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.