Anton B Iyn

Transparency standards of Omaze are unacceptably low for company working with charity organizations.

stars-rating-full stars-rating-full stars-rating-full stars-rating-full stars-rating-full

Transparency standards of Omaze are unacceptably low for company working with charity organizations. I was not able to find any financial reports or details about past sweepstakes.

I would like to know how much they had raised and transferred to each charity after each contest.

What is their profit in comparison to money transferred to actual charity? The only number we have is: “… Omaze has given over $100 million to charity!” Since the company is running for more than 6 years, it was 16.7 million per year in average. I am wondering where exactly all this money goes. And I am even more concerned since I have found “Over $100 million raised to support charity” on the other page.

“Why is that so important and what is the difference between “raised” and “given”?” - you would probably ask. Let us read their official statement:

“When you contribute $10 for the chance to win a celebrity experience (set visit, dinner date, tickets to a premiere, etc.), $6 is donated to charity, $2.50 on average goes towards marketing expenses and credit card fees, and Omaze nets the remaining $1.50. A $10 contribution for the chance to win a prize-based experience (like a car, vacation or tuition) breaks down as follows: $1.50 is donated to charity; $7 typically goes to sourcing and shipping the prize, covering the winner’s taxes, marketing the experience, and processing credit card fees; and $1.50 goes to Omaze. These experiences require substantially more resources to secure the prize and help spread the word.”

So, only 15% - 60% goes to actual charity.

When you are in a not-for-profit sector nobody expects you to make money. Generally, we want charity to take money we made and deliver promise with as little overheads as possible. Unfortunately, this is not a strategy to get the best impact for your money. Omaze is bragging that their for-profit model enables them to expand marketing services “far beyond what’s usually done in the nonprofit space”, and therefore increase the total dollars raised for partners.

Unfortunately, I have no data to prove whether it is true or not. As a financial professional I would agree with some of Dan Pallottas’s ideas. Yes, it is important to invest in your growth, but such growth should be measurable. I can not disagree that 90% of $100 000 is less than 60% of $500 000 ($90 000 vs $300 000), but 90% of $100 000 is more than 15% of $500 000 ($90 000 vs $75 000).

At the same time overheads for non-profits becomes revenues if you are private for-profit organization. When you are getting fixed portion of the pie (15%) the bigger the pie - the better for you, but when you really trying to maximize benefits for charity partners it is not that easy. Due to decreasing nature of return, at some point, company would have to cut marketing spendings since they are not bringing positive return any more. It is clear conflict of interests for Omaze, and I would like to know how they are handling it.

And there is a final question for the company - what sort of business is that?

We can assume that this is some sort of marketing platform for charities, then why does it charge 60% of marketing budget ($1.50/$2.50) – that is insane.

So, I would believe that Omaze is in lottery style business and using legal loopholes to run it. It looks like they need charities to make it more legit.

View full review
Reason of review:
Transparency

Preferred solution: Publish financial reports and details about past sweepstakes

2 comments
Guest

SCAM pure and simple.

Guest

Really should be blocked

View more comments (1)