Yes

Anne-Marie Huby

Managing Director, JustGiving

To raise funds, charities have to spend money. On average, UK charities spend between 15p and 25p to raise £1, to cover costs such as press advertising, marketing services, postage and printing. They incur these costs with no guaranteed returns, which makes professional fundraising a rather risky business and one that is out of reach for most small charities.

The internet is beginning to change that. Charities have services that do it all: let their supporters spread the word, capture donations, process Gift Aid, transfer funds into charity bank accounts, and provide support to everyone along the way. For this they pay a low transaction fee on donations — 5 per cent in JustGiving’s case.

Not only do charities raise more money as a result, but they receive the money faster and reduce their administration costs dramatically. As Bryn Parry, chief executive of Help for Heroes, puts it: “A 5 per cent fee on donations is reasonable. When we set up the charity, we considered doing this ourselves and soon realised that it would cost us more.”

Online fundraising services have democratised the process. Now the smallest charities have access to the most innovative services and latest technologies, without spending a penny of donors’ money upfront. When we launch a feature or service, such as a Facebook application or a payment method, every one of our charities gets it, at no extra cost.

Like all organisations, charities should concentrate on what they do best — whether it is researching a cure for cancer or fighting child poverty — and outsource everything else. To build a robust and complex technology platform for fundraising is costly and risky. To remain at the cutting edge requires continual investment, specialist talent and an absolute passion for technology. That is what companies such as JustGiving dedicate themselves to providing.

Charities recommend us to their supporters because they consistently raise more through our site than any other method, net of our fees. Our users tell us that much of the £530million they have raised for charity on our site to date would not have been donated without our service. Ten years on, we continue to reinvest our profits in to the business to expand and improve our service. If we did not charge a fee and generate a surplus, who would pay for the research, development and production of those tools and services that will enable charities and their supporters to raise money at low cost for many years to come? Our fees are the most sustainable and equitable way of enabling that investment.

Yes, charities still have to spend to raise money. What is new is that the risk of doing so is no longer theirs to take, and their costs have been smashed. Those who care about the way charities spend their money should welcome the innovation and investment that online fundraising companies have brought, and continue to bring, to the charity sector.

No

Ben Brabyn

Managing Director, Bmycharity

There is no such thing as a free lunch. If someone provides a service then someone, somewhere bears the cost. Charities and businesses alike cannot do what they do unless someone pays them to do it.

Online giving sites have transformed the charitable sector. They have brought business discipline and modern technology to the process of fundraising. They have raised the number of people who donate, reduced the administrative cost of donations and increased the contribution of Gift Aid, through which tax on donations can be reclaimed. If just 50 per cent of UK sponsorships were performed online, it would deliver an extra £100 million or more each year for good causes. To win that prize, we need to build the reputation of online fundraising and remove the barriers that stop people donating in this way.

If that’s our aim, does it matter that these sites get paid? No. But does it matter how these sites get paid? Absolutely, and for three reasons.

First, people expect and deserve transparency. Too often, donors are surprised to hear that up to 5 per cent of their donation has gone to website managers. Many don’t realise these are the terms, although the information is available on the site. Others feel the cost of processing a £500 donation is no more than the cost of processing a £5 gift. Where’s the equity in a 5 per cent or even 2 per cent charge?

Second, people have an emotional reaction against commission. Many people feel there is something untoward about the commission model. They are reluctant to give because of the commission.

Third, the online giving sector has a moral and commercial imperative to deliver as much of each donation as it can to the charities on which it depends. Taking a percentage of each donation is taking money from good causes. Perhaps that could be justified if there were no other way to pay for the service, but there is. And the cost of running the sites is falling all the time.

Bmycharity has developed a commission-free model through which every penny donated to a charity gets to that charity. Through commercial partnerships and sponsorship we are able to provide a service to other companies — exposure to a discerning and value-driven audience — for which they are willing to pay.

Many good causes have benefited from the emergence of online giving. But nine years after the first sites appeared, online giving represents only 20 per cent of the market. Every good online fundraising site should look to change its business model and break down the barriers to online giving. And every good charity should have an eye on the additional donations and Gift Aid that can be delivered by a more transparent charging system. The commission model has passed its sell by date. Whichever service you use to make your donations, you should call for a commission-free approach and do your bit for the good causes you support.

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