Matt Pfaltzgraf and his brother were raised by a single working mother in a household of limited means. The family often relied on non-profit services, like the Boys & Girls Club, for after-school programs and other resources.
As an adult, Pfaltzgraf started giving back to those same non-profit programs that were crucial while he was growing up, eventually sitting on a few boards. That experience opened his eyes to “how antiquated the fundraising process was for non-profits and how it’s skewed to wealthy individuals writing large checks,” he tells Hypepotamus. “Coming from limited means, I was not one of them, so I had a lot of trouble raising funds.”
The average millennial gives an annual charity gift of nearly $500, according to a recent report. Those small donations are often overlooked since non-profits tend to laser-focus on large donors. However, Pfaltzgraf discovered that this was a vital untapped market for these organizations.
His position at a fintech company gave him the necessary background to approach this issue. In late 2016, he quit and moved from Iowa to Atlanta to grow his new fintech startup, Softgiving, to capture those micro-donation customers.
Softgiving’s first offering, Change, enables donors to link their debit or credit card to the non-profit of their choice. For every purchase, Softgiving rounds it up to the nearest dollar and the spare change is donated.
“With Change, someone has the ability to give small amounts frequently, tied to the frequency in which they are buying things. It’s a small impact to that donor, but it’s large impact to that nonprofit,” he says. This also brings diversity to the non-profit’s donor base.
Pfaltzgraf shares that it’s all about making donations seamless — helping donors give more with minimal effort. While they may not be high-rollers, those donors can become guaranteed revenue for those non-profits.
Currently, non-profits using Softgiving see donors contribute $360 annually in rounded-up change, with a 90 percent retention rate. Even more telling, nearly 30 percent of new donors signing up report having never before donated to charity.
While Softgiving has international nonprofits like World Vision and CARE on their client roster, at first Pfaltzgraf grew by focusing on smaller entities.
“When I first came down here, I was terrified to work with any of the local non-profits because I didn’t want the product to fail in my backyard,” says Pfaltzgraf. “So we reached out to organizations around the country, like the Mississippi Public Broadcasting, the Boy Scouts of Seattle and others. We talked to them about their challenges and the main issue of reaching younger and recurring donors.”
This year, Mississippi Public Broadcasting was able to secure almost $25,000 in pledges in 24 hours through donations made with Softgiving.
With the addition of those large organizations over the past year, Softgiving’s base has grown to 10 million donors. The platform is free and the team helps the non-profit onboard by integrating it right into their website. The startup charges a flat rate per donor, per month with different tiers that include support, marketing assistance, text messaging and other features.
Pfaltzgraf has raised $1.3 million so far in funding currently employs 13 people. They plan to release a new product in early 2019 that will allow individual donors to give to non-profits via payroll deduction, without having to rely on their employer.
“The biggest lesson I’ve learned while growing the company is if you are not 100 percent committed to the idea you have or the problem you’re trying to solve, then don’t try it,” says Pfaltzgraf. “There are so many ups and downs — it’s such a rollercoaster that, unless you are 100 percent a true believer in yourself and what you’re trying to do, it just won’t happen.”