In Haiti crisis, a teachable moment for investors

[FarCenter]

http://blogs.reuters.com/rolfe-winkler/2010/01/18/haiti-crisis-provides-teachable-moment-for-investors/
Jan 17, 2010 18:21 EST

Well known to businessmen everywhere, but totally under-appreciated by investors, is the concept of working capital….the day-to-day operating cash flow that makes a business run. Turns out the Red Cross has a big working capital problem when it comes to text message donations. From Carrick Mollenkamp (WSJ), Americans pledge millions, but cash flow takes weeks:

Secretary of State Hillary Clinton, CNN, and users of Twitter Inc. have urged people to punch 90999 and then type in the word “HAITI” on their phones to send $10 to the American Red Cross. But the money won’t be routed from most U.S. wireless carriers to relief efforts until cellphone users pay their phone bills.

That could take 30 to 90 days, telecommunications officials estimate, well after the critical initial days in which humanitarian aid organizations are trying to deliver medical supplies, food and water to save injured earthquake victims and help others with their most immediate needs.

To run its operations, the Red Cross needs cash today. But text message donations don’t actually come through until users pay their cell phone bills and carriers pass through the funds.

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[bear425]

1. Very Good Point. We should donate via the Red Cross site

www.redcross.org so the organization will benefit and be able to utilize the money immediately.

additional link: http://american.redcross.org/site/PageServer?pagename=ntld_main&s_subsrc=RCO_ResponseStateSection

further edit: why not do both? Donate via Red Cross site and text. Haiti will need our help now and for a long time to come.

[dkf]

2. I heard some carriers were upfronting the donations and assuming it would be paid.

Was I hearing things?

[bear425]

3. Didn't hear that, but they should,. n/t

[JVS]

It shouldn't make that much of a difference either way because different customers...

have different payment dates for their cell phone plans. This means that some of the people who have texted have probably already had their bill come due and that there will be a steady stream of cash coming.

[FarCenter]

4. They are foregoing the fees, but I don't think that they are fronting the money

http://www.reuters.com/article/idUSTRE60E4ZV20100116?type=technologyNews

Wireless carriers Verizon Wireless, AT&T Inc, Sprint and T-Mobile USA, a unit of Deutsche Telekom AG, have waived fees for customers wishing to send mobile donations. Carriers are also letting users know they are not taking a cut of the donations.

"There are no text messaging fees and 100 percent of the $10 donation goes to the American Red Cross," Verizon said in a statement.

Manis said Mobile Giving is working with wireless carriers to decrease the lag time between when a cellphone user makes a donation and when the funds arrive at a charity. Donations can take 90 days to be delivered to a charity.

"Every carrier is working through a solution to push those funds out faster," Manis said.

[bear425]

5. K/R n/t

[dkf]

8. Verizon sending 100% immediately. Sprint sending 80%

ATT thinking about it per Rachel.

http://bridge.transpera.com/generate_video/5086010?type=iPhone&customer_subdomain=MSNBC

[Mojorabbit]

10. Rachel did a piece on that

and most are if I remember correctly immediately making 80 percent available upfront.

[Jennicut]

6. The thing is, Haiti will need money over the long term no matter what.

But the carriers should work out a deal to upfront the money.

[uppityperson]

7. k&r. I have no problem with orgs raising money for later, but NOT if they advertise like it will be

for immediate use.

Thank you for posting this.

[iamjoy]

9. Maybe It's Not So Bad

I mean, I don't imagine the American Red Cross has no money in the bank. They probably have some general funds and they can transfer money from that (a "loan") to the Haiti fund. Then, when they get the money from the texts, they can pay transfer the money back.

Or is that illegal? Or are people still going to be pissed when they find out about it (kinda like over the 9-11 stuff).

Or maybe it will be used for ongoing relief in Haiti - this kind of disaster isn't going to be cleaned up in a week, a month, etc.