Hugh Radojev: A war between digital giving platforms will be bad for charities

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Battle lines have been drawn between GoFundMe and JustGiving, after the former attacked the latter in a statement today over its fees. Hugh Radojev says that while GoFundMe may live to regret this move, neither have come out of this episode well.

Today, the UK arm of US-based digital giving platform GoFundMe announced that fundraisers on its platform can raise money for charities for the first time, and would also be able to claim Gift Aid. That was the news, in a nutshell. However, unless you looked really closely at the announcement, you may have missed this fact.

In a frankly extraordinary press release, GoFundMe used this announcement about changes on its platform to directly attack JustGiving over its fee structures. It accused JustGiving of “slicing” millions of pounds off of Gift Aid taken from donations on its platform.

The platform also commissioned a YouGov survey, the data from which it also used to make pointed attacks against its competitor. For example: “72 per cent of people believe it is unreasonable for platforms to take a cut of Gift Aid claimed for charities on eligible donations,” apparently.

Arguably though, the fact that this press release has clearly been targeted at certain areas of the media – namely the Daily Mail, The Sun and The Telegraph – is perhaps more extraordinary still. As we all well-know by now, the red tops are no friend of the charity sector.

It is at best a bold gamble by GoFundMe. At worst, it could be interpreted as a cynical and disingenuous marketing ploy. One that could even draw down further tabloid ire on a bruised and battered fundraising sector.

The tabloid front pages have been rather distracted today by the historic meeting and peace talks currently underway on the Korean Peninsula. But I wouldn’t be surprised if, over the weekend, one or two pick up the figures sent out by GoFundMe and run with them.

The US-connection

It says something at least of the aspirations of GoFundMe that they view JustGiving as a direct rival. JustGiving has been operating in the UK for nearly two decades and, in 2017 alone, raised over £450m for charities here. It is by far the best known and most used digital giving platform in the UK – a monopoly of sorts that has, until now at least, only really been challenged by Virgin Money Giving.

Having said all that GoFundMe has by far the more impressive global pedigree. It has raised in excess of £3.6bn globally and is well established in its native United States as the go to crowdfunder of choice.

However, its UK-launch in 2017 was met with relatively little fanfare and it has been rather struggling since to carve itself out a niche in the UK digital giving market.

It appears that today’s attack stems from the fact that JustGiving has fairly recently been purchased by Blackbaud, another American digital company.

Blackbaud spent nearly £100m on purchasing JustGiving at the end of last year, and clearly has grand designs on marketing it heavily in its native shores. This would mean effectively muscling in on GoFundMe’s home turf. It would seem that GoFundMe’s American board figure the best form of defence was a good offence.

Whatever the thinking behind all of this, battle lines have been clearly drawn. In the event of a proxy-war between two American conglomerates on UK soil, the biggest loser could well be the charities and fundraisers caught up in the middle.

Issues over Gift Aid

GoFundMe say essentially that JustGiving’s 5 per cent fee on gift aid is a “hidden fee” that many fundraisers and donors alike aren’t told about and takes millions of pounds away from the good causes they are fundraising for or donating to.

The “hidden fees” argument seems a little disingenuous given that JustGiving has an entire section on its website dedicated to explaining its fee structures. Also JustGiving is no stranger to having to defend its fees structure, as it routinely has to in the press whenever something terrible happens.

Besides, GoFundMe only dropped its 5 per cent platform fee in January of this year, and introduced a “tips” system whereby donors could leave effectively a tip on top of their donation to cover the costs.

GoFundMe said this system had worked well when it had been trialled in the US, but tips are fundamental to the way that the economy works in America in a way that it simply doesn’t here in the UK.

Having said that JustGiving itself unveiled a ‘Donation Boost’ option on its platform yesterday, which it says will allow donors to effectively cover its platform fees by boosting £1 for every £20 they donate.

This new feature doesn’t do much to clarify JustGiving’s already complicated fee structure, although it’s perfectly likely that it will end up raising more money for charity.

The folks over at JustGiving may well be gnashing their teeth in private, but they’ve played this GoFundMe stuff with a very straight bat, saying that they welcome the competition. Perhaps they’re not concerned about GoFundMe here in the UK. After all they’ve seen plenty of pretenders come and go in the UK digital giving sphere before.

Yet, this whole argument could well be rendered moot by the increasing presence of Facebook in the digital giving sphere. Facebook has already began rolling out its donate buttons on charity pages in the UK and, given the ongoing popularity of the platform, it’s hard to see that it won’t make a sizeable dent in the marketplace.

In this fairly unedifying public spectacle, it’s fair to say that neither GoFundMe nor JustGiving have particularly covered themselves in glory.

Business is business after all, but whether the charity sector and the millions of Britons who use these platforms to raise money for them every year see it that way, remains to be seen.

– See more at: https://www.civilsociety.co.uk/voices/hugh-radojev-a-war-between-digital-giving-corporates-could-be-bad-for-business.html#sthash.CCbvRHVk.dpuf

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