Oct. 18 (Bloomberg) -- Causes, a for-profit company that lets Facebook Inc.’s users give money to charities, raised $9 million in new funding and began selling gift cards in supermarkets as it aims to bring more philanthropy to the Web.
Co-founded three years ago by former Facebook President Sean Parker, the Berkeley, California-based company has raised a total of more than $16 million in financing. Investors in the latest round include venture capital firms New Enterprise Associates and Founders Fund Management LLC, Silicon Valley startup backer Ron Conway and Salesforce.com Inc. Chief Executive Officer Marc Benioff.
“I view these guys as the modern social revolutionaries,” Benioff said. “If they were born in the ‘60s, they would be protesting the war. Instead, they’re trying to change the world through the Internet.”
Causes’ Facebook application connects 119 million people to a range of charities, making it easy to donate small amounts. Americans spent $303.8 billion on philanthropy last year, according to research group GivingUSA Foundation. Causes aims to channel a bigger portion of the money through social networks, where users can rally around online communities. The company makes money by asking for a voluntary “tip” of 10 percent or more.
Causes’ new $25 and $50 gift cards, which will be available in Safeway Inc. and Vons supermarkets in California, let people donate online to their choice of thousands of charities.
‘Make a Difference’
Leilani Muenter, a professional race-car driver in North Carolina, used Causes to call attention to a charity she supports. She taped the killing of 15 dolphins in Taiji, Japan, and uploaded it last week to the Causes page for Save Japan Dolphins. The video got more than 10,000 views in three days, and inspired some people to contact Japanese embassies in their hometowns, according to comments posted on the site.
Online social tools are convincing people that “they can make a difference,” said Dave Philips, executive director of the Earth Island Institute, a Berkeley group that oversees Save Japan Dolphins and other charities. Most of the nonprofit’s 960,000 members are registered with Causes, and it has raised about $150,000 from the site in the past year.
Aflac Inc.’s Cancer Center has raised $1.17 million on Causes, more than any other organization. The Nature Conservancy is second with $399,716, followed by the Humane Society of the United States with $372,005.
Online charity accounts for about 5 percent of all donations in the U.S., the Blackbaud Index of Online Giving estimated. That number is bound to rise as individuals and large organizations see how social networks can eliminate some of the burdens of fundraising, said Causes co-founder Joe Green, 27, a Harvard University graduate who shared a dorm room with Facebook CEO Mark Zuckerberg from 2003 to 2004.
Money spent on large direct-mail marketing and telemarketing is often wasted, since only a small portion of people reached respond, Green said.
Those methods also aren’t effective at getting people to recommend causes to their friends, a kind of “social capital” that is increasingly being created on Facebook and other sites, co-founder Parker said in an interview. “The big untapped area was leveraging social capital between people to get things done in the world,” said Parker, 31, who is a managing partner at Founders Fund.
One of Causes’ most successful services is its birthday application, which lets Facebook users ask their network friends to donate to a charity they choose. More than 100,000 people have used this feature, and birthday donations have totaled $7.6 million, according to Causes, which doesn’t disclose its sales.
The gift cards are helping build awareness of the Causes brand outside of Facebook, according to Parker. The company worked with Blackhawk Network LLC to get the cards in Safeway and Vons stores. “This could be a successful gift card, and a successful gift card usually does a half-billion dollars” in total payment volume, Parker said.
Causes also has partnerships with corporations, which pay between $50,000 and $300,000 on average for fundraising campaigns.
The company will put most of the new funding toward expanding its team. The company, occupying a small, second-floor office a few blocks from the University of California, Berkeley campus, has 16 employees.
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