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The Business of Giving

Exploring philanthropy, non-profits and socially motivated business, from the Gates Foundation to your donation. A fresh look at the economy of good intentions.

December 11, 2009 at 3:33 PM

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Q&A with TisBest founder on charity gift cards

Posted by Kristi Heim

More for charity and less for the landfill, says TisBest founder Erik Marks. I talked with him about the trend of charity gift cards, which his non-profit issues, and recent criticisms from consumer advocates. Marks, a member of Social Venture Partners, started TisBest Philanthropy in 2007.

Even as TisBest has grown, Marks has kept his day job as general counsel at EDG Commercial Real Estate in Seattle and operates TisBest with three employees. Previously he worked at law firms Cairncross & Hempelmann and at Perkins Coie. He studied philosophy as an undergrad and has a law degree from Harvard.

Q: How are you different from other charity card issuers?
A: The array of charity gift card issuers has become broader with eight or nine now, but the largest are TisBest, Charity Gift Certificates, JustGive, and the Good Card.
Only TisBest and Charity Gift Certificates are single-purpose portals -- the only thing you see are gift cards. I like to believe the single-purpose approach is better. When the recipient gets a card, the Web site speaks only to the gift in hand, not six other things.
We've got the best Web site for a lot of reasons, and the uploadable image feature is probably the feature people get most excited about. That customization makes our cards particularly valuable for businesses.

Q: You have less than 300 charities to choose from, not thousands or a million -- why?
A: One advantage is browsing. When someone gets a gift card, most people have a few charities in mind but not one they're dead set on. When you get to the charities tab, it's broken down in categories.
We've consciously chosen 125 organizations that are major recognized brand names. Under homelessness for example, you will find recognizable names like Habitat for Humanity. But people also see smaller organizations they don't recognize, then they browse around and they learn. People talk about choosing a charity as a challenge and a challenge they like.
Another advantage is accessibility. If you put YMCA into the Network for Good search box, it will turn up about 200 organizations. At TisBest you turn up just one.

Q: How do you find organizations to list?
A: We spent some time when we started out in 2007 building that list, doing research, basically hard work. Now we source organizations through user recommendations. We receive emails four or five times a day nominating new organizations. We go over those and pick 20 new organizations a year. We will remove 20 that aren't receiving donations.



TISBEST PHILANTHROPY

TisBest is appealing to businesses by making customized gift cards.


Q: What is the $1.95 transaction fee for?

A: It covers our overhead for operating the organization and Web site.
We are a social enterprise model. We offer a valuable and self-sustaining social service on a nonprofit basis.
The idea is we offer charity gift cards in a format that isn't profitable but that does produce enough revenue that our organization can operate and grow. We ask people on receipts to request matching donations from their companies, and that too helps cover our overhead.

Q: Why are gift cards any better than direct donations?

A: It's the difference between charitable giving and charitable gifting. In giving, I take my own money and give it to a cause I support. I love the beach, I love to surf, so Surfrider Foundation might be something I support with my money. But let's say I'm buying you a holiday gift. That might not be your first choice for a charity. There are a lot of different ideas about what the right thing is to do to create change in the world.

We give each other gifts to build relationships. It's a great way to connect human to human. It's the connection that matters, not the thing... When a person who receives the card spends it, the person who gave it learns the charity that was chosen. That's a great opportunity to build a relationship.

Q: How much have you raised for charity?

A: Over $1 million. This is our third holiday season.

Q: How can charity gift card issuers avoid the problems of retail gift cards?
A: One thing to keep in mind is that I really don't think there are many problems with gift cards in the marketplace... it's just a fringe. Gift cards came out around the year 2000. Everyone was figuring out how they worked. Now almost all states regulate gift cards, including Washington.

(Marks also cited the book Scroogenomics, which argues that holiday presents are inefficient and unsatisfying, but gift cards, especially to charity, are not).

Q: Why transfer funds quarterly -- are you holding money to earn interest?
A: That's a red herring. We had to make a decision. Every transfer has a cost. If we made transfers on weekly or monthly basis it would be unreasonably expensive. At the current interest rates of maybe about 1 percent a year. if you hold for a calendar quarter instead of a week, you're not getting a lot of extra interest, and that tiny amount is earned by a philanthropy trying to do good in the world.

Q: Why did you start TisBest?
A: I'm an attorney and I still practice part time -- that's how I pay the bills. I made a conscious decision to change. I wanted to work in something that made the world better, and to some degree I was bored. Partly it was a response to personal frustration. I was scratching my head around the holidays. I needed to give gifts and I didn't know what to get. I don't want to buy people stuff they don't want. I think the world would be better if people focused on how to make it better rather than how to get more stuff.
Today in running TisBest I get to see what people write about giving and receiving charity gift cards, and see the true joy that comes there; and then when I leave work and walk around and see stores with heaping baskets of stuff they're trying to sell, it is a disconnect. The stuff just doesn't create joy in the same way as sharing with others.

Q: How are commercial products like gift cards changing philanthropy?
A: It's the democratization of philanthropy. It's making philanthropy more fun and more accessible for more people. It captures additional dollars from consumers. If you look at how a normal consumer lives, they have a certain income and they allocate it out. One of those wallets is gifts. We're taking dollars out of the gifts wallet and turning them into charity dollars. We're not diverting any funds from charity. Charities have always focused on the big donors, but no one becomes a big donor without becoming a little one first. We are an entry point for accessing those little ones.

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