Crowdfunding has led to the democratization of fundraising. It’s one of the most accessible and successful ways of raising money for a project, with no need to rely on banks, VCs, or the government. In 2020, the total funds raised through crowdfunding campaigns grew by 33.7 percent. And while there were already several big crowdfunding sites out there, think Kickstarter and GoFundMe, the founders of Givebutter saw a gap in the nonprofit market.
Givebutter is a people-centric fundraising platform that empowers changemakers to make the world a better place. But Givebutter goes beyond simply crowdfunding. By offering modern and donor-friendly fundraising tools, Givebutter enables nonprofit groups to create campaigns in minutes, raise funds, track campaign progress, and engage with supporters all from one place – completely for free.
Since its founding, Givebutter has run over 35,000 campaigns on its platform from over 10,000 nonprofits. Each year, more than $150 million is being raised for good causes, from providing clean drinking water in Uganda to flying at-risk pets away from disaster areas.
Three Students and an Idea
Max Friedman, the co-founder and CEO of Givebutter, went to George Washington University in Washington, DC. He started with an interest in politics, but after interning for a political campaign realized it wasn’t for him. Instead, he got inspired by listening to the entrepreneurial journeys of founders like Melanie Perkins of Canva, Joe Gebbia of Airbnb, and Blake Mycoskie of TOMS on the How I Built This podcast, and he switched to a finance and computer science double major.
Max says, “These people created something from nothing and made such a big impact in the world. I got hooked on that outlook, so I started keeping a list of startup ideas. I probably had 30 ideas on a sticky note. I’ve come to realize that pretty much every entrepreneurial college student starts a company with one of three ideas: an event app, a student marketplace for textbooks, and some version of a dating app,” Max says laughing. “Before Givebutter, I took the event app route.”
The app, called Happening, made it easy for people to discover and attend events nearby based on the user’s personal interests. Max spent three years working on it, learning how to code, market, and sell in the process. That business no longer exists, but he did meet his now co-founder and CTO, Liran Cohen, through it.
Max and Liran moved in together with a third roommate, Ari Krasner. All three of them were workshopping startup ideas in their dorm room, bonding over the idea of how they could make the world a better place. Until one day in 2016, they got a call from a friend who wanted to launch a nonprofit kosher food truck on campus.
There were lots of Jewish students on campus, but not many kosher dining options. Their friend, Yudi, wanted to fundraise on a crowdfunding website but felt like the options out there didn’t fit his needs. He asked Max, Liran, and Ari if they would be interested in building a better alternative. Their response: “Yes, give us a month!”
After spending time researching the limitations of existing crowdfunding platforms – like the lack of transparency and the difficult-to-use donation forms – the trio knew there had to be a better (or butter) way! Enter Givebutter.
A Butter Way to Crowdfund
In March of 2016, the first iteration of Givebutter was born. When the founders launched the platform, something amazing happened. Yudi surpassed his goal of $13,000 in 24 hours. Before they knew it, that one successful campaign led to another, and another…
So, why did Givebutter catch on the way it did? Max says that there are three core differences between Givebutter and its competitors. The first is fees. A lot of crowdfunding sites at the time weren’t very transparent about their fees and took large fees as their cut. Givebutter wanted to flip that model, so when you donate you always see 100 percent of the fee and have the opportunity to cover it as the donor.
“Fees are inevitable. If nothing else, there’s always a credit card fee. But as this is a donation, not the purchase of a product, it’s nice if you’re able to extend your donation to cover the necessary fees. We made that transparent and easy,” he says.
Number two, Givebutter saw an interesting branding opportunity. “A lot of people we spoke to disliked the options out there and didn’t know of alternatives for fundraising. They were excited about the idea of a new company that had a cute mascot and a funny name, making donating a more fun and engaging experience. With Givebutter, we took the opportunity to stand out,” Max says.
Number three, a lot of existing tools were limited in terms of functionality and what customers were able to do with them. Givebutter doesn’t just allow people to create a campaign, it also offers help with email marketing, events, forms, text messaging, a CRM, and everything in between to fundraise effectively. And, finally, all of their tools are free – the only cost is a processing fee, covered by more than 90% of donors on the platform.
Snowballing From One Campaign to Hundreds
Once that first campaign on Givebutter’s website concluded successfully, the founders quickly saw other use cases for what they had built, namely with student organizations. Max says, “That summer, we kept building and launched a campus ambassador program to spread the word. Or, as we liked to call it, ‘spread the butter.’ We messaged every single person we had ever met and asked them whether they wanted to be an ambassador for Givebutter. It was a great way for us to get initial traction.”
So their first customers were students and, in less than a year, more than 300 schools and universities were using Givebutter to raise money for a variety of student organizations and good causes.
“The beautiful thing about Givebutter is that it’s viral in nature. When you run a fundraiser on our platform, you share that with your friends and family. If any of those people are part of a good cause, they become a potential new customer for us. That person might sign up and do the same. So we got a lot of customers by establishing that initial base and it snowballed from there,” Max says.
