Change for Good (Part II)

Late last week I blogged about donating loose change to charity through CoinStar.

Yosi brought up a good point in the comments about where your money goes when you donate. So I looked into it by emailing CoinStar to clarify.

It turns out that Yosi is correct that CoinStar charges charities a handling fee of 7.5% of any donation. The person donating is given full credit for the entire donation for tax purposes (that’s why no handling charge was shown on my receipt). Yes, then that money goes to the charity who then has all sorts of operational costs associated with running the group.

I don’t know if anyone else remembers carrying around those little orange UNICEF coin boxes while trick-or-treating as a kid, but I know that I enjoyed brining mine back to school the next day filled to capacity. (Do kids still do that?) What I didn’t realize until I got older is that someone had to process all of that change.

The Red Cross and UNICEF use CoinStar as an official dropoff station for coin donations. That means that any fieldworker that has collected coin donations does not need to further process the money, but only has to drop it off and get a receipt when they’re done. In return for processing the change and accounting for it with receipts, etc, CoinStar directly deposits the money into the charity’s account within TWO days.

When making a credit card donation, the credit card company charges the charity a fee for each transaction. This isn’t all that different. Payments by check, I believe, net them the most money (though someone on their staff has to process them and of course they have to wait for the money to clear). UNICEF boasts that 93% of all monies make it to the field and Red Cross shows 91% makes it to their programs.

Would I like to see CoinStar have no fee at all? Certainly. If you’re making a donation larger than $100, I think a check is probably the most efficient way to get the money to them, especially if it’s not for a time sensitive disaster like this one. But for a painless way to get a few bucks into the hands of those who have far more need for it right now than I do, I can’t think of any further rationale for not doing at least something.

Would I ever use CoinStar to process my own change? No, I can’t think of any time in my life where I’d like to give away 7.5% of my money for a convenience like that.

I think programs like CoinStar’s open an opportunity for children to develop a sense of charity as well, that they can gather change and put it in the machine and see it tallied up and see that small change can add up to substantial amounts. It helps them feel like they’re part of the world. I don’t mean to sound preachy (oops, too late), but I’m of a mind to just do something, instead of worrying if it’s the most efficient thing. In contrast to all of this well researched stuff, Yosi (if you’re still reading), I did also make a donation directly to a church in Sri Lanka (where 500 homeless villagers have taken refuge) in hopes that money would go directly to them. Of course by sending it directly to the bishop, there’s much less accountability and strangely, more faith involved.

2 thoughts on “Change for Good (Part II)”

  1. Of course I am still reading! Like I would miss a day of checking in with!?!

    Let me apologize publicly if my comment on your post came off as a judgment on your giving habits. It is obvious to me and should be to anyone who reads your blog that you are a kind, conscious and generous soul. You give to me/us daily and I thank you for welcoming me into your world with such an amazing blog. Also, my comment on your post was certainly not intended to serve as an excuse for anyone to NOT donate. I was simply trying to point out that that CoinStar’s actions were perhaps not as altruistic as you originally thought.

    I was raised with a ‘tzedaka’ box instead of a UNICEF box, but the lesson learned was the same: both our actions and our pocket books have the ability to save lives and help those in need. It is indeed imperative to important to teach children just as it is important to remind adults about the importance of donating and volunteering.

    But as much as I applaud CoinStar for their efforts to give back support to the communities from which they profit, I also believe that it is their and every other company/corporation’s RESPONSIBILITY to do so. This isn’t my blog [but you did refer to me by name so I will take the liberty of a rebuttal] and I don’t want to be preachy either [too late], but I believe that a company that posts a gross profit of $99.31M (NASDAQ: CSTR) has the ability to waive its 7.5% processing fee on charitable donations.

    The Association of Payment Clearing Services, the English trade association representing debit and credit card issuers, has waived theirs and they have collected nearly £200M in donations. I wonder why the American Banking Association [and CoinStar] hasn’t follow suit? Perhaps I read AdBusters too often, but I believe it’s a symptom of our reprehensible corporate culture that has gone without social checks and balances for too long. To be honest, after finding that most banks and credit card companies charge charities somewhere between a 1% and 2% transaction fee on all donations, it wouldn’t surprise me to find out there was even a profit margin built into the 7.5%! As a former professional non-profit development executive (fund raiser), I have never experienced such an astonishingly high service charge associated with a donation and find it to be shameful.

    Again, my comments here are not intended to criticize you or your donating practices in any way. Quite the contrary. I think your efforts are indeed noble and worthy of a blog. I just don’t trust CoinStar with even the loose change in my pockets.

  2. Wow, first, thanks for the education. I had no idea that CoinStar was that profitable (I went looking at their financial statements, but only for some line-item about charities). I appreciate you sharing that and all your other info here.

    I do stand with you right there that our corporate culture is really too stingy. I was hoping to find out that CoinStar had at least a reduced fee for their national corporate charities – and I think that 2.5% would be more palatable. I’m afraid I can’t begrudge them at least not wanting to lose money on the deal. I suspect, but am not sure, that at least a double digit percentage of their coin throughput is for charity.

    Don’t worry, Yosi, I didn’t take your comments as a criticm, merely a challenge to find out those answers for myself and thought that others would be interested. I didn’t mean to sound like I was defending CoinStar nor trying to make myself sound saintly – just a tiny call to action and if a dialogue here helps people to figure out what they want to do to help others, well then I’ve done more than just another post.

    I do have another pile of change here that I found at the office and in the bedroom (this time only about $30) … I’m probably still going to go donate it through the CoinStar, not because I think it’s the right way, but sadly because I’m lazy.

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