitable' endevours cannot co-exist. I think that in reality, rewarding and motivating individuals or organisations for their ideas, excellence, skills, committment and innovations will often result in the best and importantly the most sustainable results. I think that Justgiving has been particularly groundbreaking and innovating in the services and systems they provide for both charities and said charities' supporters and as long as they continue to do that, and continue to increase fundraising opportunities, there is nothing wrong with their business model. Indeed I would congratulate any company that can rise to the difficult challenge of being ground breaking, provide real benefit where it is needed and run profitably.
Certainly since we have been using justgiving we have managed to do more fundraising for our chosen charity than we have ever done before. It just makes the donations side of things so simple and the additional and streamlined giftaid process is great... which means we can now focus 99% on coming up with the ideas, doing the training and carrying out our actual fundraising activities. Our charity is benefiting more than before, we are having fun and I am glad that justgiving has broken into profit as long as their employees are being fairly rewarded.
Charlamain
However with this level of success comes the reasonability to remain open and honest to all parties involved (charities, fund raisers and donors). So I think justgiving should consider being more open on the roadmap for the future.
which brings me on to my question......
The discussion above has been focused on the 5% commission charged by justgiving and the resulting profits and where they go and what they are used for. However no-one has picked up on what happens to the interest earned on the donations (unless I've scanned the above posts a bit quickly and missed something). So my question is a similar one to the question posed about profits - what happens to the interest earned on donations (before they are paid to the charities), is this distributed to the charities? or does it feed into justgivings (or ultimately Giving Limited) balance sheet?