Philanthropy Via Text Message

Jodi Sperber March 10, 2010 Philanthropy via Text Messaging: The Future, or Just a Fad? With four out of every five Americans owning a cell phone, they have become nearly ubiquitous. Originally designed as a means to place and receive calls from anywhere, they have evolved into a confluence of hardware and software capable of interacting with the world around us in ways Alexander Graham Bell likely never even considered when the first telephone was created. While many homes in the United States still contain land lines (i.e., traditional phone wires traveling through a solid medium), more and more individuals are cutting out this service, electing to only utilize a mobile phone. According to recent study data collected by the Centers for Disease Control and Prevention as part of their twice-‐ yearly National Health Interview Survey, over 20% of US households have opted to give up land lines and use only cell phones (Park, 2009). With this in mind, it can be argued that for the majority of people in the US, the cell phone has become an effective tool to get in touch or rapidly transmit information. This extends beyond using our voice and reaches into the ever-‐growing world of text messaging. For further confirmation, just ask the closest teenager; texting now far outpaces phone calls when it comes to communicating. According to data collected by the Nielson Company, teens aged 13-‐17 are 623% more likely to use their fingers rather than their voice when talking to friends (Rosen, 2010). Similar research has supported these numbers (Horrigan, 2008; Lenhart, Purcell, Smith, & Zickuhr, 2010; Page 1

Jodi Sperber March 10, 2010 Yen, 2009). While text messaging is becoming a routine way to communicate among teens, the activity is certainly not exclusive to this age group (Amoruso, Bosanko, & Verclas, 2010; Currie, 2009; Health 2.0," 2007; Stepanek, 2010; Yen, 2009). The sheer penetration of mobile phones in the US market, combined with an expanding wireless network and increasing sophistication in both hardware and software, has led to a host of innovative uses. One area that has seen particular attention in the past six months is the use of text messaging to transfer money. For example, it is now possible to purchase an item or pay an individual using commercial services like PayPal ("Paypal," 2010). On a less commercial note, the recent earthquake in Haiti highlighted the ability provide monetary support to nonprofit organizations to carry out their mission with simple text messaging. Donating money via text is not an entirely new concept, having been used successfully in 2005 to raise $400,000 after Hurricane Katrina and $200,000 in 2004 after the Indian Ocean tsunami that devastated Sri Lanka (Choney, 2010; MacLaughlin, 2010). It wasn’t until the recent earthquake in Haiti, however, that a turning point was reached with text donations, resulting in both a tremendously popular avenue for providing support as well as an emerging controversy within philanthropy circles. The essential question being raised is whether mobile giving is a viable long-‐term strategy to support philanthropic efforts, or if it is just a fad that will not result in increased engagement and unnecessary fees. Page 2

Jodi Sperber March 10, 2010 Public response to the disaster in Haiti provides a useful illustrative framework. When news of the earthquake in spread, the response was swift and massive. In addition to the expected reporting on the aftermath of the catastrophe, news outlets for the first time publicized the ability to make donations using text messaging. This was reinforced across social networks such as Facebook and Twitter, where instructions on how to easily donate $5 or $10 to organizations were shared among peers. In the days that followed, the ability to provide financial support via text messaging was promoted heavily. Both traditional news outlets (TV, radio, newspapers) and newer media outlets (blogs, Twitter, Facebook) encouraged the use of mobile giving. Major nonprofits such as the Red Cross, along with many smaller groups, also encouraged this route, both to increase total cash raised as well as to discourage the donation of goods that provide zero benefit (Assiciated Press, 2005; Durham, 2010; Shaikh, 2010). With a swell of donors providing small amounts, over 30 million dollars was raised in a matter of days to provide relief support (Choney, 2010). While the ease and volume of donating via text message had an undeniable impact, several details of this approach need to be reviewed to provide a more complete portrait of text-‐based giving. By considering the full cycle of text donations, including processing time, fees associated with mobile giving, and systemic limitations, a more informed opinion can be formed to address the question of whether or not this is a viable long term philanthropic strategy. Page 3

