Philanthropy, the eBay Way

When eBay’s Secret Santa Gift Exchange launched today, the site’s front page offered a new surprise: one-click donations to Unicef, Toys for Tots and American’s Second Harvest. “It’s an exciting new platform for cause marketing and fund-raising,” said eBay director of consumer promotions Julie Haddon,” and the holiday season is its first big test.”

Two years ago, McKinsey consultant William F. Meehan III called on charities to use the Internet as a proxy market for allocating and optimizing resources. “The Internet could provide instant access to financial and performance data, to thorough evaluations of nonprofit groups, to comparisons with other groups in the same sector or geography, and to donor-transaction analyses,” he wrote.

Easier said than done, believes Tom Watson, CIO of Changing Our World, a New York company that consults with donors. “Not-for-profits are several years behind corporations in how they embrace and use technology. They’re generally not as streamlined and productivity-conscious.”

Non-profits also require specialized software. They have their own accounting rules; they take money in, but don’t ship goods in return. Another problem is a difficulty with processing donations of goods. That’s where MissionFish comes in. The three year-old company aimed to solve the problem by running online auctions of donated goods, then turn the money over to the charities that had received them. “We were, in a lot of ways, the eBay for non-profits,” said Sean Milliken, executive director of the Washington, D.C.-based non-profit, now part of the Points of Light Foundation.

MissionFish had the same problem as a lot of smaller publishers: traffic. In March, it began working with eBay to create and manage its charity fund-raising program. THe Giving Works software it built went live on November 5, allowing anyone who sells on eBay to designate a percentage of the proceeds to one of the 1,400 charities registered with MissionFish. MissionFish closed its own auctions to focus on its eBay partnership. The company maintains the charity database and vets proposed auctions and sales. Once it’s matched an item with a charity and obtained approval to for a sale, it inserts the information into the item description and hands it off to eBay, which handles the auction or sale. MissionFish takes $3 for each item it processes.

Today, Phase Two of Giving Works went live. Links at the bottom of the Secret Santa pages allow visitors donate cash to featured charities. “Secret Santa is a one-time event,” Milliken said, “a creative way of using the mechanism we’ve put in place.”

Many national charities now accept donations through their Web sites. Toys for Tots, Unicef and America’s Second Harvest each feature “donate now” buttons. GuideStar provides a searchable Web database of organizations. But eBay’s Giving Works is the first automated marketplace for donations.

It’s also an awesome marketing tool. “Working with eBay increases the visibility of Toys for Tots and links us up with a major business endeavor and a corporation of enormous visibility itself,” said Lt. Gen Matthew T. Cooper, USMC, the charity’s communications director.

Washington, D.C.-based Toys for Tots spends no money on promotion, relying on corporate sponsors to get the word out. “eBay has up to 7 or 8 million people coming to their Web site a day,” said Major William J. Grein, Toys for Tots vice president of marketing and development. “The math says that if just a small percentage decide to make a contribution, we should benefit dramatically.”

eBay should do well by doing good. It’s already extended its reach from person-to-person auctions to direct sales to branded stores. Giving Works taps into a new market. For donations made on the Secret Santa Gift Exchange, the auctioneer treats Unicef, America’s Second Harvest and Toys for Tots as sellers, collecting the standard fee of from 3 to 7 percent from the charities. If eBay can tap into just a small percentage of the more than $183.73 billion that individuals donated to charity last year, it will have a very happy holiday season indeed.