- betterplace.org is the largest German platform for collecting donations. Now Betterplace itself is seeking millions in funding
- In the pandemic year of 2020, the donations processed through Betterplace increased by 82 percent.
- Betterplace needs to invest in the platform at the same time. The donation market is in the midst of change. Donors are becoming more demanding, and competition is increasing.
- Visit the Business section of Insider for more stories.
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The donation platform betterplace.org stands for a success story of digitalization in Germany. Now, however, Betterplace itself has to hustle to keep up with the rapid changes.
Almost 130 million euros in donations have been collected through Betterplace so far. But now Betterplace itself needs millions for investment.
“We are looking for a support round in the low single-digit millions,” says betterplace.org CEO Björn Lampe in an interview with Business Insider.
Betterplace first made online fundraising in Germany hopeful and then big. The nonprofit company is number one in the digital donation market. But this market is in the midst of a whirlwind of major changes – and so is Betterplace.
Several forces are changing fundraising: donors’ growing demands for simplicity, security, transparency, and control. There’s the rapid transformation of digital payments, all money flows, and financial services. And there’s the Corona pandemic, which is accelerating upheaval – and at the same time creating a donation boom.
Corona is causing a boom in fundraising through Betterplace
There’s a groundswell of solidarity in the pandemic. Betterplace felt this twice last year. More than 11,000 projects were submitted to the platform. That was 47 percent more than in the previous year. And the donation volume for all projects on Betterplace even grew by 82 percent to 35 million euros.
Betterplace has to cope with the strong growth but also outgrow itself. At the same time. So Betterplace has to invest. To do so, the donation platform is now looking for donors itself.
“We need a new round of financing, although we prefer to talk about a round of supporters,” says Lampe. Betterplace prefers individual large donors, whether private individuals or institutions. Yet it would stand to reason that the pioneer of crowdfunding would turn to the crowd itself. But Lampe rules out crowdfunding – let alone via his own platform. “We don’t want to compete with the organizations and NGOs on our platform.”
Betterplace is a good 13 years old. It was founded by enthusiasts who were convinced that it was possible to get more people to donate and to open up access to donations for more groups. Make the world a better place.
“When we started, there was a lot of attention, but at first there were few donations and few campaigns,” Lampe recalls. That has changed. In May 2020, Betterplace was proud to report that it had brokered a total of more than 100 million euros in donations. After the record year of 2020, that figure has now risen to almost 130 million.
Much has changed since the start, including Betterplace itself, which is part of the nonprofit corporation gut.org . The latter tries to support organizations in fundraising and digitization. An important part of gut.org is the betterplace academy, which provides training and consulting for nonprofit organizations. Because, as Lampe puts it, “The third sector is still lagging far behind in digitization.”
Corona forces many fundraisers into overdue digitization
If you want to understand why that is, you should look at donors in Germany. “Half of all donations come from people older than 60,” Lampe tells us. “This is another reason why many organizations tend to target their communications at older donors. On channels where younger people are, many organizations are not represented at all.”
The pressure has been growing for a long time. Corona has ramped it up. “Traditional fundraising channels have broken away,” Lampe says, citing street collections or events as examples. For the first time, many organizations have been forced to do better online. “It’s not even an exaggeration to talk about forced digitization.”
Betterplace is also feeling the pressure.
“Betterplace can cover the current state of requirements well,” says Lampe. “But we also want and need to take the next step, and for that we need money for investments.”
So far, Betterplace has been financed by a mixture of fees, services, voluntary contributions and donations. The 2.5 percent that remains with Betterplace from each donation only covers the costs of the payment providers. Betterplace covers its own costs primarily through consulting and services for companies that want to handle their social responsibility through Betterplace – as well as from donations.
That was enough for many small steps over the years. But now it needs a big leap.
The goal, after all, is unchanged: Betterplace wants to help more people donate and that more organizations, groups or even individuals get access to donors for their projects. New target groups are important for Lampe. “We want to reach more people who have not donated before.”
The data situation on the donation market is manageable. In February, the German Donation Council had published figures from a survey for 2020. According to this, private donations have increased by around five percent to 5.4 billion euros.
However, truly reliable figures are only available from the evaluation of income tax returns after a delay of several years and with gaps. Studies do show a high willingness to donate. But Lampe still sees more of a stagnation overall.
More donations from fewer donors
There are two opposing developments behind this. On the one hand, there are more large donations from individual wealthy people. Also, “the proportion of companies that donate is rising. On the other hand, however, “the proportion of people who donate is falling. Even among younger people.
These new, younger donors also have new needs: “The focus will continue to be on the fact that money can be donated easily and securely via Betterplace, and that it reliably reaches the initiators. In addition, however, it is becoming more and more important to be able to prove how exactly a donation has an effect.
The problem, he says, is not just reaching younger people on their platforms and through their channels: “For nonprofit organizations, too, the requirements for user-friendliness and transparency are growing. E-commerce groups like Amazon or Lieferando are setting the benchmarks here, too.” Above all, transparency and communication about the use and impact of the money after a donation are becoming increasingly important: “Transparency means not only proving that a donation arrives, but also that and how it has an impact.”
Betterplace also wants to develop in this direction: “We want to offer comprehensible reporting. Donations are always about trust. We can also prove this via the community or institutions. Seals can also play a role in this.”
One thing is important to Lampe: If the generation of 18 to 30-year-olds donates less money, this does not mean that they are not committed. On the contrary. There is a high level of volunteerism in Germany – even among younger people. Behind many of the campaigns for which donations are solicited on Betterplace is the commitment of many young people.
Many rules for donations are no longer up to date
Betterplace also has to make greater efforts to reach its target groups because the competition is growing – for example, from FinTech companies. Large platforms such as Revolut would themselves make offers such as rounding up payment amounts to an organization chosen by the customer.
Can the state also help through smarter regulation? Lampe has ideas. “It would be good to harmonize the deductibility of donations and the issuing of donation receipts in the EU.” New rules for cross-border donations are important, he said. “People travel more, work abroad, have more international contacts. Regulation should also follow this reality of life.”
Other ideas, he said, include a purely digital handling of donation receipts, which are still sent as hard copies by mail. Lampe also calls for the rapid introduction of the planned non-profit register for more transparency.