Givebutter started off of a George Washington University dorm in 2016 as software that might make nonprofit fundraising more transparent and enjoyable. Eight years later, the company has achieved profitability and has just raised $50 million to scale its operations as non-profit startups proceed to grow.
Company co-founder and CEO Max Friedman has raised funds for a number of organizations in college, from fundraisers for GW Greek Life to national nonprofits akin to TAMID. Friedman told TechCrunch that irrespective of the size or scope of the organization he was fundraising for, all of them had the same problem: They were all using a chaotic combination of technology software with a single solution that did not really improve the process and often got here with hidden fees.
“We realized that nonprofits use a lot of different tools to solve different problems, and what we can do for this sector is bring it all under one roof,” Friedman said. “It exists in restaurants and e-commerce; Over there [was] no Shopify or Toast for nonprofits.”
The result is Givebutter, a CRM platform for nonprofits that strives to be transparent and comprehensive. Includes marketing resources, ways to trace donors, fundraising tools for various strategies, and payment processing. Nonprofits can use Givebutter for free if their fundraising campaigns offer a place for users to donate to Givebutter, or the organizations pay a platform fee of 1% to five%.
“We had customers from day one,” Friedman said. “It was very clear that there was a big need for great fundraising tools, not a great changemaker toolkit.”
This week, the startup raised $50 million from Bessemer’s Venture Partner’s BVP Forge fund with participation from Ardent Venture Partners. Friedman said the money will go toward marketing to assist the startup scale because the company has grown to this size largely with almost zero marketing expenses.
What initially interested me in this deal – apart from the incontrovertible fact that the company makes profits through a largely donation-based revenue system or the incontrovertible fact that it calls its employees “pieces of butter” – was the incontrovertible fact that it was a sizable round in the non-tech sector profit , which has been appearing much more regularly recently.
During the recent YC Demo Day, two startups, Givefront and Aidy, were creating technology for nonprofits. While these firms weren’t the first nonprofit startups to ever go through YC, they are among the first to build software for nonprofits; many of the previous YC firms in this space are nonprofits themselves, and Givefront and Aidy were absolute standouts in this 12 months’s cohort dominated by AI and software tools.
I asked Friedman if he felt like the dynamics in the category had modified since he began eight years ago, and Friedman said he definitely did and that the time was right for the category. There has been a lot of consolidation in this space recently, particularly with respect to non-public equity-backed nonprofit players akin to Bloomerang AND Bonterra, each of which has made several acquisitions in the last few years alone. That results in higher fees and many nonprofits looking for cheaper solutions, Friedman said. Once people turn into interested in the industry, they often realize how big the potential market is, he said.
Americans will give nearly $500 billion to charity in 2022, in response to the charity National Philanthropic Fund, which is a 3.4% decline from 2021. There are over 1.5 million nonprofits and growing, and building even a portion of this market could provide a huge profit. Givebutter is a good example of this. The company works with over 35,000 nonprofits and has processed over $1 billion in donations, but it still barely makes an impact on the nonprofit industry as a whole.
“We have about 1% market share,” Friedman said. “It’s great. I’m really proud of it, but I also feel like 99% of nonprofits can benefit from this, and the fundraiser was a big part of why we raised this amount.”
Givebutter may face more competition down the road. “Nonprofits are incredibly resilient,” Friedman said. “Over there [have] there have been economic booms and busts for many years, and nonprofits have grown. Nonprofits also solve some of the world’s biggest problems. I’m glad that more and more people are aware of it and are investing in it.”