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This is Bloomberg business Week Inside from the reporters and editors who bring you America's most trusted business magazine, plus Gloomal Business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebek from Bloomberg Radio.
Okay, so Carol, you we do a cool guest. I'm gonna do the setup. Okay, take it away, because over the last week I'm thinking, Okay, you got Thanksgiving. Yeah, then you got Black Friday. Yeah, apparently of small business Saturday.
Yes, indeed, I.
Don't know what happens on Sunday, so skip that one. Don't take a cyber Monday. Do nothing on Sunday, Giving slash travel Tuesday. I know what's tomorrow? You're out of here. You don't care Giving Wednesday. It's Giving Tuesday today.
Yeah, so is that your point?
What's tomorrow? Oh? Wednesday? Something I don't know. They need to fit fgure out something for Wednesday.
You're confusing me, buddy.
All right, that's the idea. Last year in the US people gave three point one billion dollars. This is according to the Giving Tuesday data Commons. It works with various data labs to source info around Giving Tuesday. For an idea about how this year is shaping up, we turned to Tim Cadugan. He is the CEO of the crowdfunding platform GoFundMe, which raises more than fifty million dollars each week. It's amazing he's back with us in the Bloomberg Interactive
Brokers studio. Good to see you. How are you any? Very good?
Thank you for having me, especially today.
I got to ask you since we talked about Elon Musk before, and you know, he didn't get the approval second time. A judge rejected this massive pay package, and we said, you know that we don't necessarily have to do a GoFundMe page for him yet. Has anybody ever done a crazy go fundme page for Elon? For Elon?
I haven't seen that, but I have seen some high school students do it. Go fundme to get a tank to take too high school graduations. Seriously, doth veda Outrighters?
Did it work? Did they raise the money up?
They raised? I think about twelve hundred bucks and it's a hilarious video. I mean, that's just one of many examples so yeah, all kinds of crazy stuff, but that's not typically giving to you.
That's not typical. Well, so it's interesting that you're here on Giving Tuesday, because I do feel like go Fundme is year round. It's not necessarily the type of thing that is seasonal like a lot of other charity And I don't want to say you're not a charity, but like in a lot of like a lot of charities that are given to on Giving Tuesday, what do you see on the platform around this time of year versus other parst?
Sure? Well, I think the key thing to understand is there's two parts of our business. There's go fund Me, the consumer personal fundraising part, which nearly everyone knows, and then there's Classy, which we acquired in twenty twenty two, which is nonprofit fundraising, so it's software typically for mid size and larger nonprofits. These are people like the Salvation Army or Tunnel to Tows which is a great New York based charity, or World Central Kitchen. And for those organizations,
you're exactly right, like this is the giving season. Really Giving Tuesdays the kickoff for that. The three biggest days of the year are Giving Tuesday, thirtieth of December and the thirty first of December.
Those latter two for tax reasons, I imagine.
Yeah, people still like, yes, I've got to get going.
Got to get it in. How much of your businesses go fund me as the consumers know versus the B to B part, it's.
About two thirds one third roughly. Personal fundraising is the bigger PoTA. But they're both.
Big, they're both being which one's growing faster.
They're both growing pretty nicely. And the interesting thing is that I'll go fund me personal fundraising businesses in twenty countries, whereas our software classy business currently has made it in the US. So there's some big differences there as well.
Is it with plans to expand globally or we hope so yeah, Yeah.
It's a little bit more complicated doing charity fundraising because there's more complicated legislation around the world.
Yeah, how do you scale? How do you scale it outside of the US? Then, like, is there you target like a couple of different countries where you understand the legislation, How does that work.
Well with the personal fundraising it also there's legislation, but we look at how BIG's the market, how big is the GDP, what's the disposal income? And also is go Fumbi already known. So, for example, we just launched Mexico as our twentieth country in April, and part of that was understanding that we already had twenty twenty five percent brand awareness. We had a lot of search activity, and we had a lot of people who wanted and we're trying to set up go Fumbies in Mexico but couldn't
because it was not yet a supported market. We saw that demand, We're like, let's get in there. We worked through all the steps to set that up.
Always working with local currency.
