Facebook, fundraising

Facebook Credits for Good

10 Comments 26 April 2011

image courtesy of Yes!Online via Creative Commons

Whether you realize it or not, Facebook may be the next big online donation platform. And I think it’s not so far off. With the creation of Facebook Payments, and the new structuring of Facebook Deals, I can envision Facebook developing an online donation platform where donors and nonprofits collect and disperse Facebook Credits, resulting in real-world cash for nonprofit organizations. Here’s why:

Facebook currently owns and disburses a Facebook-only currency, Facebook Credits. If you play a game on Facebook that requires you to purchase virtual goods, you probably have to use Facebook Credits. (“Most transactions within games on Facebook now require that you first purchase Facebook Credits and then go to your favorite game to exchange your credits for the in-game currency,” according to Facebook’s Help Center.) Facebook also pays out the real currency players spend: “Facebook splits revenue from Facebook Credits with app developers, meaning it has to disburse funds as well as collect them.” What’s more, it’s no small market: virtual goods for sale on the site make up an estimated $835 million market.

Facebook Credits for Facebook Deals. Facebook launched Facebook Deals in five US cities yesterday. Soon, you will be able to buy Deals with Facebook Credits. (For the time being, you receive a voucher that you can redeem for the Deal.) However, it really is only a matter of time until kids “load up with Credits with the intention of giving it to Zynga for Cityville crap and end up spending it at The Gap instead,” as ReadWriteWeb noted yesterday.

Facebook is preparing to move into the payment space in a other ways as well. Facebook recently formed a subsidiary, Facebook Payments, which will handle payments to developers related to the Facebook Credits program. According to a Venture Beat article, Facebook insiders say that they want to move into e-commerce. It is rumoured to also want to create an ad network in competition with Google’s AdSense.

The bad, bad news: Facebook takes a 30% cut of of all Facebook Credits transactions. That is HUGE. More like UNreal. A whopping transaction fee (remember all the cries about Jumo’s 20% transaction fee?) would cripple its chances of success. Facebook may think it can create “one platform to rule them all,” but I won’t be using it if it harms the organization to the tune of 30% of the donations.

I may be wrong, of course, but it’s looking to me like Facebook may jump into the online donation space. If they do so, Facebook would be primed to be a nonprofit organization’s dream platform: it knows a LOT about the personal lifestyles of billions of users, and it has expertise handling real-world and virtual currencies.

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  • It’s unfortunate, but 30% seems to be the standard lately — it’s now what both Apple and Facebook are charging. I understand the need for them for them to make revenue and that they don’t want to “vet” non-profits and offer a better deal, but it’s still ridiculous.

    [Reply]

    Debra Askanase Reply:

    Sue Anne – You bring up a really great point about the vetting: If Facebook decides that they don’t want to vet nonprofits, then that is something consumers need to know up front as well. I would add that to the list of “things we’d like an online donation platform to do” if Facebook moves into that sphere. Unfortunately, I suspect that they won’t, and will choose to compare themselves to Google checkout, Amazon payments, and Paypal which also do not vet nonprofits.

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  • It’s unfortunate, but 30% seems to be the standard lately — it’s now what both Apple and Facebook are charging. I understand the need for them for them to make revenue and that they don’t want to “vet” non-profits and offer a better deal, but it’s still ridiculous.

    [Reply]

  • Melinda Lewis

    Thanks for this, Debra–I heard just a bit of a news clip about this yesterday, and your information made it make more sense, even though I’m disturbed by it. Will giving on Facebook happen through “official” channels, even–I mean, I understand that Facebook isn’t going to take responsibility for researching the nonprofits (although it seems like that would be what would make that kind of “take” at least somewhat understandable), but can anyone set up a donation portal, so to speak, for a given nonprofit? It seems like Causes already facilitates that sort of free agent fundraising, and that there could be some concerns about how freelance efforts on Facebook might collide with an organization’s other fundraising AND social media engagement strategies. Also, are there any thoughts percolating about avenues to push back a bit on the 30%–Facebook has certainly shown at other points in its history a degree of receptiveness to user concerns, and maybe there’s some room here, too, especially if nonprofits may not be able to use the platform much given the parallel concerns about “overhead” ratios?

    [Reply]

    Debra Askanase Reply:

    Melinda, lots of good questions. Firstly, Facebook hasn’t announced anything about becoming a donation portal but…as you mention, the information seems to be leading this way. I think we need to be ready to push back on high fees if and when they surface.

    One of the interesting things about fees is that the attorneys general are researching this very issue. I spoke to a group of them in March, along with Amy Sample Ward, and they are really interested in 1.) regulating online donation platforms to protect consumers and 2.) fee percentages. They’re just starting to think about this, and probably would be a good ally in a fight to lower unreasonable fees.

    I’m not knowledgeable about how to set up a donation platform, but I suspect anyone could, but it’s not my area of expertise. I did create a slide deck about how online fundraising happens and the different ways that people can make donations online, so I’ll put that up on the blog next week (good blog post inspiration!)

    [Reply]

    Melinda Lewis Reply:

    Thanks for this, Debra–I’ll look forward to seeing the slide deck on online donations, and I know that you’ll keep us posted on the need for advocacy as this develops, too. Thanks for the follow up!

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  • Thanks for sharing the information that facebook is giving credits to good and it is one of the big online donation platform.

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  • You’re welcome! Facebook isn’t yet a donation platform, but Causes and Jumo are, which use Facebook applications. I suspect Facebook will get into the donation space directly at some point, though.

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  • Michaeljones1990

    What are your thoughts on ark.com? Looks like a facebook app that allows users to donate to causes the funds raised by online surfing and searching.

    [Reply]

    Debra Askanase Reply:

    Hi Michael, Ark.com looks to me like a Facebook app that helps nonprofits raise money through cause marketing. I hadn’t heard much about it but did look into it a bit after your comment. I personally am not sure that it’s going to be a great winner for the nonprofits, as it requires a lot of steps by the donor for every donation. Also, even large organizations like Human Rights Campaign (853K Facebook Fans, but 29 Ark.com supporters have raised only $1.00) aren’t making much money off of Ark.com. That’s not to say they couldn’t, but I don’t think this platform is taking off soon.

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About

Debra Askanase is an experienced digital engagement strategist, non-profit executive, and community organizer. She works with mission-driven organizations to develop digital strategies and campaigns that engage, create trust, and move stakeholders to action. Debra speaks at conferences worldwide on the intersection of technology, social media, and nonprofit organizations.

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