Click to Donate? Not So Fast

SAN FRANCISCO (05/02/2000) - Your intentions are good. You'd like to donate to a charity. But you're busy, and you can't find the time to identify and research a worthy cause.

You are not alone. The biggest inhibitor to charitable activities is a lack of information, according to a study released last week by Roper Starch Worldwide.

The survey found that 84 percent of respondents were not confident that the organization was putting donations to good use, and 76 percent said they didn't have enough information about an organization's goals.

The Internet can help. Web sites have popped up promising to cure just about every problem that ails society today--from feeding the hungry and fighting homelessness to saving the rain forests and curing cancer.

But while the Internet gives you quick access to these organizations, how can you be sure that their claims are true? There is virtually no regulation of charity Web sites, and there likely won't be for some time.

Unregulated on the Net?

Charities are regulated at the state level, with organizations required to register in the states in which they intend to solicit donations. But on the Internet, it is virtually impossible to know where your site will reach. No organization exists to oversee Web-based charities, and although there are several organizations offering guidelines, including the Federal Trade Commission, there is no enforcement organization.

So, while the Internet has the power to make charities more accessible, it also is more susceptible to fraud. How can you make sure that your charitable donations find their destination?

There are four primary ways to do good deeds through the Internet: donating directly to a charity through its Web site; donating to a charity through a third-party organization that filters donations to charities; shopping at so-called "charity malls" that send a portion of the proceeds to a certain charity; or by "clicking to donate"--simply click on a site and view ads, and the advertisers donate money to charity for each page view their ad receives.

The click-to-donate charity model originated with The Hunger Site, founded by a private Indiana citizen in mid-1999. It allows you to click once a day to make a donation and view the sponsors' ads. Word spread so quickly that the site's founder soon quit his job to work full-time on the Hunger Site. In February 2000, Greater Good, an organization that also runs a charity mall, took over the site.

The Hunger Site is the most popular charity site on the Web; it was the only charity site that was reported on the Neilsen/NetRatings traffic report for March 2000. In order to be included on this list, a site needs to generate at least 126,600 unique visitors. The Hunger Site had almost 1.1 million unique visitors in March.

Success Spurs Imitators

The success of the Hunger Site has not gone unnoticed, and not surprisingly, the site has spawned many imitators. Care2.com started a similar campaign to save the rain forest. At its site you can register, click once a day, and track your impact on the rain forest. Sites now offer similar campaigns for homelessness, cancer, and other ailments. But while the sites may sound alike, the ways in which they donate can differ greatly.

The Hunger Site and Greater Good do not make any money off the click-to-donate feature, says Katherine James Schuitemaker, executive vice president of marketing and sales for Greater Good. Greater Good invoices the advertisers, who cut checks directly to the United Nations World Food Program, she says.

But other sites may take a percentage of the donations. FreeDonation.com, for example, which allows you to click to fight cancer, AIDS, and homelessness, as well as to support the arts and education, keeps 20 percent of the revenue that advertisers pay and sends the rest to charity. The amount is to cover administrative costs, says Dr. Jennie Hwang, the cofounder and acting chief executive officer of FreeDonation.com.

In addition, FreeDonation.com does not immediately tell you which organizations are receiving the donations; you have to click a link to view the list of organizations in each category. Doing so tells you that when you click to "support the arts," you are specifically supporting the Cleveland or the San Jose Ballet.

Direct Donation

To know exactly where your money is going, donating directly to a charity through its Web site could be your best bet. You know the organization to which you are donating, and the money goes directly into its hands.

That doesn't mean, however, that there aren't risks.

Just like shopping, making donations online requires using your credit card. If you are wary of this, many sites have a number you can call or an address to which you can send a check. If you are using your credit card over the Web, you'll want to check the site's security and privacy policies.

"Know exactly who you're dealing with," says Dan Lanagan, the director of public information at the National Charities Information Bureau. "Click on the FAQs, About Us, Privacy. Make sure all of your questions are answered."

Another danger is sacrificing your privacy. "You have to consider how your information is used. Do the sites you go to sell lists of donors?" asks Michael Nilsen, the public affairs manager at the National Society of Fund Raising Executives. Check with the organization for their policy on how this information is used, he recommends.

Third-Party Help?

When a charitable organization doesn't have a Web site or the ability to accept donations via the Web, a third-party organization may be able to help you get the money to the charity of your choice. Givenation.com, Givetocharity.com, and Helping.org are examples of these third-party sites. Shine.com, a new Web site, offers a similar service, with links to charities to which you can donate. This site also offers news on charities and the issues that donors can face.

While these sites can help you connect with your charity, you also need to know what you are getting into. You'll want to find out whether these (often for-profit) sites are taking big commissions off the money that you donate, and where exactly the money you donate is going. Are you donating the money directly to the charity, using this site only as the connection, or are you donating the money to this for-profit organization, which then in turn donates it to the charity for you? While the charity still gets the money (minus a possible commission), you don't get the tax break--instead the site that sent the money for you can take the tax deduction.

"You need to talk with the Web site provider. You always want to ask for written information," says Nilsen.

Charity Malls: Shop Until You Drop

If you already use the Web for shopping, online charity malls are an easy way to donate. With more of them appearing all the time, you have a choice among numerous charities. The malls work by donating a percentage of your purchase total to a charity of your choice. Online retailers may pay a commission on your purchase, and a percentage of that commission goes to charity.

You'll want to take the time to find out just how much of that commission is going to charity, warns Pete Mountanos, the chair, founder, and chief executive of Charitableway.com. "Web sites may pay the mall 15 percent, but the mall may only send 5 percent of that to charity. There's a big range in how much is actually going to charity," he says.

And with more of these "malls" popping up every day--NCIB's Lanagan estimates that one new mall appears each week--it's worth the time and effort involved to do a little research.

Beware of Scams

Fraudulent charity sites have not been discovered in any great numbers, but that doesn't mean they don't exist. One recent scam site was set up after the Alaskan Airlines plane crash earlier this year.

After disasters, people have an immediate reaction and want to make donations, the NSFRE's Nilsen says. And while the Internet offers the value of fast access, speed can also be one of its biggest downfalls.

Many people heard of the plane crash and logged on to the Internet to make donations. Some who did so ended up falling victim to frauds. "A couple" of sites that purported to be accepting donations for this cause were actually scams, Nilsen says.

"People want to donate now, but waiting a week and taking the time [to get written information] will have the same effect," he says.

So, while the Internet offers speed and easy access to many charities, taking the time to research your cause can ensure that your money gets to the right place.

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