Virtual Goods For Good Causes

Farmville_freak_sweet_seeds_for_haiti At our Hacking Philanthropy event a few years back we talked about all kinds of new philanthropic models that were emerging online. One model that did not come up in our brainstorming sessions was the sale of virtual goods for philanthropy. And yet, based on the data I am seeing this weekend, this could be a very big one.

Our portfolio company Zynga's Farmville game is the most popular social game online ever with almost 20mm people playing the game every day. On Friday Zynga released a new kind of seed into the game called "Sweet Seeds for Haiti". Since Friday, they have sold about 100,000 of these seeds which cost 25 FV cash.

Here is how the offer is described in the game:

Salutations, y’all! Today, FarmVille is proud to release “Sweet Seeds
for Haiti”. In this event, y’all will be able to purchase Sweet
Potatoes that NEVER WITHER, yield XP and 125 COINS PER HARVEST! Even
better than that is the fact that 50% of the
proceeds will go to helpin’ children in Haiti. What could be sweeter
than lending a helping hand to children in need? You’ll also get a
SPECIAL GIFT with your purchase so hurry on over to FarmVille and check
it out!

And here are the details about where the money is going in Haiti:

Haiti is the poorest country in the Western Hemisphere
and the 7th poorest in the world. Zynga’s mission of connecting the
world through games is enhanced by our opportunity to support the
health and education of these children and their families. For
additional information on the recipient organizations, please see and

FATEM is a non-profit organization based in Mirebalais, Haiti, and
originally organized to bring information technology to the people in
the region, thus helping with the economic advancement of the area.
More recently, however, FATEM recognized the need for a sustainable
means by which to support the general education of Haitian children and
to ensure that these children have the necessary meals that will permit
their young bodies and brains to learn and grow.

FONKOZE, based in Port-au-Prince, is an alternative bank for the
poor. It is Haiti’s largest micro-finance institution and is committed
to the economic and social improvement of the people and communities of
Haiti and to the reduction of poverty in the country.

It's a bit tricky to estimate how much money the Sweet Seeds For Haiti has raised to date because you can earn FV cash and you can buy FV cash. When purchased, 25 FV cash costs $5. So if everyone bought the FV cash that has been used to buy the roughly 100k of sweet seeds to date, then $500k will have been raised, $250k of it going to charitable organizations in Haiti.

Even though that is best case, it's a pretty big number for three days. The key to this is that the seeds have value in the game and are tied into the game play and game mechanic. So not only are players doing something good when they buy sweet seeds, they are also advancing their own interests in the game.

I can imagine this approach being adopted across a multitude of online social games. It's an exciting development and an area to keep an eye on.

Reblog this post [with Zemanta]
#VC & Technology#Web/Tech

Comments (Archived):

  1. Dave Pinsen

    That’s a clever way of raising money for charity. As for the recipients of the charity in this case, I notice one of the two is a microfinance institution. Last December, the Financial Times published a letter by an economics professor named Milford Bateman which was highly critical of microfinance (Microfinance’s ‘iron law’ – local economies reduced to poverty). When I blogged about this at the time though, I speculated that micro-finance may be effective in getting a country from abject poverty to some measure of subsistence, but ineffective in stimulating development beyond a certain point. Given Haiti’s abject poverty, microfinance might make sense there. It will be interesting to see the results of this.

    1. laura hartman

      Dave (and Fred, et al.) – As someone who works in the area of microfinance a great deal, I am extremely aware of the challenges articulated, not only by Bateman, but by many intelligent critics who have studied the process in detail. They are absolutely correct. When done in an isolated manner, it can be hazardous, disrespectful and damaging rather than serve its original purposes.That is why Zynga was intentional and deliberate in moving forward with its social strategy, rather than jumping in the moment it was financially possible to do so. We explored numerous options, examined the recipients in depth and finally chose the Fonkoze (the microfinance recipient) only because we visited them in Haiti personally (not often done by most for-profits who engage in these types of contributions) and learned of their holistic approach that starts at the lowest levels of poverty and stays in partnership with these individuals beyond the time when they become more or less self-sufficient.Zynga’s mission is to Connect the World through Games and its social strategy is to enhance that mission by Transforming the World through those Connections. We cannot do that without being fully committed to understanding the social arenas we enter. We took our time, and we believe that it will pay off in the impact we all can have on the lives of the individuals with whom we have partnered.- Laura Hartman, Sweet Seeds for Haiti Campaign, Zynga

