Social Impact or Profit? Both! And how can YOU support this idea
In 2012, me and my friends, Rui and Miguel, dreamed up a business that also donated money to charities. It was investors that told us they would be interested if we developed the charity angle even more strongly, giving the lie to the idea that commercial mechanisms cannot be used to fundraise. We are now certain that social good should not be a niche activity but be built into every aspect of people’s lives, including profit-making businesses. Our model proves it and we are offering you the chance to become part of it through our equity crowdfunding campaign (of which more later).
In May 2014, we officially launched what we call a “solidarity ecosystem”, so that technology could empower social impact (and vice-versa), connecting and engaging the different actors of the social economy. eSolidar is a 2-sided online marketplace that combines charities and their communities, by offering easy ways to raise funds and awareness to amazing charitable causes.
The world is dominated by social problems, both locally and globally. Whereas these problems can be massive, most of the world’s charities are tiny in comparison, and while doing great work, many are also hugely underfunded.
- Approximately 90% of all donations goes to 5% of UK charities;
- Individuals and the corporate sector struggle to navigate the complexity of the charity world. They are often unable to make informed decisions and to make the most of their commitment to social responsibility;
- More than four out of five small and medium-sized charities are struggling to raise the funds they need to survive;
- Many charities have yet to fully grasp the opportunity that technology offers, both to enhance their fundraising strategies, and to boost their ability to engage with individual and corporate donors;
So, why there is no disruption to traditional fundraising models?
In a world where hotels, music, gaming and taxi cabs have all been disrupted by socially-based systems using technology, why has the charity sector not done so too? It seems astonishing, given that the sector’s success already engages supporters’ good-will, donations and voluntary work that it is not using digital tools more effectively to the benefit of all those that are involved.
Where is the disconnect? Why aren’t we effectively leveraging the mutual desire from celebrities, brands and consumers to expand their commitment to social responsibility? And how do we centralize the fragmented field of charitable giving?
Here’s how we’re trying to solve it!
eSolidar allows people to shop, sell and donate to their favourite charitable causes. At the same time, the platform enables charities to diversify their fundraising base and reach new audiences through online charity shops, donations and special charity auctions with celebrities/brands.
Our goal is to provide a platform that enables all members of the charitable community — particularly the charities themselves, as well as individuals and the corporate sector — to transact in a single marketplace. By consolidating the interaction between these groups, we expect that it will enable charities to increase their resources and communicate with their donors more transparently and efficiently. It will also help individual and corporate donors to make informed choices about how and which causes they want/should to support.
We believe that eSolidar does more for the industry than conventional charity platforms. It implements an e-commerce-powered fundraising marketplace, paired with a comprehensive social platform for charities and their communities. It is our objective not to simply develop a platform, but foster a global community of giving that connects consumers to charitable causes worldwide.
“The key to survival for many small charities is to successfully diversify their funding sources without losing the essence of what they do and why they are unique.”
— Lewis Garland
As technology becomes more and more accessible, even the smallest groups now have the opportunity to venture into new areas. By making use of these new tools and technologies, and simultaneously playing to their individual strengths, small charities can maximise the impact of their messaging, grow their supporter base and start to generate more donations to help fund their future work. Now that really is a big deal.
“These income sources don’t compete with those that small charities normally tap into, and they allow charities to connect to potential supporters already registered on eSolidar. So, rather than promoting competition between the bigger and smaller charities, there is a chance to connect with and tap into a community of people who care.
We’ve seen how digital has disrupted the music industry, taxis and how we consume media. Surely the same mechanisms of personal choice, connection and user reviews can only benefit small charities.
— Devi Clark, The Huffington Post
A for-profit business to support charities? Does it make sense?!
Since launching we’ve been surrounded with several questions regarding our business model, and our market approach. Is it possible to combine profit and social impact? Is it “ethical” to make money through supporting great charitable causes? Is there a profit vs. social impact issue?
Is it “acceptable” to apply a small success fee on the raised value for charities? Won’t it lower the amount raised?
In reality, fundraising always costs money — it is a myth to believe that it is ever free. Charities spend time and money on staff, materials and distribution to get their message across.
The mechanism used by eSolidar, like the digital methodology of fundraising itself, disrupts the norms — going beyond the self-imposed imitations that the charity sector sometimes sets itself, in our view unnecessarily. Our win-win revenue model, attracts risk capital, raises awareness and generates more money for those causes by doing more marketing and scaling faster for a bigger impact. What do you think is better, for a charity to 90% of $1M or 100% of $100K?