Jodi Sperber March 10, 2010 From the individual donor perspective, there is instantaneous satisfaction. For example, if you wished to donate $10 to the Red Cross to support relief efforts in Haiti, all you would have needed to do is send a text message with the word “HAITI” to 90999. A confirmation text would arrive almost instantly, and once you responded in the affirmative a second message thanking you for your generosity would be received. Thus, you would assume that $10 is now on the way to Haiti by way of the Red Cross. Figure 1 illustrates the process, as it would look to a donor using an iPhone. The actual course of action, however, is not as expeditious. Behind the scenes, the following activities take place Figure 1: Sample Text Donation (MobileActive.org, 2010; Stanger & Giorgianni, 2010): 1. You send a text message to your organization of choice 2. You wait for your phone bill 3. You pay your phone bill 4. Your wireless carrier pays an intermediary set up for such funds 5. The intermediary pays the charity you selected When all is said and done, it can take 60-‐120 days for your donation to make it to the intended organization, pending the timing of the billing cycle and how quickly you Page 4

Jodi Sperber March 10, 2010 remit payment. Thus, your full donation amount would make it to its destination as intended; it simply would take longer than you probably anticipated. The reason behind this delay is in fact coupled with the convenience of using text messaging. The steps a donor is spared in the giving process are mediated by two agents previously uninvolved in the giving process: an individual’s wireless service provider and a third party entity established to set up and administer mobile donations. From the donor perspective, all that is witnessed is an additional $10 fee added to their monthly bill, and possibly any associated charges with sending a text message (unless your wireless provider opts to waive fees). If the donor had a prepaid calling plan, the funds would be donated from their remaining balance assuming they had enough funds to cover the donation. As a for profit enterprises, wireless providers want to ensure that the customer pays their bill, including the donation amount. Thus, the donation essentially remains in limbo until the monthly bill is paid. It should be noted that in the case of the Haiti earthquake almost all wireless carriers opted to waive normative fees associated with text messaging, and Verizon Wireless chose to advance the $2.8 million donated by its customers to the Red Cross (MobileActive.org, 2010; Richtel, 2010). In the recent Chile earthquake, wireless carriers have followed a similar pattern of waiving fees, although it is unclear if any have offered to advance funds donated to speed relief efforts. Page 5

Jodi Sperber March 10, 2010 The intermediary handling the administrative aspects of mobile giving also requires monetary support to continue functioning, growing, and supporting the organizations that take advantage of the service. Revenue is generated through monthly fees charged to the nonprofit organization, which vary based on the number of ways the nonprofit chooses to employ mobile services ("mGive Pricing," 2010; Mobile Cause, 2010). While these fees are necessary to operate a functioning business, they create (perhaps unintentionally) a dividing line between those who can or cannot take advantage of the mobile giving channel. In addition, there are limits set by the wireless carriers regarding how much a single person can donate in a single billing cycle via text message, typically $55 (Stanger & Giorgianni, 2010). The rationale behind this monetary ceiling underscores the very reason the channel was created: it is so easy to make a donation that protections were put in place to ensure that children do not use text messages to donate more funds than the person paying for their monthly bill can afford. Setting limits, however, eliminates the opportunity for a mobile donor to contribute more than the maximum amount unless they choose to a) space out their donation over multiple billing cycles, or b) follow up a text donation with a donation via the web, telephone, or by simply sending a check (which has unlimited donation potential). Recurring donations are currently not available, although this is under development. As a result, prior to setting up this type of service, a nonprofit organization would need forecast how many donations they anticipate receiving via text message and Page 6

Jodi Sperber March 10, 2010 strategize on how they will advertise the opportunity. If they did not believe they would receive enough donations (or perhaps publicity) to make the effort worthwhile – the fiscal break even point is estimated at 750 $5 donations or 375 $10 donations over the course of a year – it likely makes sense to avoid this channel. Thus, smaller nonprofits may not be able to incorporate mobile giving as a fundraising strategy, potentially placing them at a disadvantage when compared to larger, more established organizations. This also implies nonprofits situated locally in an effected area might have less of a chance for support when compared to larger, international organizations that have wider name recognition. Balancing the adoption of a new and exciting avenue for donating/raising funds with the realities of supporting its implementation is not easily accomplished. On one hand, it is likely that many donations received via text messaging would have not been collected if the conduit had not been so easily and rapidly accessible. Mobile phones are increasingly omnipresent, with the average person having a mobile phone within arm’s reach 19 hours a day (Fox & Jones, 2009). This makes it possible to immediately respond, decreasing the probability that an individual will get distracted and neglect to follow through on intent to donate. Another possible outcome is that the act of donating via text encourages an individual to become involved on a longer-‐ term basis with a specific issue or cause, which would be beneficial to the philanthropy field. Page 7

