By Zachary A. Goldfarb
Washington Post Staff Writer
Monday, December 17, 2007
The office of Razoo on Connecticut Avenue blends two distinct cultures common in Washington.
It has the feeling of an Internet start-up, what with programmers clicking away, big flat screens, an espresso machine and funky green carpet. Yet the photos on the walls from Rwanda and other poor countries and the 11 employees, age 23 to 33, suggest it could just as easily be a nongovernmental organization.
The combination is no mistake. Razoo is a company that has built a Web site to connect people with one another, much like social networking giants MySpace and Facebook, but in support of humanitarian objectives such as preventing homelessness in the United States and helping families who live in a Nicaragua trash dump. Users and causes each have their own pages.
"YouTube is transforming TV. Google has transformed advertising," said Razoo founder J. Sebastian Traeger. "The Web will do the same thing for philanthropy."
Traeger, who built and sold a previous online venture, is following in the footsteps of several other Internet entrepreneurs who are trying to reinvent philanthropy. They hope to apply the tools of the digital age -- such as social networking and peer-to-peer and viral marketing -- to an industry long criticized for its slow-moving ways.
It's not the first time tech entrepreneurs or Web sites have gotten involved in directing money and attention toward social causes. What's striking about the current movement, though, is how technology and philanthropy are intersecting with the start-up, for-profit culture of the Internet.
Risks abound. The for-profit companies are operating in a nonprofit world. And it's not clear if the hype surrounding their potential will be met by reality. "While the fusion of commercial values and non-commercial values makes sense and has promise, it's not going to be this magical cure," said Jeff Trexler, a Pace University professor who has studied the phenomenon.
"Like with any movement there's going to be a shakeout," he said.
Last week, AOL founder Steve Case's foundation announced it would award $750,000 in grants to charities selected by Internet users. Part of the contest will be administered through a "Causes" application that lets users of Facebook affiliate with and donate to charities.
The application was built by Project Agape, a venture-backed start-up in Silicon Valley created by Sean Parker, a former Facebook president and founder of the file-sharing service Napster, and Joe Green, the Harvard roommate of Facebook founder Mark Zuckerberg.
Others take different approaches. The Omidyar Network, started by eBay founder Pierre Omidyar, invests in for-profits, such as Digg, the social news site, and also backs a wide range of nonprofits. Google created a for-profit company for supporting social causes.
By merging social networks and philanthropy, the idea is that people will be more likely to give money or support to a certain cause if their friends do. The Internet also holds the promise of cutting down on bureaucracy and the high administrative and marketing costs associated with raising money.
Project Agape's Facebook application -- soon to be replicated on MySpace and elsewhere -- shows early signs of success, at least by one measure. Some 10 million people have used it.
An open question is whether this mass of supporters, many of them young, will lead to more giving, said Timothy L. Seiler, director of the fundraising school at the University of Indiana's Center for Philanthropy. "I think people are joining to be part of a group and that's the primary motivation," he said. "The primary motivation isn't to be philanthropic."
On Facebook, the biggest group created through the "Causes" application, benefiting cancer research at Brigham & Women's Hospital in Boston, has attracted nearly 2.9 million members. They've given slightly more than $52,000. A group supporting the Alliance for Climate Protection has generated $17,000 from 1.5 million members.
Another question is whether the for-profit companies can find a sustainable business model.
"People in the public and especially our users are really sensitive to somebody making money," said Matt Flannery, the founder and chief executive of Kiva.
Kiva, a not-for-profit Web site that connects lenders with people in poor countries who need tiny loans to start businesses, has received plaudits from former president Bill Clinton and talk-show host Oprah Winfrey. Kiva asks lenders to make a contribution to the site at the end of the lending process, though it is not required.
The for-profit Web sites note that big corporations pay millions to associate with certain causes, opening up possible advertising and sponsorship opportunities. But for now, many claim not to care much about making a lot of money.
"We're not prioritizing revenue. We're prioritizing the product and audience," Traeger said.
Traeger, 33, who came to the Washington area after graduating from Princeton, sold Christianity.com to Salem Communications for $3.6 million in 2005.
A year later, he connected with several like-minded investors who wanted to back a Web site like Razoo. The name is a New Zealand term for a small coin; Traeger likes to say small contributions, when combined, can add up to great value. The site mainly focuses on networking but still needs to integrate fundraising and other functions. With about 20,000 members, the site has yet to achieve critical mass.
"We originally thought, 'We will build it and they will come.' That definitely took too long," Traeger said.
So Razoo has given about $20,000 in grants to charities who assemble the most members on the site.