CharityUSA Gets It!

The other day, I received an email from my friend Barclay Law. Barclay lives in Asheville, NC where she performs transformational magic under the banner of Design with Feeling.

Barclay is a big animal person, meaning – if she had the money she would own a continent, so she could take care of all the animals that needed homes and space to roam. So, Barclay sends me an email asking me to visit The Animal Rescue Site and click on the big purple button to help feed the needy. Of course, I’m a little skeptical of things like this (Jonathan thinks I’m paranoid) so I clicked around a bit and wound up at CharityUSA, LLC.

CharityUSA did not seem like a non-profit to me which increased my skepticism, so I dashed off an email inquirying into their non-profit status. Now, CharityUSA and their Chief Operating Officer, Lisa Halstead, get the whole idea of transparency. Here is Lisa’s reply to my inquiry (needless to say, I clicked and am encouraging others to do so as well):

Hi John –
Thanks for your email into our Customer Service Department.

In answer to your question below, CharityUSA.com, LLC is a for profit company, registered as a commercial fundraiser in the State of Washington. However, our mission is to generate money for non-profits.

This probably brings to mind more questions than answers for you, so if you’ll grant me a few moments, I’d like to explain how we work and outline some rather complicated regulatory reasons for the way we’re structured.

CharityUSA generates funds for non-profits in two ways: through direct contributions from the public and through royalty payments to charities from product and advertising sales. When direct contributions are made, CharityUSA passes 100% to charity. There are no deductions taken from the charities for fundraising costs, credit card processing, etc. The funds are simply passed through at 100%.

Royalty payments are made to charities from ad sales. CharityUSA passes 100% of sponsor advertising on to charity; again, no deductions are taken. Royalty payments are also made on each product sold in our store (jewelry, apparel, housewares, etc) that CharityUSA sources from around the world. The amount given varies by product, but up to 30% of the item price is paid as a royalty to charity. The remaining amount from product sales covers our operating costs.

When CharityUSA.com generates these funds for charity, they’re passed as a royalty payment to our partner organization, GreaterGood.org, which is a 501c3. (I’d be happy to supply a copy of the letter of determination from the IRS for GreaterGood.org, if you’d like.) GreaterGood.org then passes 100% of those funds on to other charity partners (such as National Breast Cancer Foundation, Mercy Corps and America’s Second Harvest) as grants. The reason GreaterGood is placed in the middle of this relationship is to facilitate the distribution of funds to charity. Washington State requires that a commercial fundraiser register every charity they generate funds for as a separate filing. CharityUSA works with more than 200 different non-profit groups, so you can image that an annual, individual filing for each group would be somewhat onerous. With GreaterGood functioning as the recipient and then distributor of funds from CharityUSA, we only need to file as a commercial fundraiser for one entity – GreaterGood.org.

In FY ’07, CharityUSA.com gave just over $1.7 million to charity. The total amount of contributions from the public was $498,735. 100% of these funds were given to charity through GreaterGood.org. An additional $1,225,295 was paid to charities in the form of royalties on product and advertising sales. That $1.7 million is nearly 7 times our after-tax profit.

If you have any further questions, or would like to talk with some of our charity partners, please don’t hesitate to contact me. I might also suggest snopes.com as a way to vet us. I believe we’re mentioned when you search for either The Breast Cancer Site or The Hunger Site. however, please note however that some of the information on Snopes is rather old. They mention that we give 75% of the sponsor ad revenue received, when in fact, we increase that amount to 100% a couple of years ago.

Lisa Halstead
Chief Operating Officer
CharityUSA.com, LLC