Friday, November 18, 2011
This year, the charity is testing the use of Square, a mobile payments start-up that allows anyone to accept credit card payments via mobile devices.
“A lot of people just don’t carry cash any more,” said Maj. George Hood, the Salvation Army’s spokesman. “We’re basically trying to make sure we’re keeping up with our donors and embrace the new technologies they’re embracing.”
The Army, with nearly $2 billion in annual revenue, was the biggest and most visible charity to adopt the technology. Other nonprofit groups and individual fund-raisers have used it too. A Girl Scout troop in Silicon Valley, for instance, used it earlier this year to sell some 400 boxes of cookies at Facebook’s headquarters after the father of one troop member who worked there realized that many of his colleagues did not carry cash, according to Advertising Age.
Lucy Bernholz, an expert on the use of technology by nonprofits, said this could have enormous potential. “It’s a no-brainer,” Ms. Bernholz said. “It’s frictionless and will make it so easy to give that if the person ringing the bell can get your attention, there’s no excuse any more because chances are you’ve got a credit card in your pocket.”
Jack Dorsey, Square’s co-founder and chief executive, who also co-founded Twitter, is confident that Square is simpler than other methods of digital fund-raising because all it requires of a donor is to swipe a card and sign.
“Instead of training people on an entirely new behavior, an entirely new way to pay, we just use what they know,” Mr. Dorsey said. “It doesn’t require them to learn anything new and it doesn’t require the merchant or organization to learn anything new.”
Though 800,000 merchants accept $2 billion in payments a year using Square devices, they are mostly small ones like farmstands, hair salons and taxi drivers, and many shoppers have not seen it in action.
The Salvation Army plans to put Square to use at 10 locations each in Dallas, San Francisco, Chicago and New York. Bell ringers will carry Android smartphones donated by Sprint Nextel that are equipped with Square’s postage-stamp-size card reader and two apps, one from Square and one from the Salvation Army. Donors swipe a card, just as they would at any credit card processing terminal, and the money goes into the Salvation Army’s account.
Square, which charges a 2.75 percent fee on every transaction, a majority of which goes to the credit card companies, uses the same security measures as financial institutions and, the company said, has an added level of safety because the payer must be present to make the payment.
Greater use of credit cards also helps the Army reduce the theft that nonprofits might experience when cash is collected in small amounts
Three years ago, the Army added traditional credit card processing terminals to the Red Kettle Campaign with mixed results — it gathered just $60,000 that way in 2009, the last year the program was used nationally. In comparison, more than $148 million in coins and bills were tossed into the Army’s red kettles in 2010.
“The credit card terminals really haven’t been a blockbuster, I’ll be candid,” Major Hood said. “The winter elements have been a negative, people have to go through a process of entering data, and it’s just generally more cumbersome than we think Square will be.”
The partnership was the brainchild of William Raduchel, an investor in tech start-ups who has worked at Sun Microsystems, AOL and Xerox and who sits on the Army’s national advisory board. “When I saw Square, I realized immediately the implications for the Army in terms of getting money,” Mr. Raduchel said.
After playing with Square a bit himself, he got in touch with Vinod Khosla, a friend whose venture capital fund is one of the company’s biggest investors, and asked for an introduction.
He has already used Square’s device to donate $1,000 to the Army, and said that despite its age, the organization was open to new technologies.
“The Army does listen to advice,” he said. “It may not agree and sometimes it takes a while to convince the top managers, but in this case, they were very fast to conclude this made sense for them.”
Mr. Dorsey said that marrying a cutting-edge technology with an institution established in 1865 was fitting. “It definitely is a throwback, but that age was an age of curiosity and innovation and particularly craftsmanship,” he said, “and as we build the product, we’re thinking about craftsmanship and details and experience.”
This article has been revised to reflect the following correction:
Correction: November 18, 2011
An article on Wednesday about the Salvation Army’s experiment with accepting donations by mobile payments misstated the year the organization was established. It was 1865 — not 1852, which is the year its founder, William Booth, started preaching.
I love technology and I non-profits like @salvationarmyus. Now those two worlds have collided!