ChipIn - a tool for raising funds on your blog

This article was written in 2010 about ChipIn, a service which allows you to manage collecting donations on your blog or website.

The service was closed in March 2013.

This article has been left in place, because it shows the process to use when evaluating any potential crowdfunding service that you might want to use with your blog.

What is ChipIn?

In some blogging niches, you may like to build community by inviting your members to contribute money to specific causes or projects.

The ChipIn widget is one tool for doing this, and it's easy to install it into your blog.

Some people believe it has advantages over the PayPal "donate" button and similar tools:

It organizes giving into campaigns (which can be used to motivate donors and organisers into giving "now" rather than "one day")
It has a progress bar, so everyone can see what's been donated already - again, this is another tool that can be used to encourage potential donors to actually take action.
It has tools for reporting on who contributed, so you know who to thank later on, and
If a particular campaign doesn't meet its target (eg "Let's raise $1000 to send Jimmy to Disneyland"), the funds can easily be sent back to the donors without the organiser having to keep records about who donated what. (I don't, yet, know if the organiser finds out the details of who donated what, or if this is anonymous.)

ChipIn Inc is the company that makes and runs the widgets, aggregates donations, gives you management reports, and (eventually) pays the donations to you. Though most of us think of "chipping in" as something we do (ie a verb), they've re-defined it as noun, saying that a "chipin" is

"an event in which funds from multiple participants are pooled and are either sent to a recipient, or are used to purchase a gift."

The ChipIn approach has these roles that a person, or business, can play:

Organiser: this is the person/business who creates the ChipIn event, puts the associated widget onto a website, and, when the fund-raising event is over, receives the donations. Organisers must register with ChipIn
Donor / Participant: a person or business who gives money using the widget. Participants do not have to register with ChipIn in order to donate.
Beneficiary: this is the target of the money. ChipIn has no connection with them at all.

A ChipIn event ends by reaching a the goal amount of money that was set for it, by reaching the end date, or because the organiser decides to end it. When it ends, ChipIn transfers donations from participants to the organiser "in the form of cash, gift cards, prepaid debit cards, services or merchandise". The cash is actually transferred via PayPay (or perhaps via a credit card account - I'm not certain if this is still an option).

But if the event wasn't successful (ie it hasn't reached the target), then the organiser decides what happens to the donations: if they want, ChipIn will refund all the donations to the participants.

Is ChipIn safe and reliable?

There are plenty of dubious third-party gadgets on the internet, so I'm normally fairly sceptical about ones I haven't heard of before.

I've done some Googling, and haven't found any negative reviews about ChipIn (yet).   There are some positive reviews out there, and it looks like it's been around for a while.   I've had a test widget installed for a week or so, and haven't noticed negative effects on my blog.   And their donations and payments are done using PayPal, which is a service that most people now regard a trustworthy.

But there are a few issues you need to be aware of:

1) Most web-services like this ask you to log in first, and then to create the "whatever" that they are offering. ChipIn reverses this, making signing-up look very easy.   But it means that ChipIn Inc collect the email address of your PayPal account before you find how much other information you also have to provide. This isn't enough to stop me from using it, but it's worth being aware of.

2) The email address you use to sign into ChipIn is displayed when people click ChipIn to start to make a donation.   This is a good security feature if you're collecting among a group of friends (they know that the person behind the widget they're using really is their friend Fred@Fish.com).   But it may not be the effect that a blogger who's trying to stay anonymous is looking for.

This can be worked around: just set up a single-purpose email address just for ChipIn, and set it to auto-forward messages to your regular address. But it's something you should be aware of.

Terms and Conditions

As always, it's your responsibility to know ChipIn's terms and conditions and a privacy policy and to make sure you follow them.

