Our Values May Cost Us Millions
I made a decision in November of 2007 that, very realistically, stands to negatively impact the future financial standing of YourCause, yet I could not be happier! Actually, I’m proud – proud not just the decision I made, but of the support of the nearly 100 employees, 6 investors, and more than 100 clients that believed in this same decision from the very beginning and have supported me/us ever since.
So… what was the decision?
When starting YourCause, I committed to building a sustainable business that would NOT be supported by A
NY portion of a user’s donations and would instead deliver 100% of those donations to those in need. Basically, I would not profit off of the dollars intended to help others. And today, this single decision could easily cost YourCause millions – perhaps tens of millions – of dollars, but nonetheless, I remain extremely proud of that fact. So let me explain.
In the last six months, the employee engagement space (which is what we are in) has taken on an entirely new look. Two of the companies that we have historically competed against most often have received investments that have truly caught the attention of the venture and private equity community. Safe to say, the market is “hot” for us right now. As a result, little YourCause has begun to field an assortment of inquiries about our plans for the future and our interest in taking on significant growth capital.
From my conversations with potential investors, I have come to a very real conclusion: by adhering to our values and our commitment never to build a business model from donations, we are ‘less attractive’ of a business and are failing to maximize the capital opportunity (from an investor perspective). Our competition offers such models, then why don’t we?
As the Founder and CEO, and a guy who has come to see YourCause as his fourth child, I see our model a bit differently. Allow me to paint the picture.
I started this company to empower people to help others in need and to provide them with an opportunity to make our world a better place. And it’s happening today. We are facilitating nonprofits with the funding to deliver food to the poor and water to the thirsty, to save rain forests and ocean waters, and to provide people in need with medications, vaccines, and medical help. It’s this very notion that inspires me to reflect on exactly why I made that critical -and costly- decision in 2007.
Let’s take a simple example. Say I told you that for your $100 I would purchase and deliver 200 shots of medicine and save the lives of 200 children in need, but then, I inform you that I would charge you a 5% “transaction fee” for my services. In dollar terms, not a big deal – its only $5.00. In child terms, that equates to 10 children. So I ask you a simple question: “
Which 10 children will you not save?”
That question was pretty easy for me to answer. I committed to NEVER use a transaction fee model or stand in the way of the donor and their cause. Instead, we would be a FOR PROFIT company, using our profits to sustain ourselves while simultaneously supporting the optimization of the donations transacted within our system.
Seven years later, more than a billion dollars in donations have been transacted through our system, which connects more than 3.2 million people to over 70,000 non-profits. That very decision not to take a percentage of donations comes back to the forefront of our mission as our business grows to new levels. It’s that decision that has prevented us from being able to offer a super low pricing structure that passes the cost to the donor. It’s that decision that has prevented us from having ‘off the charts’ revenue growth and now prevents us from receiving a business valuation in line with that of our competitors.
And although that decision may have cost us quite a bit of potential profit, it has revealed so much more about our character- and that is why I stand here today as a proud Founder and CEO. We are humanitarians before we are capitalists. We held to our values and to our mission and haven’t deviated. We stayed true to ourselves, our clients, and those whose lives we touch.
To me, the loss of millions in value is a small price to pay for maintaining our dignity and changing our world.