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Charitable Giving Is How These Firms Make Their Living

Written By: D. Geller
Published On: December 15 1999

Event Summary

In order to gather new customers, many consumer commerce websites create affiliate programs. If a person starting on your website clicks through a link to, say, Amazon.com and makes a purchase, a percentage of the purchase price will be sent to you.

A number of companies are trying to make a business out of giving those affiliate commissions to charity. While many of these companies keep some of the affiliate commissions for themselves, two, 4Charity.com and CharityMall.com, guarantee to donate one hundred percent of the affiliate commissions to charity. The charities in this case include both nationally recognized charities and community-based endeavors such as PTA's and churches or synagogues.

A user must first register with the site. After that the user is free to select any of the charities known to the site as the one to receive affiliate commissions that accrue to the site from her surfing. Users must begin their shopping trips at the CharityMall or 4Charity web site in order for the site to be recognized by the vendor as the referring affiliate. This is the only way that the designated charity can receive the affiliate commission.

4Charity is the older of the two. It was started in 1998 by Scott Dunlap, a student at Stanford Business School, to take advantage of affiliate commissions from Amazon.com. In a recent announcement the company stated that Mr. Dunlap would donate all of his stock in the company to charity. As an example of the value of a charity site like these, 4Charity allowed Internet shoppers to raise money for the Special Olympics (via the affiliate commission paid by Amazon.)

CharityMall had previously existed in a form where the merchants paid the charities directly. However, many vendors had minimum limits for the size of the checks they are willing to cut. Therefore, after being purchased in July 1999, the company began taking the new approach of collecting the affiliate commissions directly and then allocating them to charities according to the preferences of each member. To ensure that the charities get their proper share of each purchase, users are requested to use a special e-mail address, assigned by the site, when they purchase from an affiliated vendor. In this way the confirmation notices for the purchase will pass through the charity site and can be used to reconcile accounts with the merchants. All such mail is immediately forwarded to the user's real mailbox. CharityMall CEO Greg Hesterberg pointed out that the company uses many security procedures to protect all user data. He also explained that a user can choose whether to have their name forwarded to their charity of choice. Independent IT consultant Thomas Mendelsohn, an advisor to CharityMall, notes that since its relaunch in October the amount that the company has been able to donate to charities has increase tenfold.

Both companies attempt to raise their own revenues by selling sponsorships, and from certain bonuses such as for bringing new buyers to a vendor that are different from the affiliate commissions. 4Charity also earns revenues from offering services to corporations, and selling advanced Internet tools to nonprofits. Each company almost 150 participating vendors. CharityMall shows the size of each merchant's affiliate commission with the list of merchants, while 4Charity provides a separate area with this and other information about each merchant.

User Recommendations

Both companies appear to be legitimately taking advantage of the way that business is done on the Internet to benefit the non-profit sector. Since each user can choose how to allocate the funds received in her name, we recommend that information about these companies be promulgated throughout your company. Not only can this help bring more money to worthy causes, many of the vendors pay higher commissions when affiliate sites achieve certain levels of referrals, so that bringing in more users has a multiplier effect on the amount that goes to the various charities. It's an easy way to do some good.

 
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