Philanthropy

At Rally.org, Fundraising for Charitable Causes Is Big Business


Jawanmard Paiz and Fawad Mohammadi made it to the Oscars

Photograph by Joe Klamar/AFP/Getty Images

Jawanmard Paiz and Fawad Mohammadi made it to the Oscars

When director Sam French learned in January that his short film Buzkashi Boys had been nominated for an Oscar, he brooded over how to get the two 14-year-old Afghan boys who star in it to Los Angeles for the awards ceremony. “Fawad [Mohammadi] was a street kid when we cast him in the film,” says French, who made the movie on a $245,000 budget. “He has no father. He was peddling maps and dictionaries for money.”

To fund the boys’ travel costs, the American filmmaker turned to Rally.org, a crowdfunding website for political and charitable causes. French and his team posted a video on the site and promoted it widely via social media. In less than two weeks they had raised more than $10,000, with contributions from 243 donors in 13 countries.

Rally.org wants to dominate what its cowboy boots-wearing Chief Executive Officer Tom Serres calls the cause-based economy. Since his site launched in June 2011, people have raised money for pet projects ranging from expanding a community garden in Berlin to sending U.S. athletes to the Deaflympics in Bulgaria. So far, 27,000 people have mounted so-called Rallys, and more than 5 million people have donated.

Serres, 31, was an undergraduate at the University of Texas at Austin when he began working as a political consultant on new media, including a stint on John McCain’s 2008 presidential campaign. Some of those extracurricular activities left him disillusioned. “I came out of that with the intention to totally overhaul the American political system,” he says.

To counter the influence of big money in elections, Serres started Piryx in 2009. Piryx.com, which was renamed Rally.org last year, processes roughly half of all online political campaign donations in the U.S., according to Serres. (The Romney campaign used it for fundraising but did not respond to requests for a precise figure.) He thinks the world is moving toward the altruistic mindset of those who shop at Whole Foods Market (WFM) and drive Toyota Motor (TM) Priuses. Venture capitalists, including LinkedIn (LNKD) co-founder Reid Hoffman, have bet $10 million that Serres can get these socially and environmentally aware consumers to open their wallets for the causes they and their friends hold dear.

“He’s right, the cause economy is big,” says David Slocum, a professor and faculty director at the Berlin School of Creative Leadership, an institution that offers an executive MBA. “But it’s already crowded.” Rally faces competition from GlobalGiving.org, CitizInvestor, Neighbor.ly, and environmentally focused Ioby.org. Its most high-profile rival may be Causes.com, which was started by Napster co-founder Sean Parker. That site claims to have 153 million users in 143 countries. However, there are no data to support the notion that the current generation of Americans is more generous than those that came before. U.S. philanthropy totaled $298.4 billion in 2011, which in inflation-adjusted dollars is roughly the same as it was in the late 1990s, according to data compiled by the Center on Philanthropy at Indiana University in Indianapolis.

Rally.org has processed roughly $300 million in total transactions in the past two years, Serres says. That’s yielded about $11 million in revenue for the company, which takes a commission, recently raised to 5 percent, on each contribution. Donors on Kickstarter, a crowdfunding pioneer that’s more focused on creative art and design projects, pay closer to 8 percent because the site uses Amazon.com’s (AMZN) platform to process payments.

Serres and his 30-person team spend countless hours tweaking and testing the user experience. They’ve created a tool that allows people to donate while watching a video appeal. And they’ve found that the phrases “Give Now” or “I’m In” on a virtual tab work better than “Donate” at inducing contributions. Rally is now expanding to Europe, where it faces less competition. The company has just opened an office in Berlin and will begin accepting payments in euros and pounds before the end of the year.

Buzkashi Boys didn’t win an Oscar, but French found side benefits to his Rally campaign. As it gathered steam, the film attracted a fair amount of media attention. Turkish Airlines (THYAO:TI) donated tickets to bring Fawad and his co-star to Hollywood, and the U.S. Department of State picked up the other costs. The funds raised on Rally.org, which totaled $12,141 at last count, will go into a trust to pay for the boys to attend college. Says French: “We are in these kids’ lives and will remain in the kids’ lives.”

The bottom line: The website Rally.org has processed $300 million in donations over the past two years for a mix of political and charitable causes.

Glader is a Bloomberg Businessweek contributor.

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