      1. fredwilson

        hi Laura – thanks for joining this discussion and congratulations on what seems like a wonderful way to help people in Haiti while having fun

      2. Dave Pinsen

        Thanks for your thoughtful response, Laura. Best of luck with this.

  2. Allen Burt

    Interesting use of personal incentive to drive philanthropy in the virtual online realm. I believe one of the most underutilized methods in online charitable fund raising is the use of competition and personal incentive to drive individuals to donate – matching people up in a competitive environment, driven by personal incentive, where the outputs of the competition benefit a cause.Ex: As opposed to simply asking people to buy products where a % goes to charity. Create a campaign in which people compete to sell the most goods, where a % of each sale goes to charity, and the winner receives a substantial prize. Add a competitive variable that incites human competitivness and personal incentive to exponentially grow the number of participants.Seems like this would work well in a virtual goods/social gaming arena.

    1. fredwilson

      i think you are right allen. competition is such a great incentive for all sorts of activities

  3. Adrian Bye

    If it would be useful to get an independent report of where the money is being used, I can head over to Haiti in a few months and shoot a set of photos of what they are doing with it. I live in the Dominican Republic and Haiti is on the other half of the island only a few hours away. Here’s one local photoset:

  4. ShanaC

    I’m still trying to figure out the Farmville economics versus Zynga Business Model after watching a friend of mine play it and claiming to never pay any money to get as far as she has gotten. Some days…Say this friend of mine bought the seeds. Since she has enough coins to buy the seeds without spending any actual US currency, how would this translate long run into actual money for FATEM and FONKOZE? How many of my friend (smart college student avoiding first week reading who has mastered the games principles?) are there running around that the hit would negligible?a +b just got me thinking a little too much one Sunday morning.

    1. Adrian Bye

      I think this is an important question.Fred, can you find out what % of people pay for FV cash in real money, and what % is earned via the game?

      1. fredwilson

        I do know that hundreds of thousands of dollars have gone to charity in the three days sweet seeds have been available for sale

        1. ShanaC

          Thank You

    2. fredwilson

      Good qustions shana. I think I know the answers but I’ll check to make sure and get back to you

      1. Adrian Bye

        Here’s some stats just posted by farmville into facebook:Talk about sharing the sweetness! 129,000 farmers have donated over $323,000 to the SWEET SEEDS FOR HAITI effort in FarmVille! The opportunity to give back ends October 15th!

  5. Pascal-Emmanuel Gobry

    It’s also great brandwill for Zynga.I wonder how this can be leveraged by Causes, which doesn’t seem to have much success helping people raise money the “traditional” way.

  6. Mark Essel

    This is a pretty amazing step forward by Zynga. Great news on mixing social aid and capital gain (Revenue!). Many of my friends are hooked on the game already. I suspect we are seeing the tip of the iceberg for realization of revenue from virtual goods tied to gaming. Where else will virtual goods sprout up? Maybe something tied directly to my social experience?

  7. reece

    This is great, and I’m really excited to see how this plays out. My startup is working with the idea of competitive online games/virtual goods in a niche market that involves philanthropy and we love to see this trend taking off.

  8. kidmercury

    i am doing this with my trading site as well, we let people donate the virtual points they earn, we then donate the dollar amount of this on a monthly basis to kiva. i have a dislike for charity though and prefer to view this as a marketing cost/tax of the reasons we did this was to acknowledge the fact that as a community site we are profiting from members’ contributions. as a community site you have to go about being commercial in a careful manner, in my opinion. craigslist, perhaps the leading community site on the web, leaves A LOT of money on the table as part of its unofficial deal with the community. i think incorporating charity is a good way to be commercial while still keeping community spirit, which is an essential asset.of course the real issue with social gaming is that they are creating their own money supply. this is how the internet truly changes the world. hope zynga will see this opportunity and embrace it accordingly. zynga you ever need an aspiring central banker to help you with your monetary policy, holla at me.

