Founded within the confines of a university dorm back in 2016, Givebutter has transformed the fundraising landscape for nonprofits by offering a comprehensive and transparent platform. Now, eight years into its mission, the startup has not only achieved profitability but also secured a significant $50 million investment to fuel further growth as interest in tech solutions for nonprofits gains traction.
Max Friedman, Givebutter’s co-founder and CEO, experienced firsthand the challenges of nonprofit fundraising across various organizations during his college years. He observed a common issue: the reliance on a hodgepodge of tech tools that were often inefficient and riddled with hidden costs.
We realized that nonprofits are using a lot of different tools to solve different pain points, and what we can do for the sector is bringing it all under one roof,
Friedman explained. He noted the lack of a unified platform comparable to those in other industries, such as Shopify for e-commerce or Toast for restaurants.
As a response, Givebutter emerged as a CRM platform designed exclusively for nonprofits. It offers marketing tools, donor tracking, versatile fundraising strategies, and payment processing, all with a commitment to transparency. Nonprofits have the option to use Givebutter for free by incorporating a donation option for the platform within their campaigns, or by paying a platform fee ranging from 1% to 5%.
Friedman proudly shared, From day one, we had customers. It was very clear that there was a lot of demand for great fundraising tools and not a great tool set for those change makers.
The latest funding round, led by Bessemer’s Venture Partner’s BVP Forge Fund with contributions from Ardent Venture Partners, will primarily be allocated to marketing efforts. This strategic move aims to bolster Givebutter’s growth, which has already been impressive with minimal marketing investments.
The recent investment highlights the burgeoning interest in the nonprofit tech sector, as evidenced by the presence of startups such as Givefront and Aidy at the latest YC Demo Day, showcasing software solutions for nonprofits in an otherwise AI- and dev-tool-heavy lineup.
Friedman acknowledges the shifting momentum within the nonprofit tech niche since the company’s inception, citing increased market consolidation and rising fees from private equity-backed software providers like Bloomerang and Bonterra. This consolidation has prompted many nonprofits to seek more affordable alternatives.
With the philanthropic contributions in the U.S. reaching nearly $500 billion in 2022, despite a slight decrease from the previous year, the expansive nonprofit sector presents a vast market opportunity. Givebutter’s impressive track record of partnering with over 35,000 nonprofits and processing in excess of $1 billion in donations exemplifies its potential, yet the company still only represents a fraction of the market.
Friedman remains optimistic, We have about 1% market share. That’s amazing. I’m really proud of that, but I’m also like there are 99% of nonprofits out there that can benefit, and a big part of why we raised was to go do that.
As Givebutter continues to expand, it anticipates encountering more competition, but Friedman remains unfazed, expressing confidence in the resilience of nonprofits and the importance of supporting organizations that tackle the world’s most pressing issues.
