November 26, 2007

FreeRice - charity or profit center?

Many people have discovered FreeRice, the fun little website where you test your vocabulary, see some advertising, and have some rice donated to the world's hungry - paid for with a fraction of the funds taken from the advertising revenue.

It is definitely innovative, and at first cut, sounds like a good idea. But is it legitimate? I'm not talking about whether the rice actually gets donated. There is no proof given, but even assuming that it does get donated as promised, is this site moral - or is it a personal profit center based on deceit and greedy taking of the public's good will and time? There has been a bit of discussion on this topic, but not very much considering how much traffic this site is seeing (10's of million's of pageviews per day).

So what is the issue? The problem is that the actual value of the daily donation is tiny and the potential revenue is huge. I've seen estimates on the web that show profits ranging from about $10K to $150K. Mine put it at about $100K (see below). But the main point here is not legal, it is ethical and social.

If the sole premise of a site's existence is to do charitable work, then it must do so honestly. As with other charities and organizations that manage other people's resources, it should disclose what percentage of income is actually given as charity, how much is administrative overhead, and how much is profit. It doesn't matter that the source of the funds doesn't come from the customer's cash. It still comes from the customers - just through their time and attention rather than their dollars. And the ethical requirements of charitable work are different than pure business.

The standard bar for understanding ethical behavior is full disclosure. If the site said what was really going on, and people continue to choose to participate, then the site has cleared the bar and will reap the world's good will. But without saying what is really going on, we have to assume there are nefarious purposes, and significant personal benefit taken from the charity of others. That kind of behavior may thrive for a while, but can't last as charitable work that is honest will take over - and it can't happen soon enough.

My estimate:
200,000,000 approx donated grains (Nov 15, 2007)
25,000 grains per pound
8,000 donated pounds
$5,600 donated dollars (assuming $0.70 per pound)

$5 assumed CPM
(thousand ad impressions)
20,000,000 Impressions
20,000 thousands of impressions
$100,000 revenue