The Boston charity boxing match put on by Haymakers for Hope in June raised $200,000 for Dana Farber Cancer Institute’s Jimmy Fund, which finances pediatric cancer research. But rather than handle the donation legwork itself, the nonprofit group used 19-year-old Nate Drouin’s fundraising website, Fundraise.com.
Andrew Myerson, a Goldman Sachs (GS) associate in New York who organized the event, says Fundraise.com satisfied Dana Farber’s exacting compliance demands, gave each fighter a page of his own that works easily with social media tools, and developed an iPad app that managed a silent auction and checked in more than 1,000 people at the Boston Park Plaza Hotel without creating a line. “They blew us out of the water,” says Myerson. “There was no shuffling through tickets, no shuffling through lists.”
Despite launching his site just five months ago, Drouin says some 500 users have tapped it to solicit donations for causes that range from tsunami relief to anti-nuke protests. He expects more than $2 million in revenue by year’s end and more than twice that in 2012. Drouin, who postponed attending Rollins College to launch the site in Boston, using $250,000 from friends and relatives, wants to shape the seven-person site into a donations platform as ubiquitous as Facebook or Twitter.
DONATIONS RISE ONLINE
He sees the most promise in individual donations -- which account for $212 billion of the $291 billion given in the U.S. to nonprofits last year, according to data compiled for Giving USA by the Center on Philanthropy at Indiana University. Just 7.6 percent was done online, but that was up 35 percent from the previous year, according to Steve MacLaughlin, Internet solutions director for Blackbaud (BLKB), a Charleston (S.C.) technology provider for nonprofits. MacLaughlin expects online giving to increase to 15 percent to 20 percent of the total in the next five to 10 years.
Low barriers to entry and demand from cash-starved nonprofits mean Drouin faces plenty of competitors, though new entrants’ attrition has been significant. Nonprofit service providers say that’s because most so-called aggregator sites in the past did not offer enough value to either donors or recipient charities. “I have only been with Convio (CNVO) about five years, and I have probably seen 15 to 20 of these [sites] come and go,” says Tad Druart, a spokesman for the Austin (Tex.) company that sells software and other services to nonprofits. Survivors and new entrants include Donors Choose, Razoo, Causes, CrowdRise, and Rally.org. Jumo, which was started by Facebook co-founder Chris Hughes, is still in beta stage despite having been launched in February 2010.
Fundraising sites’ business models are often predicated on acting as middleman for nonprofits. But nonprofit fundraisers strongly prefer maintaining close relationships with their supporters. “Getting that first gift from you is great, but then it’s all about how do I steward you and retain you and get you to give that second and third and fourth gift, and also how do you have such a good experience with us that you tell others about us. ... Otherwise you are constantly acquiring donors that you are not able to retain, and you are always fishing,” explains Blackbaud’s MacLaughlin.
THE “LONG TAIL OF GIVING”
Fundraise.com’s model does not depend on keeping donors and recipients separate; it’s a platform designed to facilitate outreach rather than act as a rent-seeking broker, says Drouin. His supporters -- investors, users of Fundraise.com, as well as rivals who have met him -- point to how easily users can grab Fundraise.com code and paste it on their own sites as a widget. They’re also impressed by users’ access to analytics. “We think there’s a massive opportunity in the long tail of giving ... be it nonprofit, political, school, or sports teams, all the verticals that Nate’s focused on,” says Dustin Dolginow, a technology analyst at venture capital firm Atlas Ventures in Cambridge, Mass. He expects to close a $1.2 million funding round soon for Fundraise.com, a financing that’s being joined by John Goldsmith, former chief executive of Tucker Anthony.
For individual donors -- especially those who give to various causes -- having a Fundraise.com account will allow them to keep easy track of all their donations, making tax accounting simpler. That’s also true for small organizations -- 1.2 million registered nonprofits in the U.S. raise less than $1 a million annually -- that want to avoid the expense of putting up their own site with embedded payment processing. Bigger entities could benefit, because basic donation information is collected and reported back to the designated organization. For widespread adoption, Karsten Robbins, CEO of a leading donation site, FirstGiving, says that establishing trust and accountability is as crucial as staying focused on what Fundraise.com does well. “I know firsthand how unbelievably difficult it is to be everything for everybody.”
Another challenge is meeting the crazy-quilt of state regulatory demands, where online fundraising is regarded as professional solicitation, and required information varies depending on who is raising money. Political fundraising is subject to stricter regulations for the same reason its online fundraising is so evolved: The stakes are so high and the money raised is so gargantuan. Despite the hurdles, Drouin hopes to sign two Republican Presidential campaigns as clients. “Just getting two somewhat high-caliber candidates is $80 [million] to $100 million in revenue, and I get to keep 7.5 percent of that.”