Giftcards for the greater good
Have you ever been stuck with an odd remainder on the end of a giftcard? What are you supposed to do with $7 to Bloomingdales or $12 at Home Depot? Now, an answer is popping up that makes us feel good about more than just not wasting: donating them.
On average, each household in the United States has around $400 worth of gift cards lying around, according to Plastic Jungle, a start-up that sells, purchases and exchanges unused gift cards.
Owners of idle gift cards typically use Plastic Jungle to exchange cards for cash or a credit with Amazon.com. (Customers lose some of the face value in the transaction.)
But the Mountain View, Calif., company recently added the option of donating the full face value of the cards to needy schools through DonorsChoose.org.
Plastic Jungle is hoping the initiative will strike a chord with strapped consumers who still want to donate to charitable causes, said Kristin Cunningham, director of marketing and business development for the company.
“This is a new way to fund a charity, which is particularly relevant during a time when it might be hard for some people to make the same-sized gifts as usual, although they still want to donate,” said Ms. Cunningham.
Plastic Jungle, which was founded in 2006 and closed a Series A round of funding for $4.8 million in May, makes money by buying retail cards at a discount and reselling them at a slightly higher price.
For example, if someone wanted to trade in a $100 gift card from Macy’s for cash, Plastic Jungle would verify the amount on the card and make an offer to the customer, usually around 80 percent of the original amount.
That Macy’s card would then go up for sale on Plastic Jungle’s Web site at a slightly higher price, but still lower than its original retail value. Ms. Cunningham said the average discount was around 15 percent, although discounts could occasionally reach 40 percent or higher.
The company sees cards for everything from Tiffany to McDonald’s but the ones for Wal-Mart Stores and Target are the most popular and often “fly off the shelves within minutes,” she said.
Plastic Jungle is handling millions of transactions and revenue is growing 50 percent quarter over quarter, Ms. Cunningham said.
DonorsChoose.org was founded in 2000, when Charles Best, then a social studies teacher in the Bronx, was feeling the brunt of budget cuts in his own bank account. Tired of covering the costs of supplies and field trips for his students, Mr. Best created a Web site where he and his fellow teachers could list their specific requests in the hopes of receiving funding.
Teachers on the site commonly ask for items such as book sets, arts materials and study cards. Donors receive thank-you cards from the classes they help and a line-item report of how donations were spent. More than 100,000 teachers have posted requests, and the site has processed $40 million worth of donations to classroom projects, said Mr. Best.
“We’re like a philanthropic eBay,” said Mr. Best. “We are both a charity and a marketplace.”
The nonprofit, which partnered with Plastic Jungle in May as a way to expand its donor base, will match the difference between the original balance on the gift card and what Plastic Jungle pays the donor “so that donors don’t lose a single penny when donating a gift card,” said Mr. Best.
For example, if a $50 gift card exchanged through PlasticJungle is valued at $40, DonorsChoose.org will match the remaining $10 to be donated to one of the classroom projects on its site.
However, unlike direct donations to DonorsChoose.org, gift-card donations through Plastic Jungle are not tax-deductible. Although the company says that in the next few weeks, users making a gift-card donation through Plastic Jungle will receive a donation confirmation to seek a tax deduction.
Mr. Best said the collaboration with Plastic Jungle was “just one example of the partnerships we are building with a number of companies.” Almost 20 DonorsChoose gift cards have been redeemed thus far- to the tune of close to $700.
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My Take: It’s nice to see a combination of philantrophy and that Ultimate Motivator, profit. It had to happen eventually, but it’s become economically viable to think about our fellow man. Sort of the like the evolutionary value of altruism- now the propogation of our bank accounts is assisted by cunning cyber skills, as much as our species was kept alive by hunting and gathering back in the day (that’s right, the Trogdalyte day).
I’ve got to tip my hat to the resourceful creators of DonorsChoose. Way to go outside the system when it’s not fulfilling your needs. We could all learn a lot from you. And Plastic Jungle can smell a deal when it gets near one (look at how well eco-friendly toilet paper sells- consciousness is marketable), but what I don’t get is: how is the non-profit entity expected to make up the difference? What’s up with that?
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