But another weakness of the sign-up process is that there are some quite significant ones buried deep in the fine print, including:

If the organiser is an individual, he or she is 18 years old or older, and a resident of the United States

If the organiser is a business, they are allowed to do business in the United States

Organizers authorize ChipIn to confirm that a payment instrument listed by an organizer on the service registration web page is in good standing with the issuing U.S. financial institution by submitting a request for a payment authorization and/or a low dollar credit or debit to the payment instrument and by other confirmation means.
This is close to a direct quote: It's basically saying that they can check out your PayPal account when they register by putting through a low-value transaction.
It's possible that this condition is from a time when the service didn't use PayPal. But it does seem like a very broad condition for initial registration, especially since it's so deeply hidden.

Organizers also authorize ChipIn to obtain credit reports and to otherwise make credit or other background inquiries on organizers as ChipIn deems appropriate to assess an organizer’s eligibility for the service, or to review the organizer’s continued use of the service.
This is also close to a direct quote: It's basically saying that ChipIn can do a credit check on you when you register.

Some other terms and conditions that aren't so significant, but are worth being aware of :

You can't use the ChipIn logo etc (except as it's shown in the widget) for anything else unless you get their permission.

ChipIn events may be deleted if they have frivolous content or unrealistic targets.

You can't post anything which might be offensive or illegal, or which affect the safety or rights of other users and members. This includes:

Anything unlawful, harassing, libellous, abusive, threatening, harmful, bigoted, racially offensive, obscene, sexually explicit or otherwise objectionable
Anything that encourages illegal behaviour
Spam
Copyright or trademarked material
Viruses
Things for commercial purposes, (eg contests and sweepstakes), without permission
Anything that misleads people

ChipIn doesn't get involved in disputes between organisers and contributors.

NOTE: this is an excerpt of my interpretation of the T&C's as at today. It may or may not be correct and up to date. It's most certainly NOT a legal opinion or analysis. Always consult ChipIn's official documents to get the true and correct statement, and a lawyer if you need legal advice.

Transaction Fees

Using ChipIn is free - I'd guess it's funded by advertising, merchandise sales, and (the biggie) interest from donations in between the time that they're made and when the event ends.

But PayPal is used for transactions, and regular PayPal fees apply. At the moment, these are

30c plus 2.9% if you're receiving $US,
30c + 3.9% if you're receiving other currencies.

These amounts are relatively small if you're getting reasonable-sized donations (eg receiving $US10 cost you 30 + 29 = 59c). But if there's any chance that people could donate very small amounts (eg 50c), you may find that most of the donation is used up in fees. Worst case, malicious people start donating less than 30c, meaning that their "donation" will actually cost you money.

For most people, this won't be enough to stop them using the service. But it is something to keep in mind.

Other things to consider

Other items on your blog

If you also run other advertising or donation items on your blog, you may need to consider whether seeking donations for causes could conflict with the terms and conditions of your advertising. I don't think it conflicts with AdSense, although if you are encouraging your users to click your ChipIn widget, you need to be very careful that the couldn't get confused into thinking you were saying to click the regular ads.

Declare the proportion of donations that don't get to the cause

Many people consider that it's good fund-raising practice to tell potential donors about the proportion of their donations that are used for administration and so don't reach the beneficiary. If you do this, don't forget to mention the PayPal fees.

Widget Ownership

A ChipIn event or widget effectively belongs to your ChipIn account, and is tied to your PayPal account. If you ever transfer ownership of your blog to someone else, it would be good to remove all ChipIn widgets from it, so the new owner has a clean start. Or at very least make this a part of your negotiations over the change-of-ownership.

Getting a collection started

The system won't let you contribute to your own event, so (unlike most real-world collections) you can't pop in a few dollars to get people over the "I don't want to be first" factor. So unless you have two PayPal accounts, you'll need to ask a friend to make an initial contribution.

The widget doesn't show up in feed-readers

Readers who view your article through an RSS-tool (eg Google Reader, Bloglines) won't see the gadget: you may want to put in a sentence telling them to go to your blog to see it.