Jodi Sperber March 10, 2010 Some have raised concerns the immediate satisfaction of donation facilitated by mobile giving will encourage a form of “slacktivism,” or the practice of doing something that feels good and provides immediate satisfaction but does not involve much personal effort and has no political or social impact (Livingston, 2010b; Moroziv, 2009; Wikipedia, 2010). In this instance, the term would be applied to include those that donate once via text, and then assume they have done their due diligence. It is simply too early to tell, however, if those who used text messaging to support Haiti relief efforts will remain engaged, or repeat the act for other causes. At this moment in time, we exist in a transitory period between established and emerging approaches to crate social benefit, and debates on how to best move forward are topics of animated discussion on philanthropic circles (Bernholz, 2010; Bernholz, Skloot, & Varela, 2009; Stannard-‐Stockton, 2010). Nonetheless, what is apparent is that the ability to contribute to and participate in an issue of personal meaning is changing with the advent of new media. Upon reviewing evidence both supporting and dissuading the use of text messaging for fundraising, a reasonable case can be made for either side. Some would argue that the ease of donation, wider pool of donors, and attention to a cause gained is worth the costs associated with the effort. Others would disagree, indicating that the delays in fund disbursement, administrative costs, limits on giving, and uncertainty regarding long-‐ term impact outweigh the benefits. Page 8

Jodi Sperber March 10, 2010 While earthquakes are relatively common, it is highly unusual that two earthquakes of such magnitude would strike in such a short time period. The result of this experience, however, highlights the fact that this is an area devoid of clarity and ripe for policy development. With mobile donations receiving such mainstream attention, policies and standards need to be created, revisited, and amended to incorporate response to natural disaster. At the time of this writing, standard policies do not exist, and any decisions regarding fees or advanced payments are at the discretion of each individual provider for each individual event. Having explored both sides of this conversation, one thing is absolutely clear: philanthropy can and should take advantage of mobile avenues to attract, engage, and maintain networks of supporters. The success of text based donations and other mobile activities indicates there is a population willing and able to engage using their phones. Efforts to develop applications, ideas, and methods to support these efforts should be promoted and sustained. It is easy to see how an organization or grassroots effort could share organizational updates, event announcements, requests for support (monetary or otherwise), or related news as an effective part of an overall strategy. The wireless service provider’s current position as an intermediary, however, is problematic and makes text message donations a less appealing approach. The general focus for these companies generating maximum profit (they are, after all, Page 9

Jodi Sperber March 10, 2010 commercial entities), evidenced in part by the fact that there are even charges associated with text messaging, an activity that requires little from an infrastructure standpoint and is arguably free (Bender, 2009). Until a universal “crisis response” policy is created by the industry – or the FCC and other affected parties working with the industry – outlining what fees are waived, when they are waived, and guidelines for rapid fund disbursement is established, it is cumbersome to involve them in ongoing philanthropic efforts. It only delays the distribution of funds to the intended organizations and places arbitrary limits on the amount that can be donated by a single person. From the organizational perspective, having wireless companies involved is also problematic as no individual contact information is not transmitted with the text donation – the nonprofit simply receives a check in the amount of total donations (Livingston, 2010a). This makes it less useful for long-‐term engagement purposes with potential supporters. Thus, mobile strategies are useful for engaging current supporters, but less useful as an ongoing fundraising strategy unless coupled with broader activities. As smart phones continue to increase in popularity, and with applications for these devices becoming more sophisticated, the possibility of using mobile applications rather than text messaging is already here. A dynamic community exists, developing ideas to simplify the process of connecting organizations and causes to those who are interested in participating. For example, Mobio is a service that allows an individual Page 10

