Mini-Donations-The big don't

I was all gung-ho about this site until I read the fine print.  A nonprofit that donates to other nonprofits?  Woohoo?  Right?  NO.  In order to get their platform off the ground, they were willing to sell email addresses and contact information to investors.  When that plan didn't work, they decided to become a nonprofit.  How do I know this?  They posted it on their blog.  Instead, I'm spending my time on SwipeGood.   I'm also writing a "Shame On You" about the Austin Community Foundation.  They should know that approving an organization that was willing to sell off donor info to the highest bidders may not have been a wise choice...especially if said organization posts that on their site.  Who knows..minidonations may take off...but not with my purchases and hopefully not with yours.

The full text of the article:

"Recently, Ambassador Sada Cumber and I had an incredibly engaging and thought-provoking conversation. In the course of our discussion, we developed an intriguing fundraising approach.
First of all, if you don’t know it already, MiniDonations is not your “typical” non-profit. Its purposefully designed around making money and self-sufficiency with a heart for pure altruism. It’s a disservice to organizations like us – and there are several – to label them “non-profit” or “not-for-profit.” I’d much rather we rally around a different term: “Social Benefit Organization” (SBO). But that’s another conversation…
As you may know, equity is typically exchanged when a for-profit raises capital. That equity may later convert into dividends or be worth cash in IPO or M&A events. Of course, non-profits are forbidden from giving equity away.
One of our founding principles involved sharing a portion of our profits with members of the MiniDonations Social Network. For the sake of explanation, imagine a 50-50 split where 50% goes to MiniDonations’ Endowment and 50% distributed amongst our Social Networking Community.
To attract large, early-stage donors, we simply need to tweak our “profit sharing” strategy a bit and employ an Endowment/Donor Community/Change Agent (or “Seed” Donor) split of, say, 50/40/10.
Turning a $100,000 profit would mean $50,000 would go into our endowment, $40,000 into the MiniDonations Social Network (as thanks to our Donor Community) and $10,000 among our Change Agents (as thanks for their “seed stage” donations). In all cases, profits allocated to the Donor Community and Change Agents would be deposited into their respective MiniDonations Donor Accounts. By keeping community profit sharing within MiniDonations, we comply with IRS regulations and, more importantly, encourage continued use of our giving management tools and social networking environment.
“Change Agents” would equally share the total profits allocated to their level. For example:

Donation Level	Amount	Profit Share
Founding Change Agent	$250,000	4%
Platinum Change Agent	$100,000	3%
Gold Change Agent	$50,000	2%
Bronze Change Agent	$25,000	1%

I love this idea because it marries the profit sharing aspect of the for-profit world into ours. However, the ultimate beneficiaries are not investors but charities. Our success allows our donation community to give even more to their favorite causes: think “Pay it Forward.” This could not only get philanthropists, foundations and corporations excited when funding us but might also appeal an unlikely crew as well: VCs and Angel Investors." 

That didn't sound bad until the response by the CEO to someone's comment was:

"ramileo 06. Feb, 2010 at 1:03 pm #

Great feedback! Thanks!
First of all, our foundation will have no problem meeting the 5% requirement. The vast majority of money sitting in our foundation will be from donors like you and me. That money is intended to be given away to non-profits every quarter.
Regarding the for-profit/non-profit/hybrid model, we’ve gone down these routes already. As a for-profit, the most significant roadblock we faced was our integration partners’ perception that we were competition.
Essentially, by partnering with us, they were agreeing to send us their most precious asset – their customer – with whom we could do whatever we pleased (i.e. route them to other competitors, send them targeted e-mails, etc.). Initial discussions with integration partners went nowhere. Yet, the moment we converted MiniDonations into a non-profit, their adversity to us changed. They were no longer afraid of us. Our conversion conveyed the message, “We are a truly altruistic organization” without us uttering a single word. Discussions became fruitful and centered around social good and partnerships to create new, vast revenue stream for non-profits.
Restructuring ourselves as a non-profit also meant we didn’t have to answer to investors. While we will always answer to anyone funding us and must meet and exceed our goals with them, the reason for our existence is not monetary ROI to our investors, but social change ROI.
Requiring to return profits to our investors would have meant our “social organization” could become selfish. We had enough stressors executing our mission much less worrying about returning significant gains to investors.
That’s not to say that, as a Social Benefit Organization (non-profit), we wouldn’t be in similar shoes. Yet, those who support our mission will know that their investment in us will help keep operations afloat and allow people’s donations to continue flowing to community chosen charities."