  9. GiordanoBC

    That’s why most microtransaction-based games run on a dual currency system: one that you must buy, and one that you can earn in-game. Some items are priced in one, some in the other, some in a mix of the two. Balancing the 2 currencies is one of the most important tasks to maximize ARPU and keep the game interesting, in a way that buying your way to the top is impossible, and at the same time, if you really want to succeed, you need to purchase currency eventually. Games based on a single currency have demonstrated to be less compelling to players in the long term and have a shorter lifespan, as the potential to game the system is higher, and there’s less possibility to manage the economy.Cheers, Giordanonote: that was an answer to ShanaC’s comment

    1. kidmercury

      very interesting observation, giordano. reminds me of the monetary policy that was initally setup in the USA; both gold and silver were regarded as official money and determinants in the money supply. this did create some issues surrounding arbitrage if one currency became too popular relative to the other one. i wonder if similar scenarios will emerge in social games? i think it is quite possible.

  10. Alex Hammer

    I am interested in what are the organizing principles for communities, decision making (including philanthropic giving) and related matters. Why are some communicaties self-sustaining while others do not? What kinds of communities promote action, what types of action, and how?

  11. Pierre

    That is wonderful news. My friend from high school is in Haiti right how helping run a charity called SOIL, which is dedicated to protecting soil resources in Haiti, where the people are losing the ability to feed themselves. SOIL was featured in National Geographic and profiled by Nicholas Kristof in the NY Times. If anyone from Zynga is reading this, I hope you check them out. Thank you, and Fred thanks for posting this!

  12. rich caccappolo

    at the Virtual Goods (Engage Expo) conference in San Jose 10 days ago, myYearbook told the audience that their “Causes” area is huge, one of their biggest surprises, one of their efforts of which they are most proud, and has made myYearbook a leading source of youth charitable giving. myYearbook members buy or earn credits (called Lunch Money), then donate Lunch Money to various causes, and myYearbook converts the credits into real-world items and donates them on behalf of their members. Clever, smart and commendable.They did a press release about it last week – “myYearbook Members Donate $250K to Favorite Charities in One Year”

  13. kenberger

    Coincidentally, I’m planning to visit Haiti this winter and will visit 1 or 2 of these orgs.

  14. Jonah Peretti

    Actually the idea of virtual gifts to support causes did come up at the Hacking Philanthropy event. I only remember because I thought it was such a good idea since virtual gifts and philanthropy are both motivated by social capital dynamics. The idea was presented by Maya Lin in the short presentation she gave to all the attendees. She wanted to create virtual gifts that were artists renderings of endangered species with all the money supporting environmental groups protecting bio-diversity. So you can pay $10 to send your friend an animated spotted owl and help save the spotted owl at the same time. Very cool and someone should help Maya make it a reality – on Farmville or elsewhere.

    1. fredwilson

      Wow. I stand corrected and happy about it too. Thanks Jonah. I suspect the Zynga team is following this thread and I’d be happy to intro them to Maya if they are interested

      1. laura hartman

        Always following you, Fred; just sometimes more quietly than others . . . Suggestions and connections are surely welcomed, as well as the insightful comments from your respondents, above.

  15. Drew Meyers

    This is so awesome to see. I think we’re going to see more and more web companies intersperse philanthropic efforts into their businesses over the next year or two as a way to target the gen x/y population. It’ll become a differentiator in some cases — if I have a choice of using two websites and one is more focused on “social good”, it’s an easy choice for me which site to use.

    1. fredwilson

      I agree drew

    1. fredwilson

      Not publicly. But I will say a few things here in the spirit of this community. Zynga makes very little of its revenues on offers. So little it begs the question why they bother. Also, the mention of Slide as a ‘good actor’ begs the question of who put Mike up to this