Now Givebutter has evolved beyond universities to focus broadly on fundraising in the nonprofit space. There are almost two million nonprofits in the US and most of them are small, 1.5 million of those nonprofits have gross receipts under $10 million. So while the biggest nonprofits fundraise the majority of dollars, there are many more small ones fundraising on a smaller scale.
“Every town, every city, every county has food pantries, rescues, faith-based organizations, and so on, all of whom need to fundraise. They rely on donations to support their work and keep everything running. Those small nonprofits are our bread and butter – pun intended,” Max says with a laugh.
Establishing Credibility as a Newcomer
One of the biggest challenges Givebutter had to overcome in the early days was credibility. Max says, “It’s so hard when you’re a new company with a limited track record. Every potential customer wants to know who your biggest current customer is. But if everyone uses that as a measure, how are we ever going to get that first big customer who makes us credible?”
“We had to build their trust in us, as well as the platform’s ability to scale. With every new potential customer, we needed to convince them to trust us with their nonprofit and their cause. It felt like we were constantly fighting for credibility.”
What helped Givebutter establish that sought-after credibility in the early days was building a library of success stories. For every successful campaign they had, they would do a Zoom interview with the customer and turn their story into a case study. Givebutter has around 75 success stories on its website.
“Now, if you’re a potential customer considering Givebutter, there is at least one, if not five, success stories that are very similar to what that nonprofit is trying to achieve, in terms of campaign size, industry, and category. Being able to show what someone similar to you has achieved with Givebutter is really powerful,” Max says.
The (Mis)Adventures of Funding a Startup
Back in 2016, the founders started Givebutter without raising any capital and by building everything themselves. They put $5,000 into the business, alongside $20,000 in credit card debt. The first milestone that they wanted to reach was being self-sustainable.
Until that time, Max supported himself by creating a referral network in the DC tech community. “I had a lot of friends that worked at agencies and had gotten a reputation of being the tech guy. I was constantly getting asked ‘Do you know any good web developers, designers, or app developers?’ Since I was connecting talented folks with my peers, I negotiated a 10% kickback on any referrals I made. That was keeping me afloat while we couldn’t pay ourselves from our startup,” he says.
The founders were also very frugal in their personal lives. They would only spend $100 a month on food combined and buy everything in bulk from Costco. All three of them worked and lived in their one-bedroom apartment. For one summer, they even squeezed two bunk beds into a studio apartment (despite questionable adherence to fire code policies).
Max says that was their reality for a while; they didn’t really think about it. It took three years for Givebutter to become self-sustainable, allowing the founders to pay off all their debt and pay themselves a salary for the first time.
“We didn’t raise any money from investors in those early days, but not for lack of trying. We applied to countless accelerators, incubators, investor groups, and got rejected by all of them. We couldn’t convince investors to take a chance on a crowded space, regardless of how innovative our approach was. So we did the only thing we knew: We wrote code and listened to customers. No investors, no press, no bullshit. Just build a great product and be nice to people,” he says.
In late 2019, Givebutter was on track to process $2 million in donations for hundreds of good causes, double the year prior. The founders decided it was a good time to try their hand again at raising funding, but it still proved to be challenging. Max says it was rough at the time, with months of preparations, interviews, and pitches.
Givebutter ultimately closed only a small angel round of $265,000 that allowed them to hire a few key team members. “But looking back, I can say it was truly a blessing in disguise because we did not need the money. All we needed to do was keep building and keep listening. We hired our first two contractors at the end of 2019, and have been able to grow profitably ever since,” he says.
Realizing that they did not need that external influx of money to accelerate growth, the founders continued running Givebutter with a bootstrapped mindset. They shifted their focus from trying to get more funding to building an even more impactful and highly capital-efficient business.
The term “bootstrapping” has taken on a wider meaning in startup culture. Max says, “Although we call ourselves ‘bootstrapped,’ which typically implies that a company has not raised any outside funding, we did accept this small investment and may accept more in the future. To me, what makes Givebutter bootstrapped is less about whether or not we raised any funding, and more so that we have been able to grow profitably without relying on venture capital to sustain.”
Not Taking Growth for Granted
From 2019 to 2020, Givebutter grew by 15 times year over year in revenue and expanded their team from 5 to 30 employees by the end of 2021. So, what happened from one year to the next? The pandemic (of course). COVID accelerated all of the trends that were already happening in the nonprofit sector, like the reliance on virtual events and online fundraising.
Max says, “Most nonprofits set aside a huge part of their annual budget for fundraisers. Usually, they’ll have one or two big in-person events that can bring in 30 percent or more of their total yearly donations. Givebutter was ready to help nonprofits shift to online fundraising with online donation forms, online peer-to-peer fundraising, and virtual events.”
This became the company’s turning point from a primarily crowdfunding platform to an all-in-one nonprofit fundraising solution. Givebutter now also offers donor management and donor stewardship tools so that nonprofits can build better relationships with their supporters via email, texting, and more.
Being able to meet customers’ immediate needs led to Givebutter’s exponential growth from 2020 to 2021, going from 500 customers to more than 10,000. Max concludes, “But growth is not something to be taken for granted. In 2022, for the first time we are focusing on acquiring new customers at scale and expanding adoption amongst existing customers. It’s time to make Givebutter the category-defining brand we know it can be.”
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