How we donate, Part III
NOTE: This post is the third in a series of posts about how Effective Coffee donates money. We think it’s important to donate money to effective causes and doing so is central to our operation. Being clear about how we donate is important us. See Part I and Part II for more.
When you give someone a Gift Subscription to Effective Coffee, you’re helping us donate quite a lot. Because of how we count that revenue and the subsequent shipments, it turns out that per bag, Gift Subscriptions generate more money for the great causes we support than a regular subscription.
There’s a little more to the story, though…
In September, a customer asked that Effective Coffee have gift subscriptions as part of its offerings. It was a great idea and someone asking for it was just the motivation I needed to set about finding a way to get it done. The option has since gotten a fair amount interest from current and potential subscribers.
There was a problem though: how precisely to incorporate gift subscriptions into Effective Coffee’s giving program was not clear to me nor to those from whom I asked for input.
Close readers of our giving program know that we donate according to how many subscribers we have in a given week. With more subscribers comes more revenue of course, but in our case it also means a higher Giving Rate.
Gift subscriptions are paid upfront, so they generate a big boost in revenue in the moment, from which we donate according to the current Giving Rate. But gift subscriptions also leave a long tail of renewal orders that generate no revenue. I struggled between two main options:
- Count the gift subscription once, donating a percentage of the revenue earned from the gift subscription, or
- Count each shipment as a unique order, dividing the price of the gift subscription by the total number of shipments and then counting that “revenue” as part of each weeks revenue.
In either case, it didn’t feel to me that I was counting the gift subscription fully. And while there are advantages to each approach, eventually I settled on option 2. But I’ve since changed my mind.
The main advantage to option 2, which might be called “donating piecemeal” is that, provided we continue to grow, we’d be able to donate more. And donating more is always the goal.
However, accounting for even just a couple gift subscriptions soon grew into a mammoth project, forcing me to spend a lot of time carefully tracking them.
So I changed the approach.
Now, when someone buys a gift subscription, Effective Coffee donates according to that week’s Giving Rate. But we also include each shipment as part of establishing each subsequent week’s Giving Rate. In this way, we donate a big amount at the beginning of the subscription and then each shipment drives our Giving Rate a little higher than it would have been otherwise. Even though the renewal orders themselves don’t generate any revenue, they do boost the Giving Rate and so they boost the amount we give each week, just like a normal subscription.
At the end of the day, it means we’re counting each gift subscription fully, no matter how you slice it.
I went backwards through the past few months and corrected for the change and, as expected, we donate a tad more using this newer approach.