Do you think, yeah, that's it's critical.
I'm just wondering if we're going blockchain yet, is there any crypto?
Yeah, that's quest.
We do offer crypto options for the software side of the business, actually pretty small.
Yeah, does that mean people giving with crypto?
People giving?
Because that's the thing that I think has emerged in recent years. It's not really people are holding onto their crypto. They don't want to spend it. What they want to do with it is hold it like a spec to ask that.
Sure, Yeah, we're not seeing a lot of people spending there, so we are seeing DAFT as.
A currency, don't advise funds.
Yeah, okay, we've been offering that now for most of this year, and we're seeing a nice pick up there and I think that's going to be a really strong growth area.
Okay, we are Bloomberg, and so I hate to ask this question when you're like helping people and some of them in dire situations, you know, raise money for a good cause. But how do you so what's the business model for you guys? And do you just stay private? Does it make sense?
Well, two questions, they will take the first one first, add so much so. It is an innovative business model. So we thought very carefully about this for the exact reason that you preface the question, which is we're here to help people help each other, and so we want as much money as possible going to the recipients of the fundraising. So the only thing we take out is the transaction fees, basically the credit card processing fees that
the banks charge us. So let's say you raise one hundred dollars, you received ninety seven and three percent, it's two point nine percent in the US is taken out. That's the that's the transaction processing fee. The way we generate our primary revenue is ask donors to make an optional tip to us. It's a very simple UI. We have a suggested number, it varies, and then the user, without a click, can slide that to zero.
What portion of users actually give a tip.
Enough for us to enough? People are generous to us, They value the platform. Essentially, were saying, and just do you tell us what you think our service is worth? And if it's worth something to use at the price.
What do they think it's worth? Usually not in terms of money, in terms of percentage of the donation of the contribution. I don't want to keep saying donation, but that's yeah, it's a contribution to us.
It's a it's a it's a modest percentage. Should I put it that way?
Single digits?
Modest?
Yeah, but it's enough to keep the lights on, and enough to its profitable.
Keep the lights on, keep us profitable, and critically keep us investing in product technology, Trust and safety and customer service. Those are the key areas.
That Okay, let's talk about trust and safety.
Sure, yeah, one quicker. So without that, would you guys not be able to keep the lights on?
That's all revenue? Yeah, no, we rely on that is the way we generate the revenue.
But it hasn't always been like that.
Yes, it's started out as a fixed five percentage fee and then in this is about a year and a half before I joined twenty eighteen. I think late twenty eighteen shifted to a voluntary tip model, which we think is much more in line with what customers want.
Do you make more from the voluntary tip model than you did with that blanket five percent?
That depends on the country and the donor, so it varies.
Trust and safety. How do you know what you're giving too is legit? I mean, look, I've used it and I think I talked about this last year when we spoke to you. But you know, my building has a block party every year and they use GoFundMe to raise money for the block party. I was on the board, so you're welcome. But you know, as one of those board members, he didn't do anything. I know, shocking, right. There's always the one guy he does everything, But I'm on the board.
That face is usually a woman.
It is usually the one.
He Listen, we get it done and we.
Are we projecting here? Yes, yeah, a little bit no truth, but but I do wonder you know that, So then then you're reaching out to people who you know and you're actually going to see the fund But I think oftentimes there are people out there who maybe stumble upon one on social media or maybe they even just go to your website and you know, you go to your website, you see them highlighted there. How do you know those are legit? They're going to the actual.
First, making sure that people have trust in what they're first, that they trust us enough to put their story up there, which often, as you said, Carol, is really important and often some of the toughest things that people are going through is they need to trust us as the person asking for help. And your question is more about the giver, and I trust what I'm saying. So think about it in a few layers. First, you already head on it.
There's a huge social proof layer. The vast majority of fundraising is with friends and family and cammunity, so you know the block party's real, and so you're going to give to the go fund right because you know that, and so if you most fundraisers do not make any progress unless they make initial momentum with the people that frankly know you, love you, care about you. So there's a social proof layer right there built into the way
the model works. The second thing is we've had over thirty billion dollars raised, many many millions of fundraisers, so have a huge amount of data that tells us what looks like a legitimate pattern and what doesn't. That's when the trust and safety team then kicks in because if there's some behavior there that doesn't look quite right, then our team will look at that make sure it's legitimate or in some cases not, Actually very few are illegitimate because it just doesn't work fun.
