Is Mobile Fundraising the Next Frontier for Charities?

The numbers speak for themselves: There currently are 236 million cell phone users in the United States — an astounding 76 percent penetration. In December of last year alone, 18.7 billion text messages were sent — up 92 percent from 9.7 billion in December 2005. Estimates predict 195 billion text messages were sent in 2007 — that is 600 million a day.

Fundraisers and nonprofits are salivating at the prospect of reaching all of these people where they are, at the moment they’re moved by a cause and are able to give — with a few simple flicks of their thumbs.

Mobile fundraising for worthwhile causes is, indeed, beginning to make headlines. So what is the truth behind the hype? What can fundraisers and nonprofits promoting a cause do and expect as results, and what creative ideas have gone untapped so far?

In America, the most visible and widely publicized campaigns have been so-called premium SMS (text messaging) campaigns for disaster relief, notably after the Asian tsunami, hurricanes Katrina and Rita, and the California wildfires. Customers of participating mobile carriers could send a text message to the short code “2HELP” (24357) containing the keyword “Help” to make a tax-deductible donation to American Red Cross relief efforts. Short codes often are referred to as the “mobile URL” — short, five-digit codes or even vanity codes that customers can text to receive information or participate in a campaign.

These donations via premium SMS then appear on customers’ monthly bills or are debited from prepaid cell phone account balances.

The city of New Orleans tried a different route: It worked with PayPal, which has a mobile option to raise cash via text and online. The “Text to Give” campaign was slated to raise $1 million, but the actual amount raised fell far short of that goal.

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.

So what is an enterprising nonprofit to do? How can the ubiquity of mobile phones be leveraged for a just-in-time contribution when a potential donor is inclined to give — say, upon seeing a particularly effective advertisement or appeal? Even though premium SMS is only marginally viable for micro donations or to build a mobile list (and should not be underestimated for this purpose), there are other ways in which nonprofits can think creatively about integrating cell phones into fundraising campaigns.

Internationally, there are many clever examples of innovative fundraising campaigns:

* Meir Panim, a network of soup kitchens in Israel, recently ran “SMS for Lunch,” a promotional interactive campaign: Its Web site featured the image of a boy with an empty plate and invited visitors to donate through SMS. The moment the system received the SMS, the banner changed: The plate filled, and the boy smiled. The amount of the donation — each SMS — covers the cost of one meal for a child, according to the site.

* In Australia, a special exhibit called “The Human Zoo” — an experiment that places humans in animal zoo enclosures — allowed visitors to vote by text messaging for their favorite human beings, with the proceeds of the premium SMS going toward the construction of a new enclosure (for animals, presumably).

* Amnesty UK is experimenting with a digital wallet, a service of a mobile company called LUUP. Using LUUP allows more money and larger amounts — up to £800 — to go to the human-rights organization instead of the network operators.

In addition to LUUP and mobile payment providers such as mobile PayPal, organizations are experimenting with mobile Internet sites, also called WAP sites, where people with WAP-enabled phones can interact with the charity and make donations, as well as purchase ringtones, games and wallpapers.

Others, such as the New York Philharmonic, are selling ringtones for use on multimedia phones through their Web sites.

Mobile content is a useful awareness-raising and, to some extent, fundraising tool, but most nonprofits will have a hard time generating the PR or viral buzz to make it worthwhile to develop and provide mobile content, which can be technically challenging.

The times are changing, however, and mobile payment services will become increasingly available — and not just in Japan or Africa, where mobile payments are easy and fast. M-Pesa in Kenya is one of the better known m-payment services that allows mobile pre-paid customers to transfer airtime between phones. In fact, airtime is a de facto currency in an increasing number of countries and, as such, is a potential source of revenue for local NGOs. For example, before leaving a country, tourists could be encouraged to donate what is left of their airtime to a local cause.

In the United States, Obopay allows a user to authorize payment from a pre-paid account via SMS. Similarly, one can imagine authorization via SMS for a credit card on file, especially when the donor’s information is firmly integrated with the NGO’s customer relationship database. With Visa (and already Western Union) entering the mobile space with a vengeance, mobile payments are not far off in the United States.

The most promising way to raise money right now using mobiles probably is the old-fashioned way — by using the voice feature. John Edwards’ presidential campaign, through its vendor Mobile Commons, sent everyone on its mobile list (those individuals who had opted in to receive text messages by signing up at events or on Edwards’ Web site) an SMS asking participants to listen to a special message from Elizabeth Edwards. Those that made the call (15 percent of recipients on the mobile opt-in list) then were directed to press “1” to be connected to an operator to make a donation. About 10 percent of those 15 percent did — with an average donation of $120.

While the sample was small in this case, interactive voice response systems activated via mobile and phone donations show definite promise and can motivate a person to give (and in considerable amounts just in the moment he or she is engaged in a cause — and without having to forfeit small proceeds to a wireless phone company).

It’s a mobile revolution, and nonprofits are well advised to pay attention to it — for campaigns, for keeping constituents and members informed and engaged, and most definitely for fundraising.

Katrin Verclas is with MobileActive.org, a global network of people focused on the use of mobile phones in civil society. www.mobileactive.org