Givebutter is developing for-profit technology for nonprofits

Image credits: give butter

Givebutter started in a dorm at George Washington University in 2016 as a software solution to make nonprofit fundraising more transparent and fun. Eight years later, the company is profitable and he just raised $50 million to scale as the nonprofit-focused startup appears to be gaining momentum.

Max Friedman, the company’s co-founder and CEO, supports a variety of organizations on campus, from fundraising for GW’s Greek Life to raising money for national nonprofits like TAMID. We collected donations for. Friedman told TechCrunch that no matter the size or scope of the organization they were funding, they all had the same problem. In other words, organizations were all using disparate combinations of one-solution technology software, often with bells and whistles, that didn’t really improve processes. Hidden charges.

“We realized that nonprofits use different tools to solve different problems. What we can do for this space is bring everything under one roof. ,” Friedman said. “It exists in restaurants and e-commerce. [was] Nonprofits don’t have Shopify or Toast. ”

The result is Givebutter, a CRM platform for nonprofits that strives for transparency and inclusion. It features marketing resources, ways to track donors, fundraising tools for a variety of strategies, and payment processing. Nonprofit organizations can use Givebutter for free if they provide a place for users to donate to his Givebutter in their fundraising campaigns. In some cases, the organization pays his 1% to 5% platform fee.

“From day one, we had customers,” Friedman said. “There was a lot of demand for good fundraising tools, and it was clear that it wasn’t a great toolset for change makers.”

The startup raised $50 million this week from Bessemer’s Venture Partner’s BVP Forge Fund, with participation from Ardent Venture Partners. Friedman said the funding will be used for marketing to help startups scale, as the company has grown to this size with almost no marketing spend.

What initially interested me in this deal, beyond the fact that the company makes money primarily through a donation-based revenue system and that it refers to its employees as “butter slices”; That was a big round in the nonprofit technology space. , has increased considerably recently.

At a recent YC Demo Day, two startups were building technology for nonprofits: Givefront and Aidy. These companies weren’t the first nonprofit-flavored startups to go through YC, but they were some of the first to build software for nonprofits. Many of his past YC companies in this space have been nonprofits in their own right, and Givefront and Aidy definitely stood out among this year’s AI and development tools-dominated companies.

When I asked Friedman if he felt the category’s momentum had changed since he started eight years ago, he said it definitely has and the timing is right for the category. There’s been a lot of consolidation in this space lately, especially with private equity-backed nonprofit software players like Bloomerang and Bonterra, each of which has made several acquisitions in the past few years alone. This has led to higher fees and many nonprofits are looking for cheaper solutions, Friedman said. He said that once people become interested in the field, they often realize how big the potential market is.

Americans gave nearly $500 billion to charities in 2022, a 3.4% decrease from 2021, according to the National Philanthropy Trust. There are more than 1.5 million nonprofit organizations and growing, and just building to capture a piece of that market can yield a huge windfall. Givebutter is a great example. The company works with more than 35,000 nonprofits and processes more than $1 billion in donations, but it still has little impact on the nonprofit industry as a whole.

“Our market share is about 1%,” Friedman said. “That’s amazing. I’m really proud of that, but I also think that 99% of nonprofits can benefit, and a big part of why we raised money is to was to carry out.”

Givebutter may start to encounter more competition along the way. “Nonprofits are incredibly resilient,” Friedman said. “There [have] Over the years, as the economy has gone through downs and ups, nonprofits have grown. Nonprofits also solve some of the world’s biggest problems. I’m glad more people are realizing that and investing in it. ”