How do you become a $23 million darling in Silicon Valley? By building a for-profit business that serves nonprofits, apparently
What’s one of the rare blessings of living in an era characterized by tremendous asset inequality and a chastened, hamstrung welfare state? Charitable giving has by some accounts reached an all-time high, both among the general public and among the American wealthy. What a time to be alive.
As has been the case with many a popular activity in our time, techies have now come along to philanthropy to offer the piggy-back ride they like to call disruption, claiming to fix something that may not have needed fixing while skimming a fee for doing business. The crowded crowdfunding field offers any number of sites that handle charitable donations, from Indiegogo to GoFundMe to Causes to JustGiving. All tend to follow the same basic formula, allowing users to register their own charitable causes and to donate to established ones. It’s hard for any one site to make a name for itself.
But on Monday one of the pack stepped forward from the others with big news: CrowdRise, a charity-specific crowdfunding venture, had landed $23 million in venture capital funding from a group including Twitter/Tumblr investors Spark Capital and Union Square Ventures, and Jeff Bezos’s personal investment fund, Bezos Expeditions. (This funding round followed an earlier seed round that included investment from Twitter founder Jack Dorsey.)
Those big names join the biggest one that had previously been attached to the site: Edward Norton, the actor and director. Norton and a band of cofounders launched the site in November 2009 after they raised a surprising $1.2 million for a wildlife preservation concern in eastern Africa. They figured, If we can raise good money like this, why shouldn’t we let everyone else do the same? That was a giving notion, and it’s of a piece with CrowdRise’s passionate and playful message. The site’s motto says its users will “have the most fun in the world” while fundraising, and little jokes pepper its official literature. To wit: “CrowdRise is way more fun than anything else aside from being all nervous about trying to kiss a girl for the first time and her not saying something like ‘you’ve got to be kidding me.’” Fun!
But what does altruistic fun have to do with a $23 million round of funding? That cash would do some good in the pockets of the charities CrowdRise users support. The site’s literature explains its business plan this way: “When a donation is made through Crowdrise, we deduct a transaction fee so we don’t go out of business (GOB).” No, ExxonMobil’s corporate communications team would never write such a plain thing. But perhaps what they would write would not fudge things, either. Those transaction fees not only kept CrowdRise from going under but made the business promising enough to land all that venture money. As TechCrunch put it: “[CrowdRise is] profitable and … viewed the Kickstarter goal of $1 billion raised on CrowdRise as very doable.” (CrowdRise had not responded to questions from TIME as of late Tuesday afternoon.)
Capitalist techniques have gained an increasingly stable foothold in the world of nonprofits. Universities, hospitals and big foundations are lousy with MBAs and executives who command (citing market logic) salaries close to what their for-profit counterparts make. CrowdRise’s big-bucks waltz into this moral vacuum might be a little brazen—but at least it’s clever. The opposite of clever is the spirit that accompanies any event like this. A perusal of the comments on TechCrunch’s post, and the Twitter response to the same, indicates an unflinchingly positive reaction to the news. “Great to see.” “Psyched.” “Congratulations.” That’s a whole lot of accolades for a common middleman who just got a whole lot richer.