Non-profit startups have come into focus at Y Combinator in the last couple of years. And in an extension of that, the incubator is also backing companies that offer services to the wider non-profit sector. Giveffect, part of its current cohort, has built a suite of cloud-based software that focuses specifically on the needs of non-profit businesses, covering services like accounting and CRM (including donor tracking), through to fundraising and crowdfunding platforms, all built from the ground up with its target customers in mind.
It’s also noteworthy that Giveffect, unlike many others that pass through YC, is not actually a very young startup. It was founded in 2012 and already has more than 300 customers.
The non-profit sector, despite the sound of its name, is big business. In the U.S. alone non-profits process more than $300 billion each year, with a growing portion of charitable donations coming through online platforms, especially among younger consumers.
That has creating a creeping problem, however: much of the non-profit sector is built on shoestring budgets and disjointed legacy software.
Anisa Mirza, one of the three co-founders, tells me that the impetus for creating Giveffect came from her own experience of working in the nonprofit sector in Canada, where she and her two co-founders, twins Allan and Kevin Shin, are all from.
Mirza knew first-hand both the cost and other constraints of bringing fundraising into an online environment, and the challenges that came with buying other kinds of software intended for enterprises and smaller for-profit business.
In addition to the expense of buying off-the-shelf B2B software and services, much of it isn’t designed to track, extract and integrate the kind of information that non-profits need to use daily. And creating customised software is well beyond the budgetary realm of many of these groups.
“We were inspired to create this to help clients in the online giving sector going through what I went through,” she said. She notes that it’s not just charitable causes that Giveffect targets. Others include churches and schools running fundraising events, “basically anyone that runs online giving systems needs a way of keeping and organising their notes, taxes and CRM,” she says. “What we are doing is really something that hasn’t been done before.”
In fact, she says that often when she first pitches Giveffect to prospective customers, she finds that its biggest competitor is essentially human labor. “There are so many disjointed systems,” she says. “When we show our product to clients, their first reaction is almost always, “Oh my god! You mean I don’t have to do all this stuff anymore?'”
Although Giveffect is in the current class at YC, the startup is not exactly a spring chicken. Mirza first came up with the idea a few years ago and talked about it casually with the Shin brothers at a party, both of whom at the time were following more standard career paths as software engineers, respectively at IBM and STMicroelectronics. As Mirza describes it, there was suddenly an a-ha moment when they knew they had to try it out as a business.
Today, the company’s integrated platform offers facilities for online fundraising, crowdfunding, ticket sales management, a perks/rewards system, an online campaign creator, and backend software that manages donor data, tracks taxes and issues receipts, and prints customised reports.
All of this has been built from the ground up except for the payments backend. For this, Giveffect is currently using the PayPal API and holds on to none of their customers’ financial data.
It also presents its clients together in a nifty Marketplace where charitably minded people can browse campaigns and get redirected to specific sites to learn more.
Prices for Giveffect range from $179/month for a basic package, through to $499/month for more premium packages. Giveffect takes between 1% and 3% commission, and doesn’t require customers to sign long contracts or give up cancellation fees when and if they stop using it.
And it has actually seen a good amount of traction with very little fanfare. There are now more than 300 non-profits using the software already, including large groups like United Way, SPCA and War Child.
So why go to YC? Mirza admits that the trio was hesitant at first about applying. “We did wonder if it was suitable given that so many startups here are at a much earlier stage,” she said. “But based on the traction that we’d seen other YC startups get, and the success stories we heard, we decided that we could build a good company without YC, but we could build a great enterprise with it.”
She says that one month in, their thinking has been borne out, with the “network effect” of being in the program, and the access to mentors, a whole new phase for the company. “The rapid pace you have here pushes you,” she says.
In addition to finishing out the YC program and building out its business further, she says that the three co-founders are now also looking to relocate themselves from Toronto to the Bay Area to continue that growth.