For this month’s Spotlight, we had the chance to meet up with Matt Pfaltzgraf, founder and CEO of Softgiving, to discuss his views on starting a company, updating an industry set in its ways, and taking a chance on a cause you care about.
Matt founded Softgiving to address a problem he saw in the way professional and enterprise nonprofits traditionally raise money for their causes. Most nonprofits rely on outdated methods of fundraising and receive the majority of their donations through checks written by longtime donors.
That model is becoming less and less effective as the donor base ages, and younger potential donors are less receptive toward traditional fundraising drives. To solve this problem, Matt leveraged his experience in the world of payment technology to create alternative recurring fundraising solutions to help nonprofits grow their donor bases and to support nonprofits from a marketing standpoint by creating innovative solutions to help them reach new audiences.
“When you have an aging donor base that you are completely reliant on, it doesn’t bode well for the future,” said Matt. “It’s no different than a business model that’s becoming outdated, like a Blockbuster. I want to make sure that these services are extended well into the future and that the industry is updated to be able to provide for these innovative services so they can continue to do the good work that they do. The other part is that there’s a great business case for disruption. When you have this tidal wave of new donors and people coming of age that have the capital to be involved, finding ways to get them engaged and participating provides a really interesting business case and an exciting opportunity to innovate our industry.”
Softgiving set out to revolutionize the way people give to nonprofits by creating recurring donation options that reward donors for their generosity. Matt says, “We’re building in a system through which somebody will be able to turn their credit or debit card into a rewards card for giving. By donating their change, they get 2% back from their purchase at Home Depot. They get 5% from their purchase at Athleta. They get an opportunity through almost 200 national brands where just by donating their change they can get more in credit returned to them than the donation actually cost them. It’s actually paying somebody and rewarding somebody to give, in a much more instantaneous way than has existed in any other donation tool. From the technology built, to the incentives provided, to how it’s marketed, every piece of that is something we’re building ourselves.”
Matt was inspired to help nonprofits because of his personal experience with their services. Growing up, Matt’s family relied on the Boys and Girls Club, YMCA, Goodwill, and Salvation Army. As circumstances improved for Matt’s family, he started to lend a hand to the nonprofits that had helped him so much as a child. After a while, Matt went from a volunteer to a board member for various organizations; it was in this role that Matt realized the need to change the way nonprofits fundraise. “When I was trying to raise money for my peer group, the communication, the language just wasn’t the same; and that’s because nonprofits rely on checks to fund their operations today,” said Matt. “Over 90% of donations are made in the form of checks. So when you’re trying to reach a younger, more tech-savvy demographic, you’re going to miss them every time if you’re asking them to write a check.”
At the time, Matt was the director of a payment association called SHAZAM. He decided to use his knowledge of the nonprofit and payment technology sectors to create Softgiving.
Even with a revolutionary idea, experience in the field, and a large dose of inspiration, Matt acknowledges that launching a startup is challenging:
Our first year was just a development mess. We went through two different outsource developers. We spent a lot of money to get very poor working software. We really were not prepared for that at all because some of us were new to the startup space. Working with nonprofits and trying to bring them along in a way that they feel comfortable, marketing new solutions to their donors, growing their donation bases in a new way because there are no nonprofit professional fundraisers that have experience with nontraditional fundraising was a challenge.
After surviving the startup stage, Matt says Softgiving is looking forward to the next phase. Softgiving will launch their campaign for World Vision in the next few months, and the company is focusing on gaining a foothold in the social media space. In the next few years, Matt hopes “softgiving” becomes a verb that describes any way of giving funds that isn’t a one-time gift.
For aspiring entrepreneurs, Matt offers some advice:
Don’t rush into being an entrepreneur. Make sure to take time learning skills outside of what you’re looking to pursue. A lot of things that we do today and a lot of things that I come up with come from jobs that had nothing to do with payments or nonprofits. Cultivate your network. Startups only fail when the people who are running them run out of energy and run out of commitment. Make sure you’re committed to what you’re doing and you’re passionate about it. There’s going to be lots of pivots along the way and you have to be nimble, you have to be prepared to make tough choices when you need to. It’s not all rainbows and butterflies. Ninety-nine percent of us fail. If you don’t want to be one of them, you have to put in the work, and you have to get the team, and a lot of things have to go the right way. But if it does then it’s great.
To learn more about Softgiving, make sure to check out their website.
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