smart spending

Social shopping apps donate to worthy causes

Using smartphone
Highlights
  • Retailers are willing to donate on your behalf to increase consumer loyalty.
  • Many services promote your favorite worthy causes to people in your social network.
  • Choose apps that provide details specifying exactly how the charities benefit.

Which have you done more of lately -- checked in with your friends on social networks, gone shopping online or donated to charity? Some shopping applications or websites launched in the last year or so let you do all three at once, in most cases without spending anything extra.

These social shopping apps have one thing in common: They can donate on your behalf to a charitable organization. For instance, the year-old Shopkick app enables your smartphone to connect with a signal emitted from a specialized device in stores such as Best Buy, Crate and Barrel and Toys R Us. When the app detects you've entered the store, you receive rewards known as "kicks" just for visiting. But instead of using the kicks to get a gift card or discount, charity-minded customers can donate them to one of 30 different causes.

Another example is Socialvest, which simply requires you to register with your email address or Facebook account, then click on the Socialvest site first when shopping online. Selected retailers donate a percentage of your purchase to your giving account. Macy's donates 2 percent. Fossil donates 5 percent. You can donate these rewards in increments of $10 to any 501(c)(3) charity. In the works is a credit card registration feature that will let you earn giving dollars no matter where you shop.

Why would retailers give away money? For the chance to build customer loyalty, experts say. Partnerships between commercial brands and social causes are expected to grow as companies realize the need to do more than just pay lip service to corporate social responsibility. And charities find that connecting with corporations can help them reach a huge pool of consumers.

Social shopping future of charity

David J. Neff, CEO of Austin, Texas, nonprofit "Lights. Camera. Help.," and co-author of "The Future of Nonprofits," says in five years most charities will be partnered with a commercial brand. "By 2016, the idea of a nonprofit organization not having a corporate partner or corporate sponsor will be ludicrous," Neff says.

Shopkick CEO Cyriac Roeding agrees. "I believe the future of charity is in commercial apps," he says.

Before launching Shopkick, Roeding's team tested the idea of using store check-ins to give rewards with an app devoted exclusively to charitable donations, called CauseWorld. CauseWorld was supposed to be temporary, but the app was so popular that Roeding's team decided to keep it going. So, when they launched Shopkick, they merged CauseWorld into the new app, including the charitable giving element as one option. But the actual number of people donating to charity is greater with Shopkick than with CauseWorld because of Shopkick's widespread acceptance. After just one year, Shopkick boasts 2.4 million users, five times as many as CauseWorld. For every 100 rewards earned with Shopkick, 44 of them are donated to charity, Roeding says.

Other charitable shopping apps include iGive and Endorse for a Cause, both of which donate a percentage of your purchases at selected retailers to a cause you designate. Endorse for a Cause also donates money when members of your social network buy something from a retailer you've suggested. Neff likes MiniDonations, which rounds up the change from your purchases and donates it to worthy causes.

How social shopping works

The companies behind these services want to make money, too. Most negotiate with the retailers to receive a percentage of each purchase in addition to the charitable donation. "If the user gets 5 percent from a retailer to give to charity, we may get 2 percent on top of that, for example," says Socialvest CEO Adam Ross. But Socialvest's cut is separate from the charitable dollars. "If a member sees that they've earned 5 percent of their purchase for charity, that whole amount is going to the cause," Ross says.

When choosing charitable shopping apps, read the fine print just as you would when checking food labels, Neff says. Avoid apps that provide only vague statements such as "a portion of proceeds" goes to charity. "Find out who benefits and how much they benefit. Look for real numbers, such as 10 percent of the purchase goes to the charity," he says.

How much money can charities earn this way? Ross estimates that among the 3,500 users who enrolled during Socialvest's one-year testing period, each active user earned an average of $12 to give to charity. With Shopkick, you can earn 100 "kicks" just for visiting one store. Each 2.5 kicks equals 1 cent, so donating 100 kicks to your favorite charity is like donating 40 cents.

It doesn't sound like much, but it can add up when millions of users participate, as with Shopkick. "It's a numbers game," says Roeding, who just gave the American Red Cross a check for $100,000 on behalf of Shopkick for rewards generated by users.

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