Givebutter launched in 2016 in a George Washington University dormitory as a software solution to make charitable fundraising more transparent and fun. Eight years later, the company is profitable and has just raised $50 million to scale up as momentum appears to be growing for nonprofit startups.
The company’s co-founder and CEO, Max Friedman, raised funds for a variety of organizations in college, from donations for GW Greek life to donations for national nonprofits such as TAMID. Friedman told TechCrunch that no matter the size or scope of the organization he was fundraising for, they all had the same problem: They all used a disjointed mix of tech software with just one solution that didn’t really improve the process and often this came with hidden fees.
“We recognized that nonprofits use many different tools to solve different problems, and what we can do for the sector is bring everything under one roof,” Friedman said. “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 aims to be transparent and all-inclusive. It offers marketing resources, donor tracking capabilities, fundraising tools for various strategies, and payment processing. Nonprofits can either use Givebutter for free if their fundraising campaigns allow users to donate to Givebutter, or organizations pay a platform fee of 1% to 5%.
“We had customers from day one,” Friedman said. “It was very clear that there was a huge demand for great fundraising tools, rather than a great tool set for these change-makers.”
The startup this week raised $50 million from Bessemer’s Venture Partner’s BVP Forge Fund, with participation from Ardent Venture Partners. Friedman said the money will be used for marketing to help the startup grow, as the company has largely grown to this size with close to zero marketing expenses.
What piqued my interest in this deal – aside from the fact that the company is profitable through a largely donation-based revenue system or that it calls its employees “butter slices” – was that it was a sizable round in the nonprofit tech sector, which has been appearing much more frequently lately.
During the recent YC Demo Day, two startups, Givefront and Aidy, developed technology for nonprofits. Although these companies were not the first nonprofit startups to ever go through YC, they are among the first to develop software for nonprofits. Many former YC companies in this space are nonprofits themselves, and Givefront and Aidy absolutely stood out in this year’s cohort dominated by AI and development tools.
I asked Friedman if the dynamics in this category have changed since he started eight years ago, and Friedman replied that it definitely has and that the timing is right for this category. There has been a lot of consolidation in this space recently, particularly among private equity-backed nonprofit software providers like Bloomerang and Bonterra, which have each made a handful of acquisitions in the last few years alone. This leads to higher fees and many nonprofits are looking for more cost-effective solutions, Friedman said. Once people become interested in the sector, they often realize how large the potential market is.
According to the National Philanthropic Trust, Americans gave nearly $500 billion to charity in 2022, down 3.4% from 2021. There are more than 1.5 million nonprofit organizations and counting, and are building to Capturing even a portion of this market could be a huge win. 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 still leaves little mark on the nonprofit industry as a whole.
“We have about 1% market share,” Friedman said. “That’s amazing. I’m really proud of that, but I also think there are 99% of nonprofits that can benefit from this, and a big part of our fundraising was to do that.”
Givebutter could face more competition along the way. “Nonprofits are incredibly resilient,” Friedman said. “There [have] In recent years, there have been downturns and upswings in the economy, and nonprofit organizations have grown. Nonprofits also solve some of the world’s biggest problems. I’m glad more people are aware of this and investing in it.”