High-Tech Giving at Work

Fund-raising federations test new ways to attract donations

Technology-driven innovations that are being tested this fall promise to transform

the operations of United Ways and other fund-raising federations.

Spurred in part by the emergence of a flurry of high-technology businesses hoping to grab a piece of the on-the-job fund-raising market, some of the federations are rethinking and revising their approaches.

The reward for doing so, they predict, will be greater efficiency, cost-effectiveness, and responsiveness to the needs of charities, donors, and corporate employers. By contrast, some observers warn, those organizations that do not overhaul their operations to keep up with the times are dooming themselves to obsolescence.

Among recent developments:

• United Way of America, United Way of Canada, and United Way International are jointly studying how best to integrate the Internet and other new technologies into United Way operations. Local United Ways in five cities will test some of the resulting ideas in annual campaigns that begin this fall.

• Several other fund-raising federations — including Christian Service Charities, Earth Share, Human Service Charities of America, and Medical Research Agencies of America — will offer some 300,000 retired federal workers the option of donating online, starting next week, although traditional pledge cards will also be used.

• Several high-tech companies, including AllCharities, Charitableway, DonorNet, and Givenation.com, have been hired by corporations or fund-raising federations to help conduct workplace-giving campaigns. This fall’s campaign will provide their first real test.

“The 2000 campaign will be a proving ground of sorts,” says Anthony De Cristofaro, vice president for marketing at United Way of America. “A lot of people will be trying different things to see what will work.”

Reason to Worry

United Ways in particular may have reason to worry.

Participation rates in their workplace campaigns have been declining for years, despite steps many of them have taken to give donors more control over where their money goes. Some observers predict that as donors become more accustomed to visiting charity Web sites and making donations online, more and more companies may be tempted to loosen their bonds with United Ways and embrace the services being pitched to them by dot-com companies.

In response, several United Ways and other federations are hiring high-technology companies to handle and update some aspects of their campaigns, while others are trying to beef up their own technological capabilities.

The stakes are high.

“The advent of Web-based technology, if it takes off, has the potential to basically wipe out the middleman” between donor and individual charity, predicts Kevin Ronnie, director of field operations for the National Committee for Responsive Philanthropy.

As companies take over much of the work of processing pledges and distributing donations, he says, United Ways and other fund-raising federations will increasingly be asked to justify their continuing presence in the campaigns — and the fees they charge, which typically amount to 10 to 15 percent of the money raised.

But any fears that United Ways and other federations will be swept away by a tide of online companies are groundless, officials at such federations contend. In fact, they say, the wealth of information available over the Internet will make their role as filters and certifiers of legitimacy more crucial than ever.

“The United Way enterprise isn’t thrown into doubt,” says David Armour, who directs United Way’s Internet Strategies Initiative. “Our key mission of building better communities by increasing the organized capacity of people to care for one another hasn’t changed.”

About 15 local United Ways around North America have been testing interesting models of integrating the Internet into their operations, says Mr. Armour, who remains president of United Way of Canada while spending about 80 percent of his time this year at United Way of America working on high-tech strategies.

This fall, five of the online projects will be selected as pilots, to test which ideas might be best suited for operation on a broader scale.

“Charitable giving on the Internet is an untapped area for everyone,” Mr. Armour says. He adds: “For us, this is a huge opportunity to rethink and retool a lot of the work we’re doing across North America.”

‘Up for Grabs’

But other observers have a greater sense of urgency. “My advice to United Ways has been that the time to choose partners to dance is fast approaching and in some cases may already have passed you by,” says Paul Ostergard, president of the Committee to Encourage Corporate Philanthropy and a former longtime grant maker at General Electric and Citibank. “The whole issue of employee giving is up for grabs at this point.”

Corporations have been steadily making greater use of technology in their giving programs, starting about a decade ago when they began to hire outside organizations to run their matching-gift programs, Mr. Ostergard says. Many of them are eager to switch to online technology, which they see as offering greater options and flexibility to their workplace-giving programs while also lowering transaction costs.

But many corporate executives have long histories with United Ways and may be reluctant to sever their ties altogether, he adds.

“If United Way can make alliances and figure out ways to capitalize on their strengths, they could come out a winner on this,” he says.

Different Approaches

Major corporations are being wooed aggressively by various dot-com companies, all hoping to offer online-giving options to thousands of employees.

DonationDepot, in Tacoma, Wash., for example, is negotiating to handle the workplace-giving campaign at one large local business by using its “intranet,” a miniature Internet available only to its own employees. If the venture is successful, the company hopes to market similar services to other corporations.

GiveNation.com, in Medford, Mass., is offering a somewhat different model. It’s working with the Timberland Company, an outdoor-clothing manufacturer, to develop a page on its intranet that will let its employees make online contributions to their favorite charities year-round, not just as part of an annual campaign. A separate page points employees to volunteer opportunities.

AllCharities is working to help half a dozen Fortune 500 companies better integrate their donation-related services — pledge processing, payroll deduction, and matching gifts, for example — by using sophisticated computer technology.

“We are positioning ourselves to be the Nordstrom of workplace giving,” says David Scholtz, founder and president of AllCharities, by offering not the lowest price but the best service for the money.

Appealing to Retired Workers

The largest of the new entrants into the workplace-giving arena is Charitableway, in Palo Alto, Calif., which has raised more than $40-million in capital and now has some 120 employees. But rather than setting up in competition with United Ways and other federations, the company is contracting to provide them with technical services.

“We believe that the existing infrastructure adds a lot of value,” says Pete Mountanos, the company’s founder. “United Way has 1,400 offices throughout the U.S., which give them eyes and ears in the local community. No amount of automation is going to replace that.”

