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Guaranteed. Period.

November 16, 2007

Global_giving(Dennis Whittle is the CEO of GlobalGiving, a unique collaboration between the GlobalGiving Foundation, a U.S.-based 501(c)(3) nonprofit, and ManyFutures, Inc., a social enterprise. This post, his first for PhilanTopic, has also been posted to Dennis's blog and GlobalGiving's new blog.)

If I buy shoes from Zappos.com and they don't fit, I can send them back for a full refund -- no questions asked. They even refund shipping costs! If I buy a coat from Nordstrom's and my wife doesn't like it, I can take it back to the store -- no questions asked.

But what would happen if you asked your favorite nonprofit or charity group for a refund? Margaret Su, one of our colleagues here at GlobalGiving, asked this question earlier this year. "We claim that GlobalGiving is a 'whole new way to give.' We place a premium on showing donors exactly where their money goes -– and the impact it makes. Why shouldn't we provide a refund if a donor is not happy?"

I told Margaret, as gently as I could, that she was naive: "That is crazy, Margaret. Philanthropy doesn’t work that way. We can't do that." I had a thousand reasons to blow her off.

But her idea nagged at me, and I couldn't shake it. I brought it up at the management team and then at the board. The response was always the same: "That's crazy, we can't do it, it's impossible, etc. etc."

Over time, though, we started to think that the idea might be not only possible -– but critical. And not just to donors, but also to the organization. A guarantee could compel us to put front and center questions of how to amplify the impact of our work, hold ourselves accountable to our partners, and ensure donor trust. Each and every day.

Today we’re putting our money where our mouth is with the announcement of GlobalGiving Guaranteed. Starting today, if a donor is not happy for any reason with his or her experience on GlobalGiving, he or she can get a refund. The refund comes in the form of a voucher the donor can use to give to any other project he or she wishes. (If the IRS allowed it, we would even refund donor's money in cash.) The guarantee will cover up to $10,000 per donor, per year, at the beginning, but we may increase this ceiling if it makes sense in the future.

We see GlobalGiving Guaranteed as a new way to demonstrate the confidence we have in our project leaders, who are good people making a big difference with a relatively small amount of funding. But the guarantee also brings direct market discipline to bear on us. We make promises about the speed at which donors' money will get to the field, and we promise donors that they will get regular updates from the field from project leaders. Starting now, the guarantee creates a feedback loop with teeth.

We also believe that donors deserve to be treated at least as well as consumers. After all, they are trying to help improve the world with their dollars. They have the right to know how their money is being used -- and to redirect that money to a different purpose if they are not satisfied.

You may be thinking this is a real financial risk for a small organization to be taking -- and you are correct. But we believe that ultimately the benefits far outweigh the risks. Study after study has shown that the positives outweigh the drawbacks for providers of guarantees.

Does the guarantee mean that all projects listed on GlobalGiving will succeed in terms of their objectives? Of course not. Most projects on GlobalGiving succeed in improving hundreds or even thousands of lives. But, like anything else in life and business, sometimes development initiatives fall short, for all kinds of reasons. We will, however, guarantee that from here on out, donors can play an active role in the conversation.

Months ago, I told Margaret that a donation guarantee was a crazy idea. That isn’t how philanthropy works, I said. But today, I believe that it is. What do you think?

-- Dennis Whittle

Comments

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I think it's fantastic you're taking the risk out of the hands of the donor, who is already doing a lot in the relationship by shelling out and getting "just" feelgood in return (nothing material).

I'm sure it'll work well as a marketing tool and may well boost GlobalGiving's margins to a point where this is a sustainable business model experiment -- for you guys. But could it really become the norm? Without the marketing benefits (because it's the norm), would it really work out for your rivals to take on that amount of risk?

I can only see it being viable as the industry norm if one of two circumstances are, or become, true -- either your rivals' margins are already high enough to take on this risk to their bottom line, or making this the industry norm gives rise to a huge influx of donors (so margins grow and absorb the risk). Is either likely? I'm not sure.

I completely agree with your initiative. And I would like to add to it: there must be a way to make donations a two-way street. Take us, for instance. We are a foundation located in Tarija, Bolivia, a place nobody in the world cares about. Our mission is to make the world get a message from the 36 ethnic groups in Bolivia, so their culture gets to be considered and measured without discrimination or exclusion of any kind. We are proud of our work and would be more than happy to offer a refund guarantee to any donor who would like to share our dream. Why not make both ends meet? It is not only funding many organizations look for. It is also sponsorship, know-how sharing, personnel exchange, etc. All those areas can be covered by a refund policy in accordance to the will of both parties.

Thanks for the idea. I think it will become a trend for donor-receiver relationships.

Cheers,
Jacqueline

Thanks, Philippe and Jacqueline, for your good comments.

Philippe, I think the jury is out on your question about whether guarantees will become an industry norm. We naturally hope that ours will set GlobalGiving apart at the beginning *and* increase accountability for the field as a whole.

How overall accountability rises in the sector will probably vary from organization to organization. Some of this variation will be manifested not in the policy but in the "feel" of customer service. Many retail stores offer customer satisfaction gurantees, but there is a *real* difference between how hard it is for customers to invoke this guarantee. I dread going into some stores to return an item, because I know they are going to begrudge it (or even blame me for choosing the wrong item!); in other stores, such as Nordstrom's, returning something is actually a pleasant experience where they make me feel like they care about me. Guess where I go more often?

So hopefully what will happen is that pressure for increased accountability will bring more donors to the good organizations, while the others either up their game or whither on the vine.

And Jacqueline, while I don't (yet) know your organization, I like that attitude!

I applaud GlobalGiving for taking this brave and radical step! I will be really interested to watch how it all unfolds, how often donors will make use of the guarantee and if trends will emerge in terms of which groups or causes donors will most often request be refunded. But, since you mention the comparison with consumers, what about plain and simple "buyer's remorse" and the sometimes-fickle nature of consumers? If donors prove to have the same failings, what recourse will the nonprofits have? How will this ultimately effect them?

Years ago, when Betty Beene ran the United Way of America, she touted a "money-back guarantee" for donors. I never heard whether any took her up on the offer, but her point was as much for the directors of the local United Ways as it was for the donors. In light of the more publicized examples of major donors who are threatening to rescind gifts or those of their ancestors (see Princeton), a guaranteed experience may appeal to many. Ultimately, it puts more pressure on the organizations to communicate the good work they do. Personally, I think that's a good thing.

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