Setting up a social enterprise: a case study

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When we set up TheGivingMachine, the four of us knew we were starting a journey into the unknown third sector. We knew that we wanted to build a company to give money away and we had an idea of how we would initially do it. But we didn't know that the journey would teach us about the relationship between supporters and the charities/schools they support and the different attitudes they have.

The fundraising concept

We wanted to build a company that exclusively shared its revenue with the charities and schools that individuals chose. To do this we had a simple idea which almost seems to be too good to be true.

The idea was to build a website which uses online shopping to generate charitable funds. Shoppers choose charities and schools to support on TheGivingMachine and then click through to their favourite online shopping sites who are part of the scheme. A percentage of the every sale is donated by the retailer, on behalf of the shopper, to their chosen charities and schools. Donations cost the shopper nothing personally and the online retailer is happy to pay them.

TheGivingMachine makes sure that the shopper's chosen charities and schools receive their donations. The beneficiary starts to get donation payments without having to do much other than letting supporters know about the scheme. It’s obviously much more complex in the background but essentially, that’s how it works.

Some lessons learned

A local secondary school (where I had relatives attending) seemed a natural beneficiary that we could help. They appeared to be vaguely interested about getting involved and agreed to participate so we put them onto the system. However, they didn't do anything within the school community to tell parents and supporters about using TheGivingMachine. Some of the parents independently started using TheGivingMachine to donate to the school.

When they received their first donation payment, the school was surprised and the headmaster (who was not aware that a colleague had verbally agreed to participate) asked me to remove the school from the site. I said that I was happy to do so but we'd have to tell the now growing giver base that the school no longer wanted donations from them in this way. The headmaster responded that we had better leave things as they were and has gratefully received further donations since…

This was a significant first step in understanding the power of our members (or givers). We discovered that their influence in determining where they want donations to go was just as important as the decision of beneficiaries about how they wanted to receive them or even whether they wanted to promote the scheme. In this case, 16 givers generated donations of over £40 to this secondary school without the school promoting it in any way.

However, beneficiaries who do promote TheGivingMachine, tend to generate significantly more donations. For example, the feeder primary school to the one mentioned above, has actively promoted TheGivingMachine and raised £1,500 so far.

The second lesson came when we started meeting some of the larger charity fundraisers. Some years ago, I cycled over 1,000 miles with a friend to raise money for a well-known children’s charity. They seemed a great place to start our large charity campaign trail. When we met with them, they reviewed what TheGivingMachine was about and the simple and honest response was “it is more efficient for me to ask all my donors for an extra tenner” than to ask them to donate in a new way.

Giving rather than fundraising

This was valuable feedback which has been verified many times since. Fundraising in large charities seemed to be more about the efficiency of taking money and not to do with how people actually may want to give it. As time went on we learnt more about this focus on the 'efficiency of taking' within charities as they get bigger.

We observed that this is not built on an understanding of the relationship individuals want to have or can afford but on marketing segmentations of large 'datasets' of donors who can be profiled, categorised and targeted for various 'asks' to extract the most amount of cash possible. Lapsed donors caused by too much marketing pressure just become a statistic on a spreadsheet that merely offsets the gains made from those that respond to increased requests.

Initially this seemed disheartening. We had thought that the large charities would embrace what we do as a free source of income, we didn't anticipate that, to some of them at least, it wasn't considered worth their while. In the end this turned out to be a major turning point for us. We started listening more to our other main audience, our givers. Our givers loved what we did and even when we made the odd mistake and dealt with it, we still received positive feedback – we were obviously doing something right.

Our givers convinced us that we were very firmly on the 'giving' side of the relationship and were there to support givers giving to what mattered to them. This meant that even if a charity or school was not on our system, we would allow a giver to donate to them as long as we could verify the credentials of a particular beneficiary.

We called this new initiative 'floodgates' and it has really tapped into our giver community’s energy. At last count, our givers support over 1,500 beneficiaries who have directly registered with us and a further 700 who have not. We write to beneficiaries who have been 'nominated' to let them know that they now have supporters on TheGivingMachine and invite them to join and promote the free scheme if they wish but reassuring them that we will send donations to them regardless. We now think of ourselves as proudly 'giver-centric'.

Our community of givers are really passionate about supporting the schools and charities that mean something to them. There are many examples; typical ones relate to givers who are concerned if a specific donation is not yet displaying in their giving accounts on TheGivingMachine.

Some of these donations may only be £1 or less but the energy and enthusiasm to ensure that these donations are correctly recorded is representative of how much real people actually care and want to support their personally chosen beneficiaries. These givers are who we really represent and who we built TheGivingMachine for.

We have seen a universal acceptance by givers to the TheGivingMachine concept as it is a relatively small thing to 'ask'.  Online shoppers only have to make a small change in their behaviour to benefit others. Our explosive growth in our number of givers is evidence of that our givers agree with this statement. They really care in a longer term way, about who they want to give to and not just as a one-off response to a specific appeal. 

Finally, the charity sector is starting to show interest in using TheGivingMachine for online fundraising mainly because traditional sources of funding are diminishing and our scheme is low cost and low effort as an alternative source.

Making giving more personal

Our observation is that it seems as if the larger the charity, the more distance there is between the supporters and the fundraisers who communicate with them. This distance implies that the ways supporters can help their charities more become segmented, analysed and subject only to Return on Investment (ROI) analysis.

While this is absolutely necessary for running an effective and successful business, it ignores the fact that supporters are customers too and charities may find that understanding their supporter base more personally may actually benefit them. We certainly could not have grown TheGivingMachine without listening to our givers and actively involving them in its design and development.

Medium and smaller charities seem to understand this need to listen instinctively because the size of their audience means that it generally has to be more personal and any campaigns will illicit personal, face to face feedback. Given that most of the larger charities started small with this personal approach, one would hope that some of these valuable attributes will re-emerge at some point.

What's next for TheGivingMachine

TheGivingMachine is still young but it feels as if we have learned a great deal so far – most importantly by listening to our community of givers who just want to make free cash donation to the charities and schools that matter to them. Our goal to give millions of pounds away is a real possibility within a few years thanks to the giving behaviour of normal, everyday online shoppers like you and me.

At some point, we will cross some magical RoI threshold for the mainstream, large charities to latch on. In the meantime, there are plenty of smaller and medium-sized charities only too pleased to tap into a free source of donations and enable supporters to give more for free.

Find out more

If you would like to know more about TheGivingMachine then please contact richard@thegivingmachine.co.uk  

Have your say

What is your view of a giving, rather than taking, model of fundraising? Do you use clicks and purchases websites to raise money for your organisation? Are you thinking of setting up a social enterprise?

Have your say on the Trading and shops forum or the Fundraising forum.