Personal Finance
Web sites that do good
August 11, 1999: 6:44 a.m. ET

New Internet sites let you donate to charity without spending a dime
By Staff Writer Nicole Jacoby
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NEW YORK (CNNfn) - If a hectic work schedule or active social life have been your reasons for not doing your part for charity, some new Web sites may be about to render your excuses obsolete.
     Several Internet companies have made altruism as simple as clicking a mouse, linking non-profit groups and retailers in a way that appears to benefit everyone involved -- and at no additional cost to the consumer.
     The concept is simple. Virtual shopping malls, which group a range of online retailers on one site, will donate part of the cost of your purchases to the charity of your choice.
     The service is free to consumers because retailers pay virtual malls, such as and, a referral fee for sending new customers their way. The virtual malls, which are for-profit entities, in turn, donate a portion of that fee to the designated charity.
     "This is a no-brainer," said Laura Scher, chief executive of Working Assets, which runs "People are still doing what they do every day -- shopping -- but they are having a bigger impact."
Cause-related marketing grows

     These incentive-driven e-commerce sites are part of a larger trend toward cause-related marketing, in which companies promise to promote a good cause in a bid to get people to buy their products.
     Affinity credit cards have probably been the most successful example of this type of marketing, earmarking a portion of all transactions for charitable use. Long-distance telephone companies have also landed customers by donating a portion of their phone bills to charities.

     The Internet has opened up a whole new arena for cause-related marketing, with virtual malls at the forefront. Online shopping centers that "do good" have grown in popularity partly because more and more companies believe consumers will buy products from a retailer they consider altruistic.
     At least one Internet retailer has seen evidence of that.
     "The demographics of iGive overlap almost exactly with those of Atyouroffice," said Tom Graham, the Internet office supply company's president and founder. "They sent us a tremendous amount of traffic and we send them a lot of revenue." has partnered with virtual mall since its inception in 1997.
     Businesses are attracted to sites like iGive since they help attract consumers loyal to causes, as well as to a product or brand.
     "They are definitely more loyal to iGive than to me. They would switch their allegiance to Home Depot in a second if they supported their cause," Graham said. That's precisely why doesn't plan on breaking its partnership with iGive any time soon.
     For other companies, virtual mall sites with do-good agendas help them build on existing strategies. Online retailer's Associates Program, for instance, already pays Web sites -- which link back to its site -- for sales initiated through that link, usually 5 percent to 15 percent of the sale.
     Charitable virtual malls, says one industry insider, will become increasingly about loyalty and brand as the Internet evolves.
     "Right now, only about 15 percent of American households have bought anything over the Internet, so it's about bringing on customers," said Katherine James Schuitemaker,'s executive vice president of marketing and sales. "But once businesses are satisfied they have penetrated the market, loyalty and retention will become very important. And we believe people will be loyal to the concept of giving back while they shop."
The charity side

     The response from the non-profit community, which should benefit from cause-related consumption, has been mostly positive.
     "The sites help us by raising both awareness and funds," said Wendy Dubit, the executive director of Heaven, a computer training non-profit that partners with ShoptoGive. "The traffic has been substantial."
     But some charities worry about protecting their reputation and integrity.


     "Our reputation is golden and we want to be sure we aren't endorsing or affiliating with any specific business or enterprise" whose practices are not acceptable, said Kelly Quirke, executive director of the Rainforest Action Network, which has an alliance with ShopforChange.
     Figuring out how a cause fits in a virtual mall can be a real challenge. Some groups -- especially environmental ones -- may not want to be seen supporting waste, but may decide if money is being spent regardless, a portion may as well go to a good cause.
     Quirke concedes the giving potential of the Internet is promising. "The choices offered online are a real opportunity to change consumption habits," he said.
     The opportunity lies in trying to make consumers more thoughtful about how they consume - and allowing them to follow through with action. Many Web sites offer e-mail campaigns and other information aimed at creating more socially conscious consumers.
     But for now, online altruism is just getting off its feet.
     "The Internet is quite possibly the future of charitable giving," said Dan Langan, spokesman at the National Charities Information Bureau, a watchdog group. But "compared to the amount given to charities by individuals, it is still very little."
Tips for consumers

     As great as the benefits of these charitable virtual malls are, consumers should donate with open eyes. First, be clear about any potential tax benefits.
     "Just because the company is making a gift on their behalf doesn't mean their purchase is deductible," said Bennett Weiner, vice president of Council of Better Business Bureau's Philanthropic Advisory Service. In fact, in most cases, individuals cannot deduct donations made through retail purchases under current tax law, although one Internet company hopes to change that. launches a new service Thursday that will allow consumers to deduct donations made through purchases on its Web site. The company has developed and applied for a patent for its soon-to-be-unveiled payment system which the company is confident will pass Internal Revenue Service muster.
     Knowing where your money is going is another important issue when it comes to donating money online.
     "This area is growing incredibly and some of it is very well-intentioned. But there needs to be accountability," said the charity bureau's Langan.
     Consumers should be aware of how much money is actually going to the charity, how often the donations are turned over and whether there are any minimum requirements, he said. Back to top


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