Comments on: Digging Deeper in Global Giving’s Green-ness

By: Very wary

Very wary — Tue, 11 Aug 2009 05:40:29 +0000

I am even more wary now after reading this. The basic point was not addressed: how can you call yourself a nonprofit when there is essentially another for-profit company that is owned by the same executives? The not for profit has loaned the for profit over $5 million and pays the for profit over $500,000 in fees over and above the loan. The for profit is obviously siphoning off the money and the executives are taking it home without telling the public how much they are making. How can the IRS allow this to happen? And how can GG think that some talk about restricted donations could fool us into not paying attention to the real issue! Unbelievable. Answer that, GG – how much do the execs get paid and how much equitydo they have? Then all donors should realize this is coming from the percents carved off of well-meaning people trying to help alleviate poverty. We don’t mind you making money but don’t hide it and then pretend it isn’t happening. How insulting. You aren’t fooling anyone. You stand behind the buzzword of social enterprise? Try this buzzword – transparency. I welcome your response and if you prove me wrong I will apologize. I just have not seen what is behind the curtain so prove me wrong. Tax returns of the execs or any other real proof will suffice. Or, just say they are indeed minting money on this and I will be satisfied.

By: Donna

Donna — Fri, 05 Dec 2008 21:36:10 +0000

Thanks Gabe.
We hope that within three more years we will reach a point where the 10% we retain covers our costs. At that point we won’t be doing much in the way of raising funds for capital. We might, from time to time, receive a grant that will be used for product development, a particular platform initiative, or other “non-project” effort, so it’s unlikely that ALL the money will ever be project-specific and pass through…but the vast majority will.

Hope this makes sense.
Donna @
GlobalGiving

By: Gabe Roberts

Gabe Roberts — Tue, 02 Dec 2008 01:41:24 +0000

Thanks as well for the timely response.

Happy to hear 85-90% of individual contributions do in fact go to the grass root organizations. This accounts for 41% of your total revenues with the remainder (59%) going toward “investment” in the “platform” and overhead. When do you foresee this investment will be complete and more of the funds passing through to the organizations? As a benchmark, United Way operates a similar fundraising aggregation model and they pass through 91.5% of the total funds.

PS: I’m no fan of United Way, just using them as an example of a similar business model.

By: Amy Sample Ward

Amy Sample Ward — Fri, 28 Nov 2008 11:14:29 +0000

Donna-

THANK YOU! I really appreciate you taking the time out of your meal prep to respond! Very wonderful to have a full, honest, and human response – and one timely, too! I hope your information helps Gabe and the other readers but understand the financial workings of GG and helps reiterate the goal to do as much as possible with individuals’ gifts.

Hope you had a great Thanksgiving!

By: Donna

Donna — Thu, 27 Nov 2008 14:11:16 +0000

Hi Amy and Gabe,
First, Gabe, I’m sorry our response to your email didn’t satisfy you…we’ll be happy to answer more fully here in the blogosphere…

To your point, the relationship between MFI and GGF is a little complicated. That’s why we have lengthy notes to the 990 to try to clarify the relationships, and we are working to simplify things.

Let me try to address the concern at the root of your comment, though.

First, when people give through our website they choose a specific project/program run by one of over 300 unique organizations, all of which we have vetted individually. 85-90% of the donor’s contribution goes to the project THEY have specified, for a specific purpose. For almost all other contributions “average donors” make to other organizations, funds can be used for anything the receiving organization chooses. Not so with GlobalGiving.

Second, we are supported by many foundations that provide operating funds – what my colleague described in her email to Gabe as “unrestricted” grants. These funders are making these grants more in the spirit of “investment in” GlobalGiving, to cover the cost of developing and maintaining the web platform, sourcing projects and staying in communication with hundreds of organizations worldwide, and our outreach to donors. They are essentially investing in the building of our platform, so that the vast majority of funds provided by the individual donor can go to the project he/she selects. We report regularly to these funders on the work we are accomplishing to make GlobalGiving more robust, so that one day the small fee we retain will cover all our costs. To reiterate, they are specifically requesting that the funds they provide be used to cover our expenses, so that our promise to the individual donor can be met. Sometimes they provide these funds in one fiscal year, but we don’t have plans to spend them yet, so they do remain on the books. And yes, there are two entities, so how these funds are allocated is a bit convoluted, as Gabe suggests.

This uniqueness of our business model is hard to capture in traditional approaches to evaluating non profits. We view ourselves as a social enterprise, and we are excited about new efforts in the sector to make evaluation of organizations’ effectiveness more robust, an example of which is described in this Washington Post article from earlier this week: http://www.washingtonpost.com/wp-dyn/content/article/2008/11/23/AR2008112302024.html?sub=AR

Now, on to peeling and chopping. Happy Thanksgiving.

By: Gabe

Gabe — Wed, 26 Nov 2008 19:36:47 +0000

Amy:
Thanks, let’s see what you get. I made one inquiry and received a dissertation on restricted vs. unrestricted gifts. Apparently a good portion of their funds come from foundations and are classified as unrestricted therefore are not required to be given to the grass roots organizations. I understand the mechanics, just not the motivations and the convoluted nonprofit/for-profit/lending arrangement.

By: Amy Sample Ward

Amy Sample Ward — Wed, 26 Nov 2008 10:41:26 +0000

Hi Gabe-

Thanks for voicing your concern. I wanted to let you know that I forwarded your message to someone at Global Giving in hopes to get a response.

By: Gabe Roberts

Gabe Roberts — Wed, 26 Nov 2008 00:10:03 +0000

Going green is great but have you checked out globalgiving.org… one look at their 990 gave me a scare: $3.9M in revenue but only $1.6M was passed through to the grass root organizations and they show $511K in program expenses for tools, analysis, and evaluation of the projects before disseminating the $1.6M? After giving out the $1.6M and paying overhead, they still show a profit of $1.2M which was then loaned to a for-profit sister company (Many Futures Inc) which shares key executives with the nonprofit? They are sitting on $4.4M in reserves, all of which appears to have been loaned to Many Futures Inc … why not just give the money to the grass root organizations? Why does a nonprofit loan money to a for-profit?

I’m no financial expert but something appears puzzling at globalgiving.org and I’m not certain they qualify as a “lean” organization.

Here’s their 990 from last year; tell me if I’m wrong: http://www.guidestar.org/FinDocuments/2007/300/108/2007-300108263-038cfd51-9.pdf

By: Amy Sample Ward

Amy Sample Ward — Wed, 03 Sep 2008 17:56:16 +0000

Donna – Thanks so much for your sharing your input with me and other readers! I think GG Green is really something to watch as it grows and how it effects other micro lending and peer-to-peer sites. Thanks!
a