Charitableway now participates in about a dozen corporate campaigns around the country, says Mr. Mountanos — which is all it can handle this fall, given the size and complexity of the companies involved, and the need to customize each campaign to suit the corporation.

The company is also running the technological end of the Retiree Access Project being conducted this fall by the federal Office of Personnel Management as part of the Combined Federal Campaign. The pilot project involves soliciting gifts from 300,000 people who have retired from jobs with the federal government.

The federations participating in the project expect great things from those retirees.

“Many of them were among the highest donors to the Combined Federal Campaign before they retired,” notes Kalman Stein, president of Earth Share, which raises money for environmental groups. Many of them also are still working, though no longer for the government, he says, and have already paid off their homes and put their kids through college.

Cost Savings

Through online campaigns, charities can achieve savings at all steps of the process. Donors enter data once on electronic pledge forms. There is no need to re-enter the information into computer databases, as is done with the data on paper pledge forms. What’s more, online donors can call up information about charities on the Web or a corporate intranet, and do not require printed materials.

Yet employers that rely too heavily on technology in an effort to trim costs may come to regret it: Many fund raisers predict that companies that conduct their employee-giving campaigns only online will reap little success.

Says Mike Howland, chief executive of Christian Service Charities, Medical Research Agencies of America, Human Services Charities of America, and Share America: “Some corporations around the country have seen that unless you continue to build campaign enthusiasm in other ways, there’s a danger of losing that campaign energy in online campaigns.”

And corporations that decide to run their campaigns without the aid of United Ways or other federations may face additional drawbacks, say some observers. Those intermediary organizations say they play a crucial role in evaluating and narrowing the universe of charities for companies and donors to consider.

“We’ve found that unlimited choice is incredibly confusing to the donor,” says Dan Snare, president of Community Health Charities, in Washington. “Corporations can’t deal with thousands of charities. But on the Internet, you can conduct a search and get back 11,000 hits.”

Indeed, the need for bringing order out of chaos may be greater than ever, says Matthew Howe, executive director of the National Alliance for Choice in Giving, which represents many of the federations that have been created outside the United Way system.

“There’s some anxiety about what this all means and where it’s going,” says Mr. Howe. “But we’re looking at the opportunities.” As for the dot-com companies, he adds, “we’re not too concerned about their running us out of business.”

New Partnerships

Some federations have welcomed the advantages such companies can offer.

America’s Charities, a Chantilly, Va., fund-raising federation that raises money in behalf of some 80 national organizations, has for the past five years been providing fiscal services to a handful of major corporations, including Fidelity Investments, Gannett, Mobil, Sears, and Siemens. Those services include processing donor pledges, reporting results, distributing the aggregated donations, and sending acknowledgements of donors’ gifts.

Last year America’s Charities began working with DonorNet to develop a system called Give@Work, a Web site where employees can give through payroll deduction, as well as by using a credit card or debit card. Corporations can customize the service to include, for example, a different mix of charities in different cities where it has offices.

Don Sodo, president of America’s Charities, says Fortune 500 companies where United Way conducted workplace campaigns last year typically had to wait four months to learn such details as which charities received how much in donor-designated gifts.

“That’s not good customer service,” Mr. Sodo says. “Technology-based campaigns will provide that information immediately — and will also allow employees to be acknowledged immediately for their gifts, instead of waiting four to six months.”

In addition to speeding up the flow of information, technology will trim costs, Mr. Sodo predicts. Give@Work will probably incur expenses of about 2 percent of total gifts, he says, compared with the 10 to 15 percent typically charged by United Ways.

Cost of Waiting

But the charity world will only enjoy such benefits when it adopts the new technologies — which it has been very slow to do compared with businesses, says Janice Kercheville, DonorNet’s president.

“It’s shocking to me how far behind the curve they are in their readiness to invest any kind of resources in an online presence,” she says. “The majority of folks we talk to are waiting to get something for free, not realizing there’s also a cost to that, too.”

DonorNet helps 200 clients in 26 states with electronic fund raising and giving. It has signed contracts with several local United Ways, including ones in Jackson, Miss., and Rochester, N.Y., where a few companies will test Give@Work in this fall’s campaign.

“We’re attempting to go after the distribution system that already exists,” Ms. Kercheville says. “But the concern I’ve had is that the United Way system isn’t quick enough to adopt the technology that’s available. If they wait to try to individually create it at United Ways around the country, they’re going to lose market share.”

What’s more, she adds, “the economy is hot enough and jobs hard enough to come by that more and more non-profits are understanding that they can’t compete for the people they’d need on their staffs to make this system go. So they’ll want to outsource the technology end to companies that can perform it cost-effectively.”

Not surprisingly, high-technology companies have been among the first to embrace online giving, and have developed some sophisticated models.

Dell Computer, for example, uses computers extensively in its campaigns. It offers online pledge forms, with drop-down lists to help employees select groups of charities. Campaign volunteers can download pledge cards, flyers, posters, keyboard reminder cards, and PowerPoint presentations, all of which can be tailored to their particular divisions.

The company began using online pledge forms in the 1998 campaign, which raised gifts from 40 percent of the employees. Last year, the participation rate rose to 45 percent. Because of the company’s growth and the improved participation, giving grew from $850,000 in 1997 to $2.7-million in 1998 and $4.5-million last year.

Such signs of success have whetted the appetites of many corporations for online giving campaigns.

“Corporations have been screaming for this for years, because of the cost-efficiency of it,” says Ms. Kercheville, who used to run the annual United Way campaign in Denver.

Online campaigns also can help promote a sense of common purpose among workers scattered across a far-flung business empire. “As spread-out and global as many companies are,” she says, “this enables them to give their employees something to own.”

Holly Hall contributed to this article.