The New Charity Business Model

June 9th, 2010 by Kit Eaton

One company gives away its products, for a small donation to charity.

Brought to you by Liberty Mutual's
The Responsibility Project


In the Interwebs era, there seem to be as many business models as colors in the rainbow ... yet few have the charitable cachet of "Causium." This is a wildly successful and public-spirited invention by software company Atlassian. Just the other day Atlassian announced that through their Causium software distribution model they've amassed a grand total of $500,000 in charity donations. In this case the charity is Room to Read, a literacy improvement program that's a personal favorite of the company's founder. This has turned Atlassian into Room to Read's largest Australian donator, and the money will go to educating readers in Sri Lanka, Vietnam, and Cambodia, including establishing "34 libraries, four schools, and two local language books" as well as scholarships in the Girls Education program.

It's an admirable program, and amazing news for two reasons: First, it took just seven months to raise $400,000 of this amount. Second, Atlassian raised the cash in an unusual way, by sort of giving away a high-quality, technically supported software product to tens of thousands of customers. This, explained Atlassian's Director of Product Marketing Daniel Freeman, is the "Causium" business model.

The Causium notion began when Atlassian did a deep dive into its business and realized it wasn't achieving significant sales of its software in the small businesses segment. "We were hurting in market share," Freeman said, and the team realized "we were doing so poorly we could give away a product in this segment and not hurt our bottom line." This is a great PR kick that many companies have tried, but the team wanted to apply some lateral thinking, supported by the companies existing "1/1/1" model (where 1% of employee time goes to volunteer work, 1% equity goes to the Atlassian Foundation and 1% of products are donated to nonprofits). Instead of giving away a product, which tends to result in customers perceiving little value in it, or charging a medium-scale but discounted price, Atlassian decided that a micropayment was a good idea, with 100% of the cash going to charity.

That's not all, though, as Atlassian decided it wasn't going to "be that company" that gives away a freeish product that was "bastardized" with crippled capabilities and no ongoing support. Nope--the software would be the full system, and come with completely "free technical support." After briefly panicking that this effort might "explode" Atlassian's systems, the company launched a five-day trial that sold two products to the small business market for $5 for five seat licenses. They hoped it would raise $25,000, but it ended up reaching $100,000, with some days seeing 20 times the normal purchase event volume going through the company's servers, frenzied tweeting about the experiment, and even some people purchasing the package just to aid the charity.

A success, evidently, one that even motivated some of the company's staff to work extra hours because they felt "it was the right thing to do." Learning from this five-day event, the company added more products to the Causium model, upped the price to $10 for 10 seat licenses and launched it as a permanent system in October of 2009. Strong sales between then and now led to that $500,000 charity figure.

Freeman was careful to note that this event has actually had massive knock-on effects for the company, acting as a huge PR vehicle for the firm, resulting in millions of dollars of upsell business as purchasers of the Causium-priced software bought extra software from Atlassian. It also resulted in improvements to the way the company worked as it had to perfect and streamline its tech support to cope with the un-revenued burden of supporting the "free" products. He said he'd definitely advocate the Causium model for all of these reasons, but it wasn't intended to have these knock-on effects, and originally was a novel way to "do the right thing" that ended up as a big "bunch of right things" instead.

And if your company's heart has a somewhat ethical beat, then maybe Causium is a new sales model to try out. Which then got us thinking: If even some of those millions upon millions of free iPhone apps had a minuscule micropayment attached to them, bumping their perceived value to their customers, what huge piles of money could be raised for charities of all sorts around the world?

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