Mike Villar: Rising Internet Star

Early this week, we were finally able to fulfil our obligations to those who donated via PhilippineAid.com and, more importantly, to the victims of Typhoons Ketsana and Parma–at least as far as remitting the funds we have collected via our PayPal account to the Philippine National Red Cross would go.

To date, PhilippineAid.com has managed to raise over $16,648 (PhP 776,795 using today’s conversion rates) in two collection drives.

PhilippineAid.com was such a resounding success that, to me, would be one of the best and brightest proofs of concept whenever discussions on how to harness the viral power of social media to drive similar charity campaigns pop up.

It is also a success tempered with hard lessons.

In the 6+ years I have spent developing my marketing career, I have always relied on my personal skills to achieve my goals. I have focused a lot on coming up with air-tight, business plans to raise money or spinning my wheels thinking of how I could exploit the latest technological developments to inch me, little by little towards my goal. With the entire Philippine Aid thing, I learned that being part of an aggressive, determined and supportive community of peers is just as valuable, if not more.

And really, all the credit should go to everyone who have, collectively, wagered their formidable social capital to support the cause—from the average Joe tweeting and blogging about the site to the celebrity who helped spread the word—you guys fucking rock.

But perhaps, the most important, albeit prosaic lesson I have learned in organizing Philippine Aid was that fundraisers, even if being ran with the noblest of intentions will inevitably be met with skepticism and distrust.

FAILPal

Unbeknown to most people, less than 48 hours after PhilippineAid.com went live, PayPal, restricted our account due to legal and regulatory constraints which required me to submit additional information about my charity / non-profit organization.

I really cannot blame PayPal for doing this and I am, in fact, glad that they have such a security measure in place. After all, there are a lot of opportunistic people out there who are just itching to exploit calamities such as the typhoons that hit the Philippines.

The fundamental flaw in PayPal’s Account Review process is that they assumed that I run a non-profit organization who is collecting donations on behalf of the Red Cross. I made no such claims. In fact, I explicitly said that Philippine Aid was collecting funds for the victims of tropical storm Ketsana–the proceeds of which will go to the Philippine National Red Cross whom, at the time the site was setup, didn’t have their own PayPal account.

Another impression I get that the restrictions were being placed arbitrarily. I mean, really, there’s this guy who publicized that he’s going to try and help a battered wife find a new home, raises over $16,000 in donations but for one reason or another, didn’t get the account review treatment?

It was also unfortunate that the time when PayPal restricted our account was the time when PhilippineAid.com reached its proverbial tipping point. A time when there was a deluge of people who just heard of the site (virally, through social networks) wanting to donate but couldn’t because our PayPal account was rejecting their transactions.

As a remedial fix, we directed our traffic to TXTPower’s PayPal drive. That, however, didn’t last long either after PayPal clamped down on their account as well. (TXTPower President Tonyo Cruz writes about his experience here)

Fortunately, the Philippine National Red Cross setup their own PayPal account about a day after (to which both Philippine Aid and TXTPower directed both our collection drives) but we could only guess how much donations were lost due to PayPal’s terrible indiscretion.

After numerous calls to PayPal’s customer service department and emailing back and forth with their compliance department, PayPal finally restored access to my account on October 7, 2010–a good 8 days after they froze my account.

No discount for charities based in Asia?

In my numerous calls (and subsequent escalations) to PayPal, I also tried to confirm whether or not an organization based out of the Philippines can apply for the discounted fees they offer Non-profit organizations based in the United States.

The answer was that, unless an organization can provide a 501(c)(3) certificate which proves that they are exempted from some Federal Taxes because they operate exclusively for religious, charitable, scientific, testing for public safety, literary, educational purposes, to foster national or international amateur sports competition, promote the arts, or for the prevention of cruelty to children or animals (link); they cannot avail of the discounted fees.

I am terribly disappointed in the way PayPal handled our dispute with a glaring lack of a sense of urgency and the disservice they are doing to charities and non-profit organizations outside the US. This disappointment is further exacerbated by the fact that we missed out on, based on the trends we were seeing, thousands of dollars worth of donations–donations which would’ve gone a long way in the ongoing relief operations for Ketsana and Parma victims.

Congratulations PayPal. You have lost a customer.