By Megan Greenwell
Washington Post Staff Writer
Friday, December 19, 2008
While holiday shoppers combed the aisles for the perfect gift, Janella Franklin agonized over whether a close friend would rather support the Nature Conservancy or the Denver Zoo. She had settled on a charitable donation as her friend's birthday present, but the options seemed endless. Finally, she turned to that time-tested fallback option: the gift card.
Long the exclusive domain of retail stores, gift cards are quickly becoming a major source of holiday donations to nonprofit groups. The Bethesda-based nonprofit Network for Good offers "Good Cards," which can be applied to any of the 1.5 million registered charities in the United States. The group sells 500 a day, a number chief executive Bill Strathmann expects to grow through the holidays.
Corporations are also getting into the game: The country's largest mutual fund, Fidelity Investments, began a program this month that allows clients' friends and family to donate to charity with e-mail gift certificates.
"This year, largely due to the economy and people's own money concerns, consumers are looking for ways to be thrifty and generous all at once," said Lucy Bernholz, president of Blueprint Research and Design, a philanthropy advisory firm that publishes a blog on the business of giving. That two-for-one desire has led to what she calls "good gifting," of which the cards are just one example.
The charitable gift cards aren't much different from their more established cousins in the retail sector, which are expected to account for $24.9 billion in holiday spending this year, according to the National Retail Federation. There is no comparable data for charitable gift cards.
The giver goes to one of at least half a dozen Web sites, pays a small transaction fee and chooses a recipient and gift amount.
Recipients receive either an e-mail or a plastic gift card directing them to the site, where they can browse different charities, then apply the gift to a favorite. The gift can be split among several groups. The system sends an e-mail to the gift-giver with information about where the recipient donated the money.
Pleased with her friend's reaction to the birthday gift, Franklin, a nonprofit development director who lives in Washington, bought charity gift cards for everyone on her Christmas list.
"With everything going on with the economy right now, I didn't want to give material gifts that wouldn't have meant anything to them," Franklin said. "I could bake them cookies or something, but this is a way to feel like they're giving back too."
In past years, "good gifting" generally has meant giving a donation in someone else's name, such as through Heifer International, which sends livestock to poor families around the world. Several umbrella nonprofit groups publish guides to other organizations that encourage donations as gifts.
The gift card program is a natural evolution of that idea.
"I feel like it's a little presumptuous to give in someone's name to a group that I choose; it could be a little awkward if you give it to someone who doesn't support that group," said Heidi Henry, who gave gift cards to her 25 classmates when they graduated from a master's program in nonprofit administration at Seattle University last week. "It's more personal than a gift card to a store because it actually aligns with something they care about."
Strathmann said the concept of charitable gift cards has become a successful example of embedding philanthropy in people's daily lives. Nine of 10 Americans identify as "conscious consumers," according to research by branding firm BBMG, which Strathmann said poses a major opportunity for nonprofit groups on the Web.
"We're going to see more and more innovative ways of giving to charity around the holidays," he said.
The idea for TisBest, the Seattle-based company that sold Henry her gift cards, began when founder Erik Marks was a law student in 1991, but like most other charitable gift card programs, it began functioning on the Web only in the past year.
Marks said the concept probably would have taken off several years ago, but the idea was patented during the dotcom heyday in the early 2000s, and the patent holder, a Texas-based company, sent cease-and-desist letters to anyone who tried to start a competing site. The company no longer sells gift cards, and the patent was thrown out in July 2007, fueling a mini-boom in new Web sites selling the cards.
TisBest began selling e-mail gift certificates last December, then expanded to plastic gift cards this year. Gift-givers can customize the cards with images from the Web site, or upload their own. For close friends and family, Henry ordered gift cards featuring a picture of herself with each recipient.
Strathmann said about 56 percent of Good Card givers send gift certificates via e-mail, either because it's environmentally friendly or they waited until the last minute to send the gift. The average card is worth $50, and some people buy 10 or 20 for co-workers or dinner party guests, he said. The transaction fee, generally between $3 and $5, covers the relatively low cost of running the program.
At Pomco Group, a Syracuse, N.Y.-based benefit management company, all 400 employees will receive a TisBest gift card this year. The family-owned company has always given gifts to employees at the holidays, a tradition that will continue, but its owners also wanted to encourage workers to do something for the community.
"Last year we gave out the gift cards, and the response was unbelievable," said Elsa Steo Pomco's human resources director. "Employees were very touched to know that rather than the company making a donation somewhere, they could make their own decisions."
Unlike the much larger Network for Good, TisBest offers donors a list of about 250 national and international nonprofits. TisBest doesn't judge the "moral quality" of organizations on the site, he said, but staff members review financial documents for each charity before approving it for listing.
Strathmann said most donors go online knowing exactly which group they want to give to. His program, which has sold $1.2 million worth of Good Cards so far, links to Charity Navigator, one of the largest online sources of financial information about charities.
"One of the amazing things is that while traditional giving has remained flat during the recession, online giving has continued to grow" by 20 to 30 percent a year, Strathmann said. "And that has opened up more and more ways to give gifts that are about the recipient doing good."
Charity gift cards are available at http://networkforgood.org/goodcard, http://tisbest.org and other Web sites.
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