Why JustGiving dropping their fees is a mixed blessing

Today JustGiving announced that it is removing platform fees from all fundraising campaigns and charitable donations in the UK. This is surely a cause for celebration, right? Well yes, absolutely. In the short term at least.

The problem is that in the technology game, like so many places in life, you get what you pay for. A race-to-the-bottom in terms of cost is not always beneficial for technology products. Free services that inevitably become cost centres for businesses tend to have the proverbial rug pulled out from under them. We’re all nodding and whispering “MyDonate”. Blackbaud (who acquired JG for £95 million in October 2017) have previous on shutting down JustGiving functionality: The closure of JustTextGiving left many rather stumped about the way forward.

The big questions that should be raised when a service becomes free are “how will they fund innovation?” and “how will they fund customer support?”.

JustGiving has said that users will be able to make a voluntary contribution to support the platform which will be used (presumably in part) to fund innovation. It’s hard to know how effective this will be. The JustGiving brand is strong and their acquisition was sensibly quiet enough that perhaps donors will be willing to voluntarily support the platform. Although perhaps more likely the idea of voluntarily donating cash to fund the R&D team of a NASDAQ-listed American corporation won’t go down terribly well.

As for customer support, therein lies the real problem. JustGiving does not have a good reputation here – and cutting off its supply of cash is unlikely to improve things. The inconvenient reality is that if you want to offer world-class support then you’re going to have to pay for it somehow. Perhaps we’ll see options for premium support packages being offered for JustGiving’s larger customers at an additional cost.

You really need revenue In order to offer world-class support, foster innovation, and to be sustainable as a business, you really need revenue. This shouldn’t be thought of as a dirty word in the sector. Stable, profitable businesses that provide a good service are a healthy part of the charity landscape and can be kept in check by similarly healthy competition. Problems arise when a small number of organisations grow to dominate the market and use their market dominance as an excuse not to innovate.

That’s not to say that the available options are either free and terrible or prohibitively expensive. There should be a middle ground. Indeed, there is. And I would argue that this is where we are going to see all of the interesting, juicy innovation over the next decade. Unfortunately it seems that Blackbaud is operating at the edges of this spectrum.

This all sounds like a lot of doom and gloom. But let’s not despair. The space is evolving, and such changes open up interesting opportunities for new, innovative entrants who are building sustainable and interesting products. Just look at the success of Donr who swooped in to capitalise on the JustTextGiving shutdown – they’re going absolute gangbusters. We’re seeing new ideas emerging in the charity tech space like never before. The likes of Wonderful, Localgiving, and Goodbox are good examples of organisations that continue to drive technological innovation.

If you want to find the best ideas and to have the best experiences with your technology providers it’s sensible to seek those with fair and sustainable pricing. After all, there’s no such thing as a free lunch.

Originally produced as a guest blog for UKFundraising. Reproduced here with permission. Original article can be found here.