Free Enterprise Staff  | April 21, 2015

A Crowdfunding Platform—9 Years Before Kickstarter

Crowdsourcing has become part of our vernacular over the past few years, thanks in large part to the success of Kickstarter, a crowdsourcing platform founded in 2009. Yet the notion that a group of people could come together to finance a project was actually the basis of, a nonprofit that launched nearly a decade before Kickstarter.

Founded in 2000, DonorsChoose was the brainchild of Charles Best, who, at the time, was a New York City public school teacher. Like the majority of his colleagues, Best spent a lot of his own money on supplies for his students; he also hoped to enhance his students’ experience through everything from art projects to field trips. Born of that desire was DonorsChoose.

Best, who continued to teach while leading the organization for the next five years, created a platform that remains unique among the ever-growing crop of crowdfunding platforms. Apart from its being a not-for-profit organization, DonorsChoose verifies every project it accepts on its site. First-time requests are limited to $2,000, and every part of the fulfillment process—from buying to delivery—is handled by DonorsChoose. It’s the organization’s transparency that continues to attract donors, a group that has collectively contributed more than $320 million to some 570,000 individual projects.

How has the organization changed since it launched 15 years ago, and what are its plans for the future? These are some of the questions we posed to DonorsChoose chief marketing officer Katie Bisbee, who recently sat down with Free Enterprise for an interview.

How does your platform work?

The way it works is that teachers can go on our website and request any supplies they need to teach their kids. They have to write a short project description of how those supplies will help their kids’ learning, and then they submit their project. We have a staff person or a volunteer from DonorsChoose who vets or verifies every single one of the requests. We then post it to our website, and, from there, donors can search and browse through the projects and fund ones they care about. If a project is funded, then we ship the supplies directly to the classroom, and the donor receives thank you notes from the classroom.

Has the model changed since the organization was founded?

The model is pretty much the same, though I think it probably works a lot better today than it used to. I guess the biggest difference between 15 years ago and today is that it was only open to serve teachers in New York City. Starting in 2007, we opened it up to serve teachers across the country. So, I think a lot of people think of our start as in 2007. 

Also, for the first handful of years we were operating until around 2009, when a project was funded, we actually mailed a teacher a disposable camera to their classroom. They would take pictures of their kids participating in the project that they got funded, and they would then mail the cameras back to our office, and we would develop the film and send it out to donors. Now, we do it all digitally. We have teachers upload six photos of each project that’s funded. You can imagine how much money that saves, and now we’re able to send photos to every single donor, not just the ones who gave a certain amount. 

How does DonorsChoose distinguish itself from other crowdsourcing platforms?

Despite the fact that our founder is credited with starting the crowdfunding movement 15 years ago, our model is substantially different from other companies. One really big note is that we’re a nonprofit organization, whereas Kickstarter is for-profit. And I emphasize that just because I think it’s more important for us to have a ton of transparency since we’re a nonprofit. The concept was that we wanted the process to be as easy as humanly possible for teachers, since they’re our beneficiaries. So, in fulfilling the actual classroom supplies and mailing them to teachers directly, it makes it really easy for them, since they don’t have to deal with purchase orders, receipts, and shopping. Also, because we work with vendors across the U.S., we have purchasing power and the ability to ask our vendors for great service level agreements that teachers would not have as individual buyers.

The reason we do it for donors is because we want donors to have the highest level of trust that we’re accountable as an organization, so the more transparent we are the better. If we were just to take a donor’s money and mail a check to the teacher, then there’s really not a lot of transparency there in terms of what the teacher ultimately does with the check. But there’s a ton of transparency if the teacher requests books, and then we get the books for the teacher, and then the donor sees that we’re actually purchasing them and mailing them to the school. So, we really think it’s best for both parties that we handle everything from vetting through the fulfillment of the classroom projects.

Do all projects get funded on your site? 

When a teacher posts a project there is a four-month expiration date. So, about 75% of projects get funded before that. That’s one piece of it. The second thing is that the average project is around $750, and it does have to raise the whole amount for us to be able to ship the supplies.

Who are your donors? 

About half of our donations come from corporate partners and foundations; the other half comes from individual donors. We’ve had 1.7 million supporters over the years, and there’s definitely a huge mix of demographics. But, on average, I would say that the most prominent demographic are women in their 40s and 50s, half of whom have children.

One other note is that half of our donors give to classrooms within 25 miles of their homes, so a lot of the donors are local to the projects they’re supporting. I’m guessing that a lot of our donors are also former teachers. I think that teachers get excited to help their fellow teachers, and there’s a lot of $1 donations on our site from teachers to other teachers.

What’s one of your most successful projects?

I would say the most expensive classroom project I know of that got funded was for a classroom on the island of Kauai in Hawaii, which is an incredibly high-poverty area. The kids didn’t have a playground; they played during recess in their school’s parking lot. They had a $100,000 request to build a playground at their school that was funded. That was kind of incredible.

What are your goals for the future? 

Our really short-term goal is that we want to reach 100% of our country’s highest poverty schools in one school year. We think that will take $100 million being raised in one year from a million donors. We hope that we’ll be able to hit that goal in the next two or three years.

Our longer-term goal is that we would love to impact federal spending on education. We now have 15 years of data of what teachers need for their classrooms that they’re not getting, and what teachers deem the most important resources for teaching their students. We’ve opened up our data entirely on our site, and we’ve invited anyone to look at our data and help us make discoveries. And we really hope that we’ll be able to make federal spending smarter. I’m guessing it might take us several years to be able to do that, but it’s very much a part of our mission.