Virgin donations

In Liverpool this morning to speak at the autumn conference of ACEVO (the organisation for third sector CEOs). Preceding me was Jo Barnett, Executive Director of Virgin Money Giving (VMG).  This is a new not for profit business set up by Richard Branson with the explicit aim of challenging the dominance of JustGiving. It is a big venture, with VMG having agreed a multi million pound lead sponsorship of the London Marathon for the next five years.

Currently JustGiving has over 90% of the online donations market. It has been a powerful innovation and people see it as a simple and reliable way to raise and give money. This year the RSA gave the Albert Medal for Social innovation to JustGiving co-founder Zarine Kharas.  But JG faces two criticisms.

First that it makes a profit and that to do so it charges fees that are too high (5% on donations and gift aid I think)

Second, that it has not been able to increase the share of online giving as a proportion of overall donations to charities (running at only about 2% apparently)

VMG aims to restrict itself to a fee of 2% on donations and nothing on gift aid. It says it will do this by being more efficient and through charging for advertising on sponsor sites.

It will be interesting to see how VMG does. A few years ago I was on the board of the Lottery operating company, Camelot. Richard B was forever criticising Camelot for being profit making and saying that he could do a better not for profit job. But when it came down to it he never persuaded the National Lottery Commission that his case stood up. The Camelot profit is tiny in comparison to the costs of the Lottery and presumably those awarding the franchise were unconvinced that an arm of the Virgin empire could do better.

JustGiving takes a bigger slice of donations than Camelot does of lottery sales so the case for a not for profit makes more sense. Also, it must be good to have some competition; it may make JG more creative and drive down their fees.

Having said which, I’m not sure I would want my donations site plastered with advertisements for Virgin credit cards or whatever. 

What won’t convince me is an argument that it is inherently better to have a not for profit company providing this service. It’s not the governance or form of ownership that matters - but the quality and cost of the service.