Like many once-angsty teenagers, I rarely pay attention to communications from my high school. But a couple of weeks ago, a missive from the institution landed in my inbox and caught my eye.
“Venmo Us!” the subject line read, with instructions for how to send the organization a donation through the mobile payments app. (It’s a private school.) I typically reserve Venmo, which allows friends to easily transfer money to one another, for things like paying for drinks or a restaurant bill. So I felt a little bit uncomfortable with the idea of my high school lurking in this seemingly peers-only space.
But after giving it some thought, I’m rethinking that initial response. Changes in the way people donate money, suggest that a tool like Venmo could be key to fueling charitable gifts in the future. Philanthropy overall increased just 1% between 2015 and 2016, according to the Blackbaud Institute, an organization that researches trends in charitable giving. While online donations jumped 7.9% during the same period.
And millennials are particularly interested in engaging on social media and in person with the causes to which they give, experts say. With its emoji-filled news feed, Venmo offers the perfect opportunity for young people to donate, share their cause and perhaps subtly peer pressure their friends into donating too — often a key motivation for philanthropy, research shows.
Finally, the easier a donation is to make, the more likely people are to do it. A 2010 experiment found that donors were 26% more likely to respond to a solicitation from a German opera house when the ask they received already had the bank transfer information filled in. There are few tools that offer an easier money transfer than Venmo.
“It’s all about the convenience factor,” said Jonathan Meer, an economics professor at Texas A&M University who studies charitable giving. “I don’t think it takes much to put a barrier up” to making a donation.
So if Venmo provides a seamless way for young people — a coveted donor group — to give money to their favorite nonprofits, why aren’t more charities using it?
This simple answer is that for now, Venmo discourages it with a few exceptions, said Josh Criscoe, a Venmo spokesman. Right now the platform is really designed for peer-to-peer transfers and not for users to interact with people or groups they don’t know personally, he said.
In fact, organizations, including Planned Parenthood, the Red Cross, as well as Rutgers and Princeton Universities, appear to have accounts on Venmo, but when MarketWatch reached out to the organizations, officials said they hadn’t set them up. Criscoe said the company wasn’t aware of these accounts specifically, but the company does take action if an account is brought into question.
For now, Venmo has a beta version of a website for nonprofits that a handful of charities are participating in. But outside that group, Venmo recommends nonprofits hold off on using the service until the company offers more official channels for the institutions — something they’re hoping to do in the near future, Criscoe said.
That’s likely to change soon. Nonprofits using PayPal, PYPL, +0.60% Venmo’s parent company, to accept donations will be able to use the app later this year, when PayPal rolls out Venmo capability to all of its participating merchants and institutions. The company is also hoping to eventually turn the beta program into a full-fledged feature, though officials haven’t specified a timeline for doing so, Criscoe said.
Another challenge to expanding Venmo and other technology to the nonprofit space: regulation. Nonprofits and regulators are still working through the issues associated with the proliferation of new channels to donate and solicit money, said Una Osili, an economics professor at Indiana University Purdue University Indianapolis and an expert on philanthropy.
Oversight of charities is largely governed by the states and in some cases, state laws also regulate third-party solicitors that nonprofits may hire to fundraise on their behalf. Those laws, developed in simpler times, may cover one person hired on behalf of one or in some cases, a few charities. Now state regulators are working to catch up with advances in technology and to determine how best to oversee new websites and platforms that may be raising money on behalf of hundreds of charities.
Already it’s clear that bringing a new technology into the nonprofit space can present a number of challenges. Laura Christian, the director of the Wellesley Fund, which raises money on behalf of Wellesley College, said she had to ask an alumnus to shut down a Venmo account she created to collect money for the school from her friends because it had the appearance of being an ask from the college. “It felt a little unofficial,” she said. “It’s not how we do things.”
But Christian said she’d like the college to be on Venmo in an official capacity and she’s waiting eagerly for nonprofits to have the opportunity to use it. “I heard young alums clamoring for it,” she said.
Pleasing this group is particularly important because colleges have struggled in recent years to convince young alumni to donate. Christian said Wellesley has had some success with short and intense social media-driven campaigns, but the opportunity to use an app like Venmo could really help reach this group.
“To raise money for nonprofits, ease of use and access are the two big barriers to get through when someone is interested in making a gift,” she said. “Venmo takes away for many that barrier. It’s a super simple way to make a gift.”
That ease may be why a few nonprofits using the platform have already seen some success. Last year, Water is Life, a charity focused on increasing access to clean water, used Venmo to solicit donations by sending users one penny through the app with an accompanying message about the organization and its mission. In just a few days, they raised several hundred dollars — and received a slew of media attention.
In it’s first year using Venmo, my high school, the Charles E. Smith Jewish Day School, received 75 new gifts, the majority from young alumni — the group the school targeted with the Venmo campaign, said Wendi Kaplan, the school’s associate director of alumni relations. Kaplan said they haven’t dug into the data yet to see how many of those gifts were made through Venmo, but she suspects the app played a role. “The ease of Venmo was huge for us, I think that was a big reason of why we saw more gifts,” she said.
The informal conversations I had with my classmates who donated to our school also reinforced the notion that Venmo in many ways is an ideal place to raise money.
One said the Venmo option counteracted his “lazy and forgetful nature” that delays his usual donation until he’s been hounded multiple times. Another said the immediacy of Venmo meant there was less opportunity to back out. “It barely feels like a money exchange at all,” the classmate said in an email.
And a third said he could donate money without getting up from his living room perch. “Venmo is a thing that you use with your friends,” he said. “But I thought it was a smart idea for them, especially to target younger alumni, because it’s a lot easier to just tap, tap, tap on your phone then to enter in your credit card.”