The End Of Pay and Pray
For years philanthropic organizations have bought fundraising software from the likes of Blackbaud and a host of other software companies, large and small, in the hope that these tools would help them raise money. The term I like for these fundraising software packages is “pay and pray.” There is no correlation between the amount of money a non-profit pays and the amount of money they raise with these tools.
I think we witnessed the end of pay and pray yesterday with the announcement that our portfolio company CrowdRise is joining forces with GoFundMe to create a single crowdfunding platform that will serve the needs of person to person fundraising, event based fundraising, fundraising for philanthropic organizations, and corporate social responsibility.
Over the past five years, CrowdRise built a suite of crowdfunding tools for philanthropic organizations, events like marathons and other races, and corporations that want to participate in social causes. Those web-based tools are used by tens of thousands of organizations to raise funds organically over the Internet. Now those tools sit on top of the world’s largest platform for charitable giving. In the six years that it has been around, GoFundMe has been used by over 2mm people to raise money from over 25mm donors. Over $3bn has been raised on GoFundMe since 2010.
I think the new GoFundMe has become the social charitable platform of choice, much like LinkedIn is the social platform for business relationships, Facebook is the social platform for staying in touch with friends and family, and Twitter is the social platform of choice for staying on top of what is happening. We will all have profiles on GoFundMe which speak to our charitable giving history and we will all have stored payment credentials on GoFundMe that facilitate one-click social action. In time, everyone who wants to raise funds from the billions of people who are on the Internet will use GoFundMe to do that. And everyone means you and me, it means charities large and small, it means corporations who want to light up social action in their employees, and it means events that want to offer charitable fundraising. One platform can do all of this and it will do all of this.
The other thing that is important to understand about a crowdfunding platform, like GoFundMe or Crowdrise, is that there are no upfront or fixed fees or minimums required to use the platform. Most crowdfunding platforms take 5% of the amount raised plus a credit card fee. So there is a direct correlation between the amount you spend for these tools and the amount you raise with them. And many charitable organizations that use these tools pass these fees onto the donor which means they keep 100% of what they raise on these platforms.
This is a revolution in the way money is raised for good causes. There is now a large scale network that exists to support charitable giving. And the tools now exist for any person or organization to participate in this network. And these tools cost relatively little, or nothing, to use. No more pay and pray.