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09-26-2006, 23:58 willopad Joined on 09-26-2006 Posts 2 JustGiving commission It makes me uncomfortable to think that JustGiving is taking a chunk out of everyone's donations and making a profit out of it. Yes, I know it costs money to keep a site like this running but I'm sure it's nowhere near 5% of the total that passes through. Do any of JustGiving's profits go to charity or is someone rapidly becoming a "dot com millionaire" thanks to people who think they're donating to charity? Take for example the guy who donated £50000 to the Richard Hammond/Yorkshire Air Ambulance campaign. By my calculation JustGiving got just over £3200 out of this! Surely no-one could claim the company did anything to deserve that much. I'd propose either a capped commission, or a flat rate of, say, 50p per donation.    Report

09-27-2006, 10:14 elizabeth@justgiving Joined on 09-29-2005 London Posts 217 Re: JustGiving commission Dear Willopad, Thank you for your post regarding Justgiving's fees. Your concerns surrounding our transaction charges are both valid and welcome, and I hope the reasons given below will provide the answers you seek. The cost efficiencies that online fundraising and email communication affords, which are the cornerstone of our service, enable charities to fundraise at costs that are the lowest ever experienced in the voluntary sector.  We provide highly sophisticated web technology to charities, thousands of whom would not be able to afford it otherwise, and firmly believe that our transaction fee represents exceptional value for money: our 2,000+ charity clients are a testimony to this. The fact that, even after deduction of our fees, charities receive around £12 for every £10 donated represents a huge saving to charities in time and cost.  The value we provide includes: automated donation processing, automated Gift Aid reclamation  (unheard of before we did it), remittance of funds weekly (unheard of in the charity sector before we came along), an extremely sophisticated online reporting system for charities that provides data in real-time (unheard of in the charity sector before we came along), an Inland Revenue audit trail which has to be maintained for at least 7 years, and, not least of all a free help desk fielding all charities' online supporter enquiries via telephone helpdesk manned by a real live person (not provided by a single other competitor since it is so expensive). Let me give you a real example: You may remember the TV programme "The Boy whose Skin Fell Off".  The charity (a very small charity) called us help a few days before the programme was due to be broadcast. Within hours of the call, we were able to create a page ready for online donations. It subsequently handled £4,000 worth of individual donations in under 2 minutes of the programme ending (and several tens of thousands of pounds within hours).  Not only does this give you an idea of the robustness of our systems, but, on the charities own admission, these were donations which would simply have been lost since the charity would not have been able to cope with the demand, by telephone or otherwise.  If the charity had hired a telephone call centre to cope with the demand either they would have underestimated the demand or, if not, it would have been impossibly expensive since telephone call centres are so expensive. In addition, processing the donations & reclaiming Gift Aid for all contributions to this small charity's fundraising appeal page would have placed a severe strain on their resources. There are 2 further points you may wish to factor into your assessment of whether 5% is too high a fee or exceptionally good value for money.  First, you may be aware that fundraising costs in the UK charity sector average about 25% (though this does vary from one organization to another), and therefore a medium such as Justgiving which costs 5% represents excellent value, especially for smaller charities with limited manpower.  Secondly, very few charities (especially the smaller ones) are able to reclaim Gift Aid on all eligible donations.  Quite a few simply do not bother. Others will tell you it's not worth their while to reclaim Gift Aid on gifts of less than £10-£25.  That is principally why something like 60% of Gift Aid remains unreclaimed every single year and continues to swell the coffers of the Treasury. A large charity client did a comparative analysis of their Gift Aid reclaim rate and ours in order to determine whether they were receiving good value from our services. Their reclaim rate was less than 50%.  Since ours is always 100% (thanks to our automated systems) you can guess what the conclusion was, and why we continue to increase our client numbers by over 100 month on month.  Let the customer decide, is what we maintain here at Justgiving.  There is enough competition after all.  We offer the lowest credit card fees online: 1.4% since our volumes are so high.  We have competitors who charge slightly less than we do.  Yet we remain the leaders in this field by a very large margin. I hope this in some measure addresses your point, but if you’d like to discuss any aspect of our service please do get in touch - you can reach us at community@justgiving.com. In any event, thank you for using Justgiving. Warm regards, The Justgiving team *Elizabeth K* Justgiving Usability and Design elizabeth@justgiving.com Justgiving    Report

10-01-2006, 3:59 willopad Joined on 09-26-2006 Posts 2 Re: JustGiving commission 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?    Report

