In a move to have a sustainable business model, charities are taking an increasingly entrepreneurial approach to sustaining their initiatives. One quick example is US-based MalaikaForLife, which runs an ecommerce store selling bracelets hand-made by a group of 150 women in Tanzania. MalaikaForLife’s proceeds go towards providing them with a source of sustainable income and for stamping out malaria in the region.
Then there’s DoGoodBuyUs, a type of Etsy for charities, which stocks hundreds of charity made products.
The trouble is that in order for a charity to produce these products, they need some kind of starting capital to produce the goods. One option would be to take a micro-financing approach through something like Kiva. A new startup from Hong Kong reckons they might have another option.
DonationShop collects donations for charity organisations through selling branded merchandise without initial investment for the seller. The startup invests in merchandise on behalf of the charity, provides the ecommerce platform and takes care of the delivery. When an item gets sold, DonationShop keeps a fee — close to the wholesale price of the product — and the rest of the profit goes to the charity. According to DonationShop’s transparency rules, all payments go directly to the seller’s PayPal account.
Founder David Rubben bootstrapped the idea following his experience in the merchandise manufacturing industry and found that charities had trouble raising funds to sell merchandise.
“Selling merchandise online to raise funds is a great idea, but it requires significant investment in product, time and labour from ordering branded merchandise to importing, selling, packing and shipping. Usually, most of the charities doesn’t have enough resources to do it, or do it efficiently,” says Rubben.
It’s a pretty risky business. In order to mitigate some of the risk of a charity’s product failing to sell, DonationShop offers smaller charities the option of selling unbranded merchandise.
“If we invest into branded merchandise it will be hard for us to sell if the charity can’t promote its donation shop,” says Rubben.
Launched very recently, the seed stage venture has yet to see much traction, but it’s an intriguing idea.
“It took us a full year of preparations to start. We developed product designs and techniques to produce branded merchandise in small quantities, without a sharp increase in production costs, designed efficient parcel packaging system to pack faster and established our own logistics centres in Hong Kong, Europe and US to effectively ship parcels worldwide,” says Rubben.
The raw material and components enter the factory in mainland China, and exit in a postal shipment box addressed to the end-user of the product.
“Cutting supply chain costs, we are able to offer wholesale prices to the charities for quality merchandise and cost efficient worldwide delivery,” says Rubben.
Rubben says that his company’s largest challenge is convincing charities to try out the service.
“Since this is a very new way to collect donations, our goal is to create a trend among public figures, brands or companies to have a donation shop and use their names to help. That’s the biggest challenge,” says Rubben.
Charities and individuals willing to promote sales on behalf of charities — Rubben underlines the gravitas of public figures — go through a screening process.
“Anybody can open a donation shop as long as he/she can demonstrate an ability to promote it successfully and commits to sending all profits to the charities,” notes Rubben.
Successful applicants get an online store through which they can select the type of branded item they’d like to sell. Once the shop owner has sent through a brand logo or images, DonationShop starts the designing and manufacturing process, and calculates the product and shipping cost for each item.
Once the initial quantity of a branded product is ready, the store promotion can commence. DonationShop will bill charities or those selling on behalf of charities on a recurring basis for products sold.
It’s still early days for DonationShop, but it’s an idea with heart. Rubben hopes that having a “donation shop” becomes the go-to ecommerce tool for public figures who support charities.
Since Rubben’s venture encompasses control of the entire supply chain, charities located in countries where the infrastructure isn’t well-developed, stand to benefit.
“Through DonationShop, a charity in Africa, Latin America or anywhere else in the world, is able to sell merchandise to collect donations globally, without investing any money, paying high shipping fees or dealing with product stocks,” says Rubben.
Hmm, Foxconn for charities anyone?