Last year, Virgin Money Giving trumpeted – while launching one of its tiresome PR assaults on JustGiving – that not only ought you be able to run a donation platform without making a profit, but that you can do that.
Just a few weeks ago, VMG proved themselves wrong.
Virgin Money Giving has been closed because its parent company – Virgin Money – is no longer prepared to pay for a service that doesn’t pay for itself. According to Sky News, VMG was costing Virgin Money “millions of pounds a year to operate”; while Third Sector reported that the company was not prepared to pay the “significant investment required in the service for [VMG] to remain competitive”.
‘Competitive’ is the operative word here. Even in the press release announcing its demise – which said nothing about the withdrawal of financial support, only that with Virgin Money ceasing sponsorship of the London Marathon it was now the “right time” (for whom?!) to close the crowdfundraising arm – Virgin Money demonstrated its hubris by stating how VMG had been established in 2009 as a competitor to the “very small number of providers, with high costs for charities and donors” that, it said, “dominated” the market at the time.
Well, you can’t compete with your competitors if you’re not in business.
But over what was VMG competing with those “dominant” providers? VMG never set out to make a profit, and didn’t need customers the way JustGiving did.
Since its launch, VMG has pronounced on the right way to do fundraising. They told us that platforms such as JustGiving ought not charge the level of fees it does.
It made moral capital from its own low charges (which were only low because it was subsided by a company that actually did charge for its services) and used this as the competitive advantage.
The competition was not in a business marketplace, but in a moral and ethical marketplace.
VMG set itself up as a moral arbiter of how much fundraising ought to cost, something it could only do because it didn’t have to pay that cost itself.
For over a decade it declared that its was the morally correct way. And now that doing the morally right thing has proved too expensive for VMG, it will simply stop doing it.
The crowdfundraising marketplace is undoubtedly worse off as a result of VGM’s closure. It should be competitive and there should be choice among different platforms.
But let’s be quite clear that this is a moral failure, not a simply a business matter of the numbers not stacking up (if they had charged more for their services then the numbers would stack up).
If it was morally right in 2009 to provide a cheap, subsidised service to donors, it is still morally right in 2021. Virgin Money can afford to do the right thing; they’ve just chosen not to.
However, this isn’t only about VMG using a supposed moral competitive advantage. A bigger question is why VMG was able to claim the moral high ground in the first place.
For years, certain players in the non-profit sector– from Comic Relief’s ‘golden pound promise’, to charity: water, to those regulators around the world that demand only an arbitrary proportion of donations be spent on overhead costs – have collaborated with the public’s fantasy that all the money they give ought to go directly to ‘the cause’, with none ‘wasted’ on overheads, particularly fundraising.
The sector has never been able to find the arguments and discussion points to resolve this issue, partly because the zero-cost brigade can always fall back on a recourse to the public’s moral outrage.
The moral failure that is the closure of Virgin Money Giving should hammer the final nail into the coffin of the mindset that tells donors, and charities, that they can get something for nothing in fundraising.
But it won’t. Unless we change the conversation within the non-profit sector about how much fundraising costs, there’ll be another company or charity that comes along promising zero-cost fundraising, and that anyone who doesn’t do this is robbing donors.
Ian MacQuillin is director of the think tank Rogare