Givebutter started in a George Washington University dorm in 2016 as a software solution to make nonprofit fundraising more transparent and fun. Eight years later, the company is profitable and just raised $50 million to scale as momentum for nonprofit startups appears to be growing.
The company’s co-founder and CEO, Max Friedman, raised funds for a variety of organizations at the college, ranging from fundraising for GW’s Greek life to fundraising for national nonprofits like TAMID. Friedman told TechCrunch that no matter the size or scope of the organization he was raising money for, they all had the same problem: They were all using a disjointed mix of one-stop technology software that didn’t really make the process better and often came with hidden fees.
“We realized that nonprofits use a lot of different tools to solve different pain points, and what we can do for the sector is bring them all under one roof,” Friedman said. “It’s in restaurants and in e-commerce. there [was] not Shopify or Toast for Nonprofits.”
The result was Givebutter, a CRM platform for nonprofits that strives to be transparent and inclusive. It has marketing resources, ways to track donors, fundraising tools for a variety of different strategies, and payment processing. Nonprofits can either use Givebutter for free if their fundraising campaigns offer users a place to donate on Givebutter, or organizations pay a platform fee of 1% to 5%.
“From day one, we had customers,” Friedman said. “It was very clear that there was a lot of demand for great fundraising tools and not a great tool for those change makers.”
The startup raised $50 million from Bessemer’s Venture Partner’s BVP Forge Fund with participation from Ardent Venture Partners this week. Friedman said the money will be used for marketing to help the startup scale as the company has grown to this size so far largely with almost zero marketing spend.
What initially got me interested in this deal—besides the fact that the company is profitable from a revenue system based heavily on donations or the fact that it calls its employees “Butter Slices”—was that it was a fairly large round in the non-profit tech sector , which has been popping up a lot more recently.
During YC’s most recent demo day, two startups, Givefront and Aidy, were building technology for nonprofits. While these companies weren’t the first nonprofit startups to ever go through YC, they are some of the first to build software for nonprofits. Many older YC companies in the space are nonprofits themselves, and Givefront and Aidy stood out in this year’s group dominated by AI and programming tools.
I asked Friedman if he felt like the dynamic in this category had changed since he started eight years ago, and Friedman said that it certainly has and that the timing is right for this category. There has been a lot of recent consolidation in the space, especially with non-profit, private equity-backed software players like Bloomerang and Bondera, each of which has made a handful of acquisitions in the last few years alone. That leads to higher fees and many nonprofits looking for less expensive solutions, Friedman said. Once people become interested in the industry, he said, they often realize how big the potential market is.
In 2022, Americans gave nearly $500 billion to charity, according to the National Philanthropic Trust, down 3.4% from 2021. There are more than 1.5 million nonprofits and growing, and carving out a piece of that market could provide a huge windfall. 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 barely makes a dent in the overall nonprofit industry.
“We have about 1 percent market share,” Friedman said. “That’s great. I’m really proud of that, but I also think there’s 99% of nonprofits out there that can benefit, and a big part of why we raised it was to do that.”
Givebutter may just start facing more competition down the road. “Nonprofits are incredibly resilient,” Friedman said. “There [have] there have been downturns and ups and downs in the economy for several years and nonprofits have grown. Nonprofits also solve some of the world’s biggest problems. I’m glad to see more people aware of it and investing in it.”
