Sports stars lend their names to multi-level charity scheme

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How do you get the greedy to donate? Ex-Winikhaya businessman has the answer.

JOHANNESBURG - How do you get people to donate money to charity? For businessman Dawid Crous the answer is to start a multi-level marketing (MLM) scheme with a difference. The scheme, called Give for Life, has the endorsement of several sports stars, including Springbok rugby player Victor Matfield and swimming star Ryk Neethling.

Give for Life's website makes liberal reference to Leon Louw, a director of the Law Review Project, and who is known to Moneyweb readers for his involvement with the Free Market Foundation.

Give for Life is the brainchild of Crous, who was previously involved in televised charity raffle Winikhaya. However, he is not the first person to come up with the concept. The scheme is in fact remarkably similar to U-Care, a scheme which has seen a great deal of success among certain communities.

Give for Life describes itself as a "social entrepreneurship business" that benefits reputable charities.

Members are invited to join at a one-off cost of R150. Thereafter they choose their "contribution status" by deciding how much to contribute to the scheme. Monthly contributions vary from R100 for the Student package to R1 000 for the Platinum option.

Members who find new recruits earn commission on their contributions. For every R1 Give for Life's members contribute, 20c goes towards charity. The remaining 80c goes toward satisfying commissions of a five-level marketing scheme and "management fees". This breakdown is disclosed in Give for Life's terms and conditions.

The management company, Giving Innovations Projects, has undertaken to pay back 60% of its after-tax profit to charity. Each member also has an option to donate his or her commission to charity.

Louw says that he does not endorse the scheme. His job is to ensure that it complies with the law. In this regard, The Law Review Project offers its services to a number of multi-level marketing (MLM) schemes - including U-Care and Give for Life.

According to Louw, laws that apply to multi-level marketing schemes are seldom clear-cut or simple. He describes the South African law as "bad, vague and uncertain."

For the Law Review Project to be satisfied with a particular scheme, it must be transparent and have accurate and honest disclosure.

Louw says that earnings examples must be of real-life people. Checks and balances are put in place to minimise fraud. The scheme is also shown to the relevant government departments for their approval.

Louw does not participate in Give for Life himself, but he does not seem too perturbed by the relatively small portion of total contributions that finds its way to charity. He notes that many fundraising schemes might have lower rates of return. In some cases they could even lose money.

Give for Life members cannot be in it for altruism alone. If they were, it would be far more efficient to donate the money directly to a charity. Why do it through Give for Life if it means that 80% of their contribution is sacrificed towards management and marketing costs?

Crous answers that 20% is the minimum amount that goes to charity, since a member has the option to donate any commissions earned.

"With Give for Life you only need to get three other people to join the programme and you contribute to charity with hardly any cost to yourself," says Crous. He cites a real life example, Marie Botha, a housewife who joined Give for Life at R500 per month.

"She has now on her own generated R115 627 for the charities, and personally earned an income of R53 893.Since you can also nominate your own charity I believe that is the very reason why Give for Life will generate as much as R100m for charity by the end of 2010."

Crous sees Give for Life as a way of involving charities in business. He notes that there is no financial risk to the charities for their participation; as long as members pay their contributions, they earn money.

Crous has a long history with charity-based business ventures, and knows that the charities often get a small portion of total revenue.

Take Winikhaya as an example. Winikhaya invited SABC viewers to send SMSes at a cost of R7.50 apiece. In return they had the chance to win "dream house" worth R500 000, which was raffled every month.

The lion's share of the R7.50 went to the cellular companies like MTN Group and Vodacom. Crous says he asked these giants to cut their fees, because the scheme was in aid of charity, but they apparently weren't interested. Thereafter the SABC was the second-largest receiver of income, followed by the advertising agencies and the wireless application service providers. The charities were near the bottom of the revenue pecking order.

There was much debate over whether Winikhaya was operating in contravention of the Lotteries Act. A High Court judge declared it a promotional competition but this decision was later overturned on an appeal by the National Lotteries Board.

With Give for Life, Crous is not taking any chances, hence the involvement of Louw and the Law Review Project.