Shopkick Switches To For-Profit Status, Sees Surge In Charitable Giving

The popular geo-location app grew its total user base as it transitioned from nonprofit to for-profit--having more users to give to charity in the process.

In a fascinating case study of how the for-profit industry can sometimes make a greater social impact than the nonprofit world, Shopkick, a popular geo-location app, has paradoxically created a more charitable community since it decided to ditch its charity business model and focus on giving people free stuff. The app rewards users with virtual currency for completing various check-in tasks at selected retailers which can then be redeemed for products or used to give equivalently to a charity. But it began as CauseWorld, a similar check-in app where users could only give their points to nonprofits, rather than the gift cards and discounts they can now also redeem under Shopkick.

When CauseWorld users transitioned to the new for-profit version, Shopkick, the community grew almost four times, and a sizable chunk still decided to give their rewards to charities. Though a smaller percentage currently donate, the massive growth in users means that a greater number donate, making the aggregate contribution more charitable than under CauseWorld.

"You basically benefit from greed," says Shopkick CEO Cyriac Roeding, "You build a larger user base with a for-profit app than with a nonprofit." Given that CauseWorld raised roughly $1.5 million for charity in the few years it was around, both the community's continued existence and bump in giving is a significant contribution to social good.

Shopkick awards virtual currency when users check in to a retailer; then users decide to give a certain number of those virtual credits to either a charity or to buy actual consumer goods. Here a few numbers on to compare CauseWorld to ShopKick:

A carbon offsetting project:

CauseWorld: 2,133 donations per monthShopkick: 2,673 donations per month

A charity to prevent child abuse:

CauseWorld: 667 donations per monthShopkick: 1,257 donations per month

A breast cancer charity:

CauseWorld: 533 donations per monthShopkick: 964 donations per month

Shopkick is the latest in a long line of social entrepreneurs who have found that combining charity and profit is more beneficial to both, including Toms Shoes's Blake Mycoskie. "If I had created a nonprofit, we would have been able to give shoes once, or maybe twice," he told Fast Company. Thanks to his massive retail presence, though, the sustainable model has given more shoes to charity than a nonprofit could have alone. In Shopkick's case, the change was quite dramatic. Some charities received double the number of monthly donations.

There is one caveat to the Shopkick story: Because Shopkick is forbidden from disclosing actual donation numbers, there's no way to verify if the total dollar amount going to charity has increased--we only know that users are giving more often. It's possible (yet unlikely) that when Shopkick transitioned from CauseWorld, the amount of money per donation decreased.

Regardless, the lesson holds: More people were donating their credits to causes. And, as other nonprofits or aspiring social entrepreneurs mentally wrestle between for-profit or nonprofit models, the Shopkick lesson is a powerful argument in favor of market capitalism.

Follow Greg Ferenstein on Twitter. Also, follow Fast Company on Twitter.

[Image: Flickr user Images_of_Money]

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