Social Networks

Philanthropy: Causes, the Socially Conscious Network


On an October visit to Taiji, Japan, Leilani Münter captured the killing of 15 dolphins on video. The professional race car driver, who lives in North Carolina, uploaded the clip to Causes, a website that's become the online hub for Save Japan Dolphins. The video got more than 10,000 views in three days and inspired people around the world to contact Japanese embassies in their hometowns to complain.

Founded in 2007 by political activist Joe Green and former Facebook President Sean Parker (yes, that Sean Parker), Causes uses social media tools to virtually connect thousands of charities with their supporters and potential donors. The Berkeley (Calif.) company began as one of the first applications on Facebook and now serves as a broker for 119 million charitably minded users. On Oct. 18, Causes announced a $9 million round of venture capital investment that will allow it to add more software engineers to its 16-person workforce. "I view these guys as the modern social revolutionaries," says Marc Benioff, chief executive officer of Salesforce.com (CRM), who invested in the latest round of financing. "If they were born in the '60s, they would be protesting the war. Instead they're trying to change the world through the Internet."

Not just the Internet. Causes is about to enter the offline retail market with $25 and $50 gift cards. The cards, which allow giftees to donate to their choice among thousands of Causes-affiliated charities, will be available in all California Safeway (SWY) and Vons supermarkets by yearend. Causes won't make money off the cards, but hopes they help build awareness of the brand outside of Face-book, says Parker. "This could be a successful gift card, and a successful gift card usually does a half-billion dollars" in total annual payment volume, Parker says. That's an ambitious goal: Causes says it currently facilitates about $1 million a month in donations.

The aim of the startup is to encourage more charitable giving through digital means. "Charity is this huge opportunity because it is large and it's a system that has a lot of problems," says Green, 27. Bill Drayton, founder of Ashoka, which advises socially minded entrepreneurs, says the financing system for nonprofits is "one of the biggest bottlenecks holding back change in the world." Causes, says Drayton, is "part of a wave of experimentation" trying to make giving more efficient.

Americans donate $263 billion a year to charities, but only 5.7 percent of that is given online, according to the Blackbaud Index of Online Giving, which tracks fundraising. Many charities still rely on expensive, inefficient direct-mail and telemarketing campaigns to spread their message and solicit donations. Ettore Rossetti, director of Internet marketing for Save the Children, adds that most current donors are middle-aged or elderly. He sees Causes as a way to reach the next generation. "We better be in sync with the tools they use to communicate," he says.

Parker, 31, says Facebook and other online networks are much better than offline methods for "leveraging social capital between people to get things done in the world." One of Causes' most successful services, for example, is its birthday application. Through it, Causes has raised more than $7.6 million by encouraging users to ask for charitable donations instead of gifts on their birthdays.

The nonprofit-focused Causes is a for-profit company and asks users for a voluntary "tip" of 10 percent or more on their donations. It also partners with corporations, which pay between $50,000 and $300,000 for sponsored fundraising campaigns. Causes says it's operating at break even. "For a company like this to be of enduring value, it's best served being a for-profit company," says Scott Sandell, a general partner at venture capital firm NEA, which invested in Causes' latest round of funding. "The profit motive will make it the most efficient possible organization."

The bottom line: Fresh off a new round of investment, Causes hopes to reach more potential donors by selling charitable gift cards in supermarkets.

MacMillan is a reporter for Bloomberg News and Bloomberg Businessweek in San Francisco.

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