Jodi Sperber March 10, 2010 to store payment information within an application that can read barcodes, so all an individual has to do is point their phone camera at the barcode, enter a pass code, and confirm payment (Mobio, 2010). Other services allow organizations to create and brand applications quickly and cheaply, so that messages and alerts can be pushed out to supporters. This arena is where we will likely see significant growth in adoption in the coming years. The result of these efforts would minimize or eliminate the need to use a wireless carrier as an intermediary, freeing up the potential for larger and more frequent donations, and helping to encourage a broader segment of the population to be engaged. References Cited Amoruso, M., Bosanko, J., & Verclas, K. (2010). 2010 Nonprofit Text Messaging Benchmarks. Retrieved February 22, 2010: www.e-‐benchmarksstudy.com/mobile Associated Press (2005). Useless tsunami aid includes thong panties. MSNBC.com. from http://is.gd/9TfPI. Bender, E. (2009). Guess What Texting Costs Your Wireless Provider? Retrieved March 1, 2010: http://is.gd/9TxMp Bernholz, L. (2010, February 22). What Matters About Mobile? http://is.gd/9TqlP. Bernholz, L., Skloot, E., & Varela, B. (2009). Disrupting Philanthropy: Technology and the Future of the Social Sector. Retrieved from http://is.gd/9Toop Choney, S. (2010). Mobile giving to help Haiti exceeds $30 million. MSNBC.com. Retrieved March 2, 2010, from http://is.gd/9RgdT. Currie, D. (2009). Public health leaders using social media to convey emergencies. (Cover story). Nation's Health, 39(6), 1-‐30. Durham, C. (2010, March 4). Help not hinder Haiti. http://is.gd/9TeTi. Fox, S., & Jones, S. (2009). The Social Life of Health Information: Pew Internet and American Life Project. Health 2.0 (2007). from Economist Newspaper Limited: http://resources.library.brandeis.edu/login?url=http://search.ebscohost.com /login.aspx?direct=true&db=aph&AN=26523211&site=ehost-‐live&scope=site Horrigan, J. (2008). Mobile Access to Data and Information: Pew Internet and American Life Project. Page 11

Jodi Sperber March 10, 2010 Lenhart, A., Purcell, K., Smith, A., & Zickuhr, K. (2010). Social Media and Young Adults: Pew Internet & American Life Project. Livingston, G. (2010a). 5 Real Challenges For Non-‐Profit Texting Campaigns. Retrieved March 4, 2010, from Mashable.com: http://is.gd/9RtVy Livingston, G. (2010b). Why We’re In the Age of the Citizen Philanthropist. Retrieved March 4, 2010, from Mashable.com: http://is.gd/9RM5L MacLaughlin, S. (2010, March 3). Online Giving and Rapid Response Trends. http://is.gd/9UWOz. mGive Pricing (2010). Retrieved March 3, 2010, from http://www.mgive.com/Pricing.aspx Mobile Cause (2010). Pricing Retrieved March 4, 2010, from http://clients.mobilecause.com/plans/retail#text2give MobileActive.org (2010). SMS Text Donations and the Haiti Earthquake Retrieved March 2, 2010, from http://is.gd/9QuTY Mobio (2010). Mobio Identity Systems, Inc. Retrieved March 3, 2010, from http://is.gd/9UZkB Moroziv, E. (2009). The brave new world of slacktivism. Retrieved March 4, 2010, from Foreign Policy: http://is.gd/9RKWw Park, W. (2009). Latest study finds 1 in 5 US homes are wireless only. Retrieved March 4, 2010: http://is.gd/9LIUO Paypal (2010). Retrieved March 4, 2010, from http://is.gd/9RvYZ Richtel, M. (2010, February 18). Wireless Companies Speed Up Texted Haiti Donations. Blog posted to http://is.gd/9RDvW. Rosen, L. (2010, February 22). Generation 'Text': FB me. http://is.gd/9LAUz. Shaikh, A. (2010, March 4). Nobody wants your old shoes: How not to help in Haiti. http://is.gd/9Tewc. Stanger, T., & Giorgianni, A. (2010, January 14). Haiti relief update: What to know about text donations. http://is.gd/9QEIQ. Stannard-‐Stockton, S. (2010, March 2). The Cost of Information Sharing in Philanthropy. Blog posted to http://is.gd/9TpKL. Stepanek, M. (2010, January 15). TextAid: The New Normal? http://is.gd/9Lhun. Wikipedia (2010). Slactivism Retrieved March 4, 2010, from http://is.gd/9RK6B Yen, H. (2009). Popularity of text messaging is edging out cellphone calls. Retrieved March 4, 2010, from Associated Press: http://is.gd/9RbMx Page 12

Philanthropy Via Text Message

by Jodi Sperber on Apr 12, 2010

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Philanthropy Via Text Message — Document Transcript