04-20-2007, 22:21 Kavey Joined on 02-14-2007 Posts 31 Re: JustGiving commission I must admit, when I first came across the justgiving site a few years back I was a little affronted by the idea of a profit being made on it. Especially when it was clear that this profit was big enough to support the salaries of quite a few people not to mention generate a profit for shareholders too. But on reflection, I think something can be wholly positive from a charitable standpoint AND a legitimate profit-maker too. At the end of the day a huge proportion of the money collected using this site is money that simply would not be collected at all otherwise (and I'm not even getting into the gift aid aspect there). I know that in this day of long distance (even international) friendships and email communication that many of us fundraisers wouldn't see many of our potential donors in person to ask let alone collect. It's not just lip service to mention the fact that many charities simply could not accept online donations without justgiving - it's true. Even those that can accept online donations do spend a fair bit of the money generated just to market themselves and their website as well as paying staff to man phones, to look after their website, to organise fundraising events and so on. As has been said, a much bigger chunk of every pound raised by even the most efficient charities goes to costs than it does here at justgiving.com. And let's add into this the fact that many people wouldn't bother getting sponsored if they had to physically go around collecting the money in person and badgering people to pay up. It's a lot of hard work and time - I know as I used to do it that way when I was a kid - same as a lot of you here, I'm sure. I don't think it's fair to judge it on the back of one or two larger donations or to restrict it to flat fees only. What you have to remember too is that there aren't many people altruistic enough to put in the sheer volume of time and effort that has made this site what is today if they aren't going to get paid for it. And even if they wanted to, most couldn't afford to put the time in and make a living to support themselves at the same time. If justgiving.com did not make enough money to pay decent salaries and generate a profit for investors it simply would not be the thriving organisation it is today. I truly believe that. And I don't work for them. I don't know anyone who works for them. I haven't even met anyone who works for them. Or invests in them. I haven't even had this conversation with any of them.    Report

05-20-2007, 16:59 Jimmy Joined on 05-20-2007 Posts 2 Re: JustGiving commission  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? I would also like to hear a reply from justgiving regarding this (it was asked about 6 months ago). According to your website you have helped raise over £150million. So with your 5% deduction that equates to over £7.5million for yourself. Now, £7.5 million in my opinion is probably well over and above the costs involved in the setup of the site and staff wages etc. So what do Justgiving do with these massive profits?, and don't you think a smaller percentage is more appropriate in order to give the charities more money?    Report

05-21-2007, 10:06 simon@justgiving Joined on 10-03-2005 the quiet side Posts 61 Re: JustGiving commission whoa, so in your opinion Jimmy, what are the costs involved with setup, salaries, rent, marketing, processing and everything else?    Report

05-21-2007, 21:32 Jimmy Joined on 05-20-2007 Posts 2 Re: JustGiving commission That's kind of my question to you. Is it 7.5million? If so then fair enough, if not then where do the profits go? I'm not trying to be funny, it's a reasonable question to ask a charitable organisation where their profit goes when I'm sure a lot of people who sponsor someone through your site may not know where the cut you take goes, or even that a cut is being taken at all.    Report

05-22-2007, 9:52 simon@justgiving Joined on 10-03-2005 the quiet side Posts 61 Re: JustGiving commission well without sending you to sleep with pie charts and colourful graphs, the short answer is yes! 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. The overall goal is always to help people raise more money than they ever thought possible, so investing in technology and the right people helps us to achieve that. The clearest explanation of how this all operates is in our 'about us' section which you can find here: http://www.justgiving.com/Statements/about_us/about_us.asp It's absolutely a reasonable question to ask social enterprises where their profit goes, as it is equally fair for donors to ask how their money is spent, which has lead to websites like intelligentgiving.com to appear. Any more questions then let me know!    Report

07-13-2007, 15:04 scedwar Joined on 07-13-2007 Posts 2 Re: JustGiving commission 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.            Report

07-13-2007, 18:08 elizabeth@justgiving Joined on 09-29-2005 London Posts 217 Re: JustGiving commission Hi Scedwar, Thanks for your interesting post. I don't think we are planning to become a not for profit organisation anytime soon. If we did, I would suspect that we honestly wouldn't be as good at raising money for charity. I'm sure you can find out more about our finances at Companies House, but just to give you an idea, this year we have been re-paying our investors and, like Simon said, reinvesting in technology and hiring. I think we've got nearly 10 new members of staff for 2007 so far. To be perfectly frank, if we weren't a for-profit organisation with some really good investment I doubt we would exist at all. We all feel proud that we've been able to help raise over £150 million for charity - and raising even more is our prime motivation. If we wanted big salaries and bonuses we'd go work in the city! Kind regards, Elizabeth *Elizabeth K* Justgiving Usability and Design elizabeth@justgiving.com Justgiving    Report

07-16-2007, 10:26 scedwar Joined on 07-13-2007 Posts 2 Re: JustGiving commission 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!    Report

07-31-2007, 23:33 Charlamain Joined on 07-31-2007 Posts 3 Re: JustGiving commission 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    Report

04-09-2008, 11:55 Fraky Joined on 04-09-2008 Posts 1 Re: JustGiving commission As I'm sure everyone does I truly believe that justgiving is a fantastic way for individuals to both easily raise and donate money to charities, and judging by the number of charities and individuals interacting with justgiving, not only is this a fantastic way of raising money it's a highly successful solution to fund raising. 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?    Report

04-14-2008, 16:44 pj22 Joined on 04-14-2008 Posts 2 Re: JustGiving commission I too feel very uncomfortable about this charge. It leaves a very bad taste to me. Why shouldn't I give direct to the charity and cut out the middle man? I'm sure many people simply aren't aware that this 5%  is being lopped off their donation. Yes, I know it's on the website, but how many people are actually aware of it? It doesn't seem terribly obvious to me. I feel really naive in saying this, but it really never occurred there was a profit motive behind this when I first gave money.    Report

04-14-2008, 16:58 pj22 Joined on 04-14-2008 Posts 2 Re: JustGiving commission p.s. Wouldn't it be fairer if -- when you click to give, say, 100 pounds -- a message came up to say that, in effect, you're actually giving 95 (minus other card charges) and Justgiving is getting 5?    Report

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