During the Star MegaDO, we were treated to the debut of a new charity program, KULA Causes, which aims to improve the way you use your miles and points to benefit worth causes.
I spoke with company leaders Gerrit McGowan (Founder and CEO) and Mark Dority (Director of Marketing) after their talk to learn more about KULA and how it plans to revolutionize charity opportunities. It was comforting to hear that most of the concerns I raised were already under consideration or addressed. These guys know what they’re doing.
How KULA Works
KULA created a technology it calls “Cause-Related Loyalty Marketing™” to enable “democratized transactional giving.” Big words that might not make much sense, so lets break them down. I’ll give an example using JetBlue Airways, one of KULA’s current partners. Cause-related loyalty marketing is KULA’s way of saying that it works directly with the loyalty programs, like JetBlue’s TrueBlue program, to help them market charity opportunities for individual causes.
Right now you have to hunt around on JetBlue’s website to find any donation options for your extra miles. They aren’t marketed much at all, except maybe when there is a natural disaster or during the winter holidays. KULA provides custom portals for loyalty programs to advertise donation opportunities and share how others have shared their miles or points. This lets JetBlue stick to what it knows best (operating an airline) while KULA takes over the charity aspect.
Second, democratized transaction giving describes individual control over where donations end up. JetBlue might send out an email encouraging TrueBlue members to donate 1,000 miles to the Red Cross. Maybe I don’t care about the Red Cross. Maybe I want to donate to my local school district instead. Any non-profit organization can sign-up with KULA to become an eligible cause. There are already over 2.5 million causes in dozens of countries registered with KULA, including over 1.3 million in the United States.
KULA Is More Effective than Existing Charity Programs
Many airlines and hotels will already let you donate points toward charity, but it isn’t always clear what they do with it. It certainly isn’t always a good deal. Donating 10,000 miles so some airline can give a Teddy bear to a child with cancer is nice, but I can use that same 10,000 miles to book an award flight that would normally cost $300. You can buy a lot of Teddy bears with $300.
Realizing the true value of their account balances, some frequent travelers want to give away those miles directly. I know a few people have tried to work with hospitals, for example, to identify worthy patients and family members who need transportation. You can also donate miles to programs like MileDonor.com or the Make-a-Wish Foundation. But there are still problems vetting award recipients or matching award availability with inflexible travel needs. Not to mention that not every charity is in need of free travel.
KULA removes these hurdles by working to ensure your miles and points get a fair valuation, turning them into real money, and directing those funds to the charity of your choice.
Maximize the Value of your Donation
How does KULA get a good price? Well, you know and KULA knows and the airlines and hotels know that lucrative award opportunities exist. The airline might value its miles at only 1 cent each on its balance sheet when it calculates financial liability, but I value them at 2 cents each for my own calculations and can redeem them for flights that produce an actual value of 10 cents or more.
KULA negotiates with the loyalty programs to ensure better than bargain-basement accounting. If the airline or hotel is willing to assign a better value, then you and I are going to be more willing to donate. The loyalty programs also benefit from positive press (networking the donation portals with social media) and good corporate citizenship (assigning a higher value creates a larger potential tax write-off for the company).
The end goal is to give you an option of visiting a company’s giving portal, typing in the number of miles or points you want to donate, and then being provided a fair dollar amount for that transaction. You can then direct those funds to any of the charities registered with KULA.
KULA has plenty of non-profit organizations already registered, with more being added all the time. If you don’t see the charity you want to donate to, contact them and ask them to partner with KULA. Charities and non-profits can easily sign-up and enhance their profile online. KULA is also in advanced talks with many major loyalty programs, so chances are the company with which you keep your miles and points will be working with them soon.
The biggest potential issue is taxes. People are used to getting a tax deduction when they donate to charity, but you won’t get anything for using KULA. Companies are fond of reminding their customers that individuals don’t own their miles and points. The ownership, and tax benefits, stay with the loyalty program. But this is also one reason why KULA can negotiate a better value for those donations in the first place and avoids setting a precedent that would lead to taxation on the points you choose to keep.
It is a different kind of giving than you may be used to, but I think KULA has found a way to make everyone a winner.