August 21, 2003 | Read Time: 2 minutes
Network for Good — an Internet site that allows donors to contribute to any charity in the United States — has made a significant change in its operation: Instead of passing the entire donation to the nonprofit group, it has started to deduct a 3-percent processing fee from contributions it handles. The San Francisco organization says that the move is unrelated to the June collapse of PipeVine, the charity that until that point processed gifts made through the site.
The site, which expects to handle $25-million in donations this year, is one of the most ambitious online-giving systems in the nation and one of the few to have survived the shakeout in the technology industry. It was founded in November 2001 by AOL Time Warner, Cisco Systems, and Yahoo. The AOL Time Warner Foundation covered processing costs for donations made to Network for Good’s predecessor, Helping.org, which the foundation started in October 1999.
Ken Weber, Network for Good’s president, says that the fee is necessary to ensure that the organization remains viable.
“The Internet is pretty efficient — more efficient than most mechanisms out there for charitable giving — but there are costs,” says Mr. Weber. “In order to fulfill our mission and to sustain it and extend our services to thousands more nonprofits, we are asking them to help us cover these costs.”
He says that the fee will cover most of the costs associated with the transactions, such as credit-card fees, banking fees, data management, electronic funds transfers, and check writing.
The increasing volume of donations being made through the site was also a factor in the group’s decision.
“We’re a large processor,” says Mr. Weber. “We expect to process somewhere in the neighborhood of $25-million this year, and at 3 percent or so, you can imagine that starts to become prohibitive from a budget standpoint.”
Mr. Weber says that the decision to start charging a processing fee is not related to PipeVine’s closure in June. Last month, Network for Good announced that it planned to pay charities the $2.8-million in contributions that were made through its system but not paid out to the designated recipients by PipeVine (The Chronicle, July 24). PipeVine is now under investigation by the state of California for its handling of donation money.
“We had actually planned to take this step earlier in the year,” says Mr. Weber. “The only reason we didn’t get it implemented earlier is because we had to deal with the PipeVine situation.”
The new transaction fee went into effect August 1. Donors will also be encouraged to add $3 per gift, to go toward Network for Good’s operations.
To get there: Go to http://www.networkforgood.org.
