NEW YORK – Charities and special interest groups are driving donors toward e-commerce that they hope will give them a leg up in fund-raising, but some observers are warning that nonprofit groups could be risking their tax-exempt status.
The latest trend in fund-raising has resulted in organizations pushing supporters to purchase gift certificates, apparel and mutual funds, all online and all for a good cause.
"Organizations are not just flat out asking for money anymore, they are tying [requests] to specific programs and outcomes," said Holly Ross, director of programs for The Nonprofit Technology Enterprise Network (search), which helps nonprofit organizations make more effective use of technology to advance their missions.
Ross said "accountability driven" fund-raising is all the rage now, and pointed to Moveon.org, which has held fund-raisers in order to raise cash for political ads, as a good example of the new approaches being used to get voters to open their pocketbooks.
"It's that tangible result that people appreciate. I can open up the newspaper and see the ad that I helped pay for. It's really rewarding for people. They don't just get a vague sense that their money has done something good," she said.
In 2003, the environmentally-oriented Sierra Club (search) began mingling financal planning with philanthropy, offering Sierra Club Mutual Funds. The fund, whose details are available at http://sierraclubfunds.com/about_overview.htm, allows people to invest in companies that are considered environmentally friendly while also supporting the club's efforts.
The funds' investment adviser, San Francisco-based Forward Management (search), pays the Sierra Club a fee for helping to identify socially and environmentally responsible investments.
"The Sierra Club has a history of exploring innovative ways to effect positive change for our planet," said Carl Pope, executive director of the Sierra Club, in a statement. "These funds let citizens hold corporations more accountable and give businesses incentive to take their responsibility to the environment seriously."
The Sierra Club also launched its first line of brand apparel for men and women, available in several hundred stores and online.
"Studies show that about 67 percent of American adults consider themselves environmentalists, but how do you reach all those people? The clothing line reaches out to the everyday shopping audience," said Johanna O'Kelley, director of licensing for the Sierra Club.
O'Kelley said the line of apparel also serves other benefits, including returning 5 to 14 percent of revenues back to the Sierra Club and giving individuals a voice on Capitol Hill. Each item of clothing comes with a postcard about "a certain critical conservation issue important to the Sierra Club" that shoppers can sign and send to their member of Congress.
"You become a one-minute activist," O'Kelley said.
Also looking for new ways to raise money in a tight economy, the Christian Coalition (search) is urging its members to buy gift certificates redeemable at a range of stores and other businesses.
The 2 million-member conservative grassroots political organization has signed up with SharingCertificates.com, an online program that sells the gift certificates and returns a percentage of the proceeds to Christian ministries, churches and schools.
"We realize there are many of you who would like to help, but do not have the resources to send a gift monthly," President Roberta Combs wrote in an e-mail asking people to sign up. "We all shop, go to restaurants, stay at hotels, etc. The SharingCertificates program was developed to enable us to support God's work at no cost to you."
While the latest ideas in donating add some fun to the process, Ken Gross, an attorney specializing in tax-exempt groups, said a nonprofit must be careful when looking to business to raise money or else risk its tax-exempt status.
Groups active in federal elections may also run afoul of a ban on using corporate money for partisan political activity, he said.
"Most of these organizations have different buckets. They have charitable buckets and advocacy buckets and political buckets" for the money they raise, Gross said. "They often allocate funds in a way that makes it permissible."
Despite the innovative ways to give, many prospective donors are also still skeptical about where their money goes, and with good reason, said Ross, noting the dissolution of San-Francisco based PipeVine, a nonprofit donation processing center that shut down this summer after admitting that it was funneling charitable contributions to its own operations.
But Ross said the newest form of fund-raising has a built-in mechanism for guaranteeing the money arrives at its destination.
"[Accountability driven campaigns] help folks know that whatever they are giving isn't going to be misused," said Ross, who added that creative cyber-collecting for a cause is a trend that is only going to grow.
"In all of the conferences, the sessions around fund-raising aren't around the mechanics anymore but about how can I tie this to my program and be more effective. Nonprofits who are going to be successful have already caught on to this," she said.
The Associated Press contributed to this report.