The consensus is that our company should either support causes OR make money, there is no in-between. We believe we’re contributing to changing mindsets, where we can have profit AND social impact. In fact, is it not perverse to believe that non-impact driven companies are legitimately making profit, while not allowing impact driven to do so?
“I’ve always felt that social impact and profitability are two sides of the same coin.”
— Richard Branson
We work daily to develop innovation in the way the community, companies, brands and celebrities get involved and collaborate with good causes, so they can empower each other.
We expect that, by connecting the best from the so called “for-profit” and “nonprofit”, we will be able to bridge the gap and make these two “worlds” stronger.
We believe in social innovation and in the massive impact that technology can create within this sector, but we also believe that social impact can disrupt traditional business models. It is also our obligation to show it’s possible.
“We have a visceral reaction to the idea that anyone would make very much money helping other people. Interestingly, we don’t have a visceral reaction to the notion of people would make a lot of money not helping other people.”
— Dan Pallotta
It’s a nice theory, but does it work?
“In eSolidar, we have finally found a solution to raise vital funds through an extremely simple process (…) The whole process from start to finish was so easy. The staff are simply phenomenal, they made the auction process completely hassle free (…) Our first item sold for around 20% higher than our high end estimate and I believe this was down to the generous nature of the bidders both wanting the item and also knowing the funds were going to charity.
I would definitely recommended eSolidar to other charities and will most certainly be using them again. I hope that this is the start of a long relationship.”
— Richard Fogelman, Grief Encounter
Within the last 2 years, we are fortunate to have a community of close to 40,000 people and to have supported over 700 charities. We’ve raised close to $200,000.00 to charitable causes and had the privilege to work with partners like Impact Hub, Rock in Rio and Vodafone, among others. We’ve been working with several music festivals (mostly in Portugal, Brazil and UK) and have done initiatives involving 100+ celebrities, including Miley Cirus, Johnny Depp, Linkin Park, Maroon 5, Metallica, Muse and Lady Gaga.
Furthermore, we’ve been selected by the European Youth Award as the “Best Business Potential 2014” and by Forbes 30under30 in Europe for Social Entrepreneurship, earlier this year, which give us confidence that we are in the right track.
“If they carry on this rate, maybe eSolidar will inspire a revolution in online fundraising. That’s certainly a good news story for all of us!”
— Mike Zywina, GoodNewsShared
Our journey was never easy, but has been worthy. However, trying to make a “for-profit with purpose” startup grow, when you work with and for charities, is something that’s not always appealing to venture capitalists.
I would say that’s also due to the fact that we are in a kind of a “blind spot” or “grey area” between web/tech/e-commerce and charity/nonprofit/social impact. But, at the same time, eSolidar can be an investment opportunity that offers the potential of an high financial return while doing good.
Expanding our own family — how? Through equity crowdfunding and we want you!
In the last few months, a big part of our community showed interest by supporting us more actively and becoming part of our family, by investing in us.
That’s also why we’ve decided to open part of the company to anyone that believes in what we are building, and wants to empower us closely and more effectively. This will allow us to expand our operations and start our second phase of our growth strategy where companies will also become part of the ecosystem.
We will be able to provide tools for companies, through a Software as a Service (SaaS) model, to better engage with their employees & customers through CSR strategies. This will boost all the ecosystem and enable us to reach an exponential growth in users, revenue and amount raised for charities. At the same time, it will allow any company to become more effective on how to empower their employees through social impact.
“If you kill innovation in fundraising, you can’t raise more revenue; if you can’t raise more revenue, you can’t grow; and if you can’t grow, you can’t possibly solve large social problems.”
— Dan Pallotta
Why equity crowdfunding?
Despite allowing us to raise the capital which is essential for our future growth, this method has a number of additional benefits other than just money.
- Validation: The validation of eSolidar early in its journey is a critical part of the development cycle;
- Marketing: It is an opportunity to present eSolidar it in front of a new audience and benefit from the network effect of investors sharing and talking about their investments to raise brand awareness and grow customer numbers;
- Investors, Customers and Evangelists: Investors can become supporters, evangelists, advisors and customers. The introduction of these ‘super’ supporters, from a wide variety of backgrounds who will want us to succeed and would be often willing to offer their experience and networks to help us get there, will also allow us to focus more on executing and delivering the best service/product possible.
Because we have a platform focused on supporting charities and their communities, we want the platform to be owned also by the community.
The campaign launched to the public on 28th of June, will last until Mid August, and, meanwhile, anyone can invest here: seedrs.com/eSolidar
If you have any questions regarding this impact investment opportunity or would like to have a call/coffee/beer, please reach me on firstname.lastname@example.org.
*This post is originally from: http://bit.ly/2apFnJv