Givebutter is turning a profit making tech for nonprofits | TechCrunch

Givebutter is turning a profit making tech for nonprofits | TechCrunch

GiveButter started in a George Washington University dorm room in 2016 as a software solution to make nonprofit fundraising more transparent and fun. Eight years later, the company is profitable and has raised just shy of $50 million as nonprofit-focused startups gain momentum.

The company's co-founder and CEO, Max Friedman, raised funds for a variety of organizations at the college, from fundraising for GW's Greek life to national nonprofits like TAMID. Friedman told TechCrunch that regardless of the size or scope of the organizations he was fundraising for, they all had the same problem: They all used a disjointed mix of tech software with the same solutions. Which didn't really improve the process and often came with it. Hidden fees.

“We realized that nonprofits are using a lot of different tools to address different pain issues, and what we can do for the sector is bring them all under one roof,” Friedman said. To bring.” “It's in restaurants and e-commerce; there (was) no Shopify or Toast for nonprofits.”

The result was Givebutter, a CRM platform for nonprofits that strives to be transparent and inclusive. This includes marketing resources, ways to track donors, fundraising tools for various strategies, and payment processing. Nonprofits can either use Givebutter for free, if their fundraising campaign offers a place for users to donate to Givebutter, or organizations pay a 1% to 5% platform fee.

“From day one, we had customers,” Friedman said. “It was very clear that there was a huge demand for great fundraising tools and there was no perfect toolset for these changemakers.”

The startup raised $50 million from Bessemer's venture partner BVP Forge Fund this week with participation from Ardent Venture Partners. Friedman said the money will be used for marketing to help the startup scale as the company has grown to this size with almost zero marketing costs thus far.

What initially interested me in the deal—beyond the fact that the company is profitable from a largely donation-based revenue system or the fact that it calls its employees “butter slices”—was that That this was a big era in the nonprofit tech sector. , which has been popping up significantly more of late.

During the latest YC Demo Day, two startups, Givefront and Aidy, were building tech for nonprofits. While these companies weren't the first nonprofit-flavored startups to go through YC, they are the first to build software for nonprofits. Many past YC companies in the space are themselves nonprofits, and Givefront and Aidy stand out. This year's AI- and dev-tool-dominated cohort.

I asked Friedman if he felt like the momentum in the category had changed since he started eight years ago, and Friedman said that it definitely had and that the time was right for the category. There has been considerable consolidation in the space recently, particularly from private equity-backed non-profit software players such as Blooming And Bonterra, each of which has made a handful of acquisitions in just the last few years. That drives up fees and many nonprofits look for less expensive solutions, Friedman said. Once people are interested in the sector, they often realize how big the potential market is, he said.

In 2022, Americans donated nearly $500 billion to charity. National Philanthropic Trust3.4 percent less than in 2021. There are more than 1.5 million nonprofits and growing, and building to get a piece of that market can pay off big. Givebutter is a good example of this. The company works with more than 35,000 nonprofits and has processed more than $1 billion in donations, but it's still barely breaking even in the nonprofit industry as a whole.

“We have about a 1% market share,” Friedman said. “It's amazing. I'm really proud of it, but I also love that there are 99% of nonprofits out there that could benefit, and that's a big part of why we did it.”

Givebutter may start taking on more competition down the road. “Nonprofits are incredibly resilient,” Friedman said. “There have been ups and downs in the economy over the years and nonprofits have thrived. Nonprofits also solve the world's biggest problems. I am happy to see more people becoming aware of it and investing in it.”

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