General Ramblings: Tidings Of Good Cheer

December 1, 2008       Paul Clolery      

An episode of Seinfeld has been running around in my head since the recent arrivals of a couple of pieces of mail. Jerry’s skinflint pal George handed out cards telling his co-workers that a gift had been made in their names to The Human Fund.

Of course, The Human Fund didn’t exist and it evolved into one of the most hilarious holiday television episodes of all time, the celebration of Festivus. It was a holiday where George’s family members aired their grievances with each other and wrestled each other to the ground. Well, that sounds pretty normal in most households.

What jogged this funny memory was the announcement of a couple of different gift cards targeting the nonprofit sector. A person can buy gift cards and give them away and the recipient can then use the card to donate to a favorite charity.

Gift cards always seemed like a waste, unless they are tied to a banking facility, like Visa, MasterCard or Amex, so the user can do anything they want with the money. That Starbucks card always has less than a dollar left on it and finds its way into the trash. If you receive a restaurant card, you always end up spending more than the card’s value so it’s not the treat that was intended.

TowerGroup in Needham, Mass., estimates that of the $97 billion worth of gift cards purchased in 2007, nearly $8 billion went unused, although no one has an exact count. According to TowerGroup, 49 percent of Americans have at least one unused gift card and that the average number of gift cards people have is 3.7.

In some states businesses must put the unused money into an escrow account guaranteeing the money will be available if the card is ever used. In most cases, however, after six months to a year that money goes straight to the issuing company’s balance sheet.

In the case of the charity gift cards, there is a fee tied to the card. In the case of one card, there is a $5 fee for every card. If the money is not used within 12 months of the date of purchase the issuing nonprofit will use the money to promote its online giving mission.

At least in that case the money will still be going to work in the nonprofit sector, but that isn’t the donor/purchaser’s intent.

Charities should encourage donors to give to organizations directly and then have charities send out a thank you to the person in whose name the gift was made. If donors want to make the gift a family experience, they can sit at a computer while everyone is at the house to celebrate and let the recipients pick a charity and give directly on the gift-giver’s credit card. It will bring new effort in the family philanthropy concept.

Giving through a third party is never as good as giving directly. Someone always gets a ‘taste’ of the action. You want donors to know you, not a card processor. Promote direct giving by donors and perhaps children will some day tell their children of the holiday when the only feats of strength were the digits on your fingers and the power of a credit card.

The year 2008 has been a wild ride, with real and imagined up and downs. Uncertainty will rule for another few months and the economy will emerge from the recession that nobody wants to actually label. We are not out of the woods. Oil is going to begin climbing back up near $100 a barrel, testing the patience of drivers and pushing upward the price of just about everything else.

If nothing else, American consumers will eventually power an economic recovery and that will start with donating. The old joke is that there are only two things that are certain: death and taxes. American donors making a difference should be added to those certainties. Here’s to a sparkling 2009. NPT