Tell us a little about yourself, how and why did you come to create How2Fund?
The idea came in 2014 when I was picking up a teacher-friend from a school in the South side of Chicago. I saw a good-sized building on campus that was burned and boarded up. She told me that used to be their cafeteria and it had been sitting like that for more than two years. At first, I wanted to raise money on my own to help repurpose this building, but I soon learned that this was just one of many capital improvement projects in Chicago that were waiting on funding. In 2015, I partnered with my childhood friend, Brian Letzter, who was fresh out of the Army, to form an online platform for schools to create a profile, post projects and collect donations. At its peak, we had five schools using the platform, together raising about $4,000.
By 2017, we realized that many nonprofits wanted to adopt a similar crowdfunding-esque fundraising style (posting projects, photos, setting a goal with a timeline, etc.), but didn’t want to compete with other nonprofits or people’s personal projects on places like GoFundMe. So we decided to use what we had built already and pivot to creating white-labeled fundraising pages for nonprofits. This allowed nonprofits to post their projects to a page that matched their brand, and was accessible by a private login. All donor and transaction details were available to them, and they had full control of their fundraising efforts.
How have you marketed the product and where are your customers originating from?
We have eight nonprofits using the platform now, together raising about $22,740. We did not market the platform very heavily. All of our nonprofit partners were through word of mouth through various events and startup incubators. We definitely understood that if we wanted to scale this up, we would need to implement some consistent business development plans and execute on digital marketing campaigns, but we didn’t have the time or budget to do so.
How does your company generate revenue?
All donations collected through the platform include a 5% + $0.30 fee (on top of whatever the donation is). Stripe takes 2.9% + $0.30, and we take 1.9%.
We offer website packages for nonprofits that don’t have an existing website, for which we charge $2,500. We also are value-added resellers for DonorSearch, the largest donor database and donor targeting platform in the US.
How much time a week does it take to run it and what is automated?
Right now the platform is mostly running on it’s own. There are no new features or development projects underway. We pay a monthly fee to remain a reseller of DonorSearch, and have to pay monthly fees for our server space, but that’s really it. To set up a new fundraising page for a nonprofit it takes approximately 7 min – and that’s setting the page color scheme, inputting a logo, and creating a login for the nonprofit administrator. I will record a video that I can share with interested buyers.
The next project we wanted to complete was to automate the entire page creation process. That way, a nonprofit could visit our How2Fund.com website, verify their status as a nonprofit and register with us (their EIN numbers could be accessed through the IRS API), design their own page with logo and color, and start fundraising. They could buy add-ons like DonorSearch’s donor targeting software to begin their campaigns, while keeping track of all donor activity.
This is a young business, why are you selling now?
The short answer is … life happened. HowToFund was started while Mike was getting his MBA and Brian was pursuing his undergraduate after the Army. Mike got married and moved to San Francisco and Brian is now pursuing his Master’s in Marketing in Chicago. Unfortunately neither of us had the time or money to continue to develop new features or execute on growth plans. 🙁
What does someone need to do to continue operating the business in its current Form?
As I’d mentioned, the platform is running on it’s own for the most part. Someone would have to continue paying the bills, perhaps updating the WordPress tools and ensuring they didn’t cause problems for our users. Obviously, if the new owner wanted to grow the business, we would suggest putting money toward digital marketing, as well as automating the nonprofit account creation and website development process. I would also suggest that the new owner explore new features with our partner, DonorSearch, as their targeting platform is a perfect match for our donation collection. We are happy to organize and facilitate an introduction to the DonorSearch team, if interested.
What has been the evolution of this site since launch?
As mentioned, the platform started off in 2015 as a platform for schools to register, create a profile, and post projects. We pivoted in August of 2017 to the white-labeled Platform-as-a-Service (Paas) approach, allowing nonprofits to have and maintain their own branded fundraising pages. We currently utilize WordPress custom theme development to create and host the nonprofit pages.