I was wrong about SMS donations to Haiti lining the pockets of mobile carriers: I’m told that the carriers are waiving their fees (which normally consume about half of the funds donated through SMS). I’m happy to be proven wrong! If you want to give to relief efforts by texting, you can do so without worrying that your money will be wasted. I still wish you wouldn’t, though.
By waiving their fees the P-SMS vendors have escaped the following critique, but it still holds for the general case: premium SMS is an expensive way to donate. And it’s going to remain so. Your mobile carrier has a monopoly on adding things to your phone bill. Like room service, buyers of P-SMS are part of a captive audience, and will always pay more than he or she would for the same good in more competitive arenas.
Just how bad is the carriers’ cut? It’s a little tough to say, though the most often-cited number is 50%. If you look at this page, from mGive, the prices actually look pretty good! They’re competitive, at least, with what you might get charged by a bulk email vendor for handling your nonprofit’s fundraising. But then you see something like this, from a vendor in Europe — a more developed P-SMS market — and realize that mGive’s slice of the pie doesn’t include the fees charged by carriers, which dwarf the processor’s cut.
I’m glad that the carriers aren’t taking a percentage this time. But I suspect it’s a relatively cynical — and canny — decision on their part. If you use P-SMS to provide aid to Haitians, you’re helping to legitimize and standardize P-SMS. More organizations will consider adopting it — will feel they need to adopt it — and, to whatever extent it’s used as a substitute for giving through mechanisms with lower costs, it will hurt the cause of charitable giving.
Perhaps the situation will eventually improve. Certainly the enormous cut that carriers routinely take is impossible to justify. But when you consider that the cost of normal SMS has been increasing as the service becomes more popular — despite expanding network capacity and very low costs to carriers — I think there’s reason for pessimism (in terms of pure bandwidth, SMS is by far the most expensive type of data that is bought by normal consumers (by which I mean people who are not in the middle of the Pacific Ocean, nor on their way to the moon)).
I’m sorry to have provided incorrect information this morning about the specific case of using P-SMS to give to Haitian relief efforts, but I have no regrets at all about pushing people away from P-SMS giving in general. It’s a bad deal, and I think it’s likely to remain so. You shouldn’t give it your business, and you shouldn’t imply to others that doing so is a good idea.
UPDATE: Via comments, I see that the situation is yet more complicated. There’s something called the Mobile Giving Foundation, which seems to be a coalition of wireless operators who vet nonprofits and waive their normal predatory fees for those who qualify. I think that’s how it works, anyway — the site isn’t very clear about it, and certainly makes no mention of what normal fees for P-SMS are.
It still appears to me to be an effort to promote P-SMS and deflect criticism, and I see no assurances that the fee waiver is a permanent policy. Judge for yourself, but I’m still pretty skeptical, and will not be donating via text message any time soon.
actually all mobile giving programs in the US have their fees waived by carriers. See: Mobile Giving Foundation – http://www.mobilegiving.org/
I recently donated to This American Life via text, I normally never read my phone bill but after seeing your article about this I checked it out, it’s marked as a charitable donation and from my $5 donation I was only charged exactly $5… I don’t know if TAL got all 5 of those dollars or not but I never liked the taste of micro-transactions, so I think I’ll stick with your advice and use PayPal or something to donate in the future.