But how do you figure it out? Like do you talk to the people you like? How do you figure it out to make sure?
Yeah, so's there's a couple more pieces coming in as well, which is once money starts to be raised, then we go put the beneficiary through KYC, Know Your or KYB if it's a business, which quite a lot of people raise for a business, right And so that's both us and those banks I mentioned that those payment service providers.
We're both doing KYC on the customer validating that it is the person that they are going to use it for legitimate means, and the fund's only released until that is all correct.
So how do you validate someone like what is it that you look for?
Well, looking for that their identity is correct, that it matches, that they're verified to their bank account information, that all the flows are clean and precise, and we're also looking for the donor activity to make sure that there's correlation and there's logical connectivity between the people donating that are coming from the community, and there's patterns of behavior that makes sense a little bit like what a credit card company is looking at those kind of patterns that indicate
that something is legitimate and not legitimate.
Is that your biggest expense? What's your biggest overhead product?
Technology? Products?
The area is it most But is that is that development? Is it paying people or is it servers? Like I'll come to that.
I just want to hit one last thing because this trust and safety is so important. So because I.
Can't tell you how many people are times it's like, you know, how do you know how I've heard in conversations? Is the last piece you know this is real?
So we a few years ago we instituted the Giving Guarantee, which is a global guarantee any donation of any amount made worldwide for up to a one year afterwards isn't covered. Wow, and that's great.
What do you mean it's covered.
So if there's any kind of problem, Yeah, you want a refund, you've got it.
Oh interesting from anybody who donates.
Anybody who donates up to a year afterwards.
Any So, if someone didn't have fun at the block party.
That would be different. That would be on you guys.
You guys didn't have enough snacks at the block party.
And the fortunate thing is we we we don't have to use that policy very much at all because most people asking for help are real people, legitimate p or genuinely asking for help because they need it. That's what most students do.
You know, when I see some of these big campaigns that end up going viral, I think to myself, and maybe it's because it's the bloomberg in me, but I think to myself, this person is going to get a sudden influx of cash, and that cash might be to plan for their child's education if they lost a parent, something absolutely tragic like that, which unfortunately we do see with these campaigns. They need somebody on the side of you know, wealth management or investing to help them manage
a windfall such as that. Do you guys do any of that? We don't.
It's something we've thought about, because you're absolutely right. I mean, someone's often put into a very demanding and unusual situation and then they've got this influx of cash, which is a great problem. But it's a problem. But it's not something that we've gone into. And maybe it's something we can help with in the future. But I agree with you, it's something that's important. So you were asking about the product stuff for.
A Yeah, I mean when you say the expenses in the product, is it about paying you know, AWS for service space or whoever?
It's people, righteers It is our product team, our design team, our engineering team, who build a very unique product.
Is it hard to find them?
Actually, not terribly because we offer a really interesting set of product and technical challenges to work on, and we offer a really rare combination of it's technically interesting, it's a it's a well paying job, and the purpose is bar not right. You get to work on products that help people help each other. So it is a really nice blend. So we have a very We're very fortunate.
Is there an average raison kind of the individual side, the crowdfunding side, or that.
It's really hard to say because it is across.
It is really, it's just it's the the data.
The average is meaningless though, here's the here's the here's the problem. Right, The average is meaningless because it includes some really small things and some gargantuan things.
What's the biggest amount that's ever been?
The largest amount was forty five million dollars raised for a su campaign fundraiser on gofunme dot org, which is our sister, which was America's Food Fund, which was set up by Lori Powell Jobs and Leo DiCaprio, And that was in covid so for food insecurity.
Wow.
The largest number of donations ever was for the George Floyd family fundraiser.
Wow?
How much is that?
That was I think about fourteen or fifty million dollars but the largest number of individual donors from about one hundred and fifty countries.
Hu, Tim Cadugan, thank you so much, really appreciate that. The CEO of go fundme joining us right here in studio. Happy holidays.
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Mm hmm