Charities scrambling to respond to the needs of the millions of people hit by the disastrous earthquake in Haiti have needed money fast. One way they have been raising it quickly and cost-effectively from millions of individuals is through donations made by SMS, which is now widely recognised as one of the most efficient ways to handle both commercial and charitable micropayments of $10 or less.

The American Red Cross, for example, said on Friday that it has received more than $9 million in donations from over 900,000 cell phone users through a service that enables Americans to text a specified short word, such as “Haiti”, to a specified short code (90999) and $10 is then deducted from their monthly mobile bill or prepaid credit. The beauty of SMS as a channel for donations is that it is quick, easy and low-cost, making it viable for charities to collect relatively small sums from consumers without incurring much in the way of overhead – they don’t have to pay collectors to knock on doors or roam busy shopping streets.

Although there has been some controversy in Europe about the size of operators’ handling fees for routine SMS donations, the biggest issue for charities probably relates to getting the short code and short word into the public domain. In the case of Haiti, the media, celebrities and word-of-mouth has largely done that job for them. Moreover, the mobile operators in some countries, such as the U.S. and the U.K., have waived their usual handling fees for SMS donations to charities helping Haiti.

Crucially, giving via SMS is also simple and quick for consumers. I made a donation to a charity working in Haiti via their web site, but the process was slow and cumbersome, requiring me to key in my 16 digit credit card number and other personal information. In retrospect, it would have been quicker for me to have sent a series of text messages to the U.K. charitable short code and had the total donation deducted from my phone bill.

Breakthrough in the U.S.

Many Europeans are now accustomed to giving by SMS, thanks to television fundraising shows, which have steered viewers towards this method of making donations. By contrast, in the U.S., SMS donations are a relatively new phenomena, stimulated in part by the work of the Mobile Giving Foundation, which was only founded in 2007.  

But the extensive U.S. media coverage of the tragic aftermath of the Haiti earthquake seems to have prompted many Americans to want to give money immediately and some will have used SMS to donate while continuing to watch the news bulletins. The Mobile Giving Foundation said on Friday that up to 10,000 donation text messages were being sent by Americans every second.

As a result, SMS donations should now have a much higher profile Stateside and mobile networks are likely to become a major channel for less urgent, more routine, fundraising in future. Moreover, mobile operators and charities need to consider whether there is scope for more interactive services that will really engage individuals and potentially spur them to give to their chosen cause on a regular basis.