Is Mobile Fundraising the Next Frontier for Charities?

Amnesty International and UNICEF have experimented with mobile Paypal as well. Donors simply text the word “amnesty” or “water” to a short code to receive a link to donate $10 to their chosen organization. A potential donor needs a PayPal account to make for a smooth and quick transaction, however, and even then there is a multistep process that might deter potential donors.

At Text for a Cure, you can make a donation and get messages from breast cancer survivors. But the site reveals the actual cut for the charitable effort: For a $5 donation, the actual amount received by the charity is only $2.10; that is, more than half of the donation is eaten up by various charges.

Premium SMS is the easiest way to raise money over the phone by billing charges to the customer’s bill, but it clearly has shortcomings for nonprofits. The initial idea by the carriers was to sell entertainment, not causes. Maintaining a short code is expensive — $500 per month for a basic short code and about $1,000 for a vanity short code, if you want to maintain your own code. To make this process easier, however, many mobile vendors maintain short codes and up-charge their nonprofit customers a small portion for the use of a shared code.

The other drawback is the limit that carriers will let a donor give via premium SMS, currently capped at $10. Carriers also hold the money for premium SMS donations up to two months before releasing the funds — once the customer’s bill is paid.

Last, the carriers take a substantial cut of the donation — as much as 40 percent to 50 percent. There are several mobile vendors who have been trying to allow for much reduced charges for legitimate charitable purposes, but so far to no avail. It is worth noting that the carriers waived their fees for the Red Cross relief campaigns.