Crowdvance, the online fundraising platform for small or nonprofit organizations looking to raise between $1,000 and $100,000, announced Monday that it has done away with service fees on the site. The news comes on the heels of two other developments, including winning a business plan competition and closing a seed round.
Dylan Fox, the recent George Washington University grad who founded Crowdvance, says the company has been able to do away with the 6.5 percent service fee it had been charging by focusing on "the value [they] provide to national companies" instead. For example, Crowdvance recently struck a deal with Hulu. When people use the Crowdvance platform to make a donation online, they can choose up to four different gifts as a reward; the gift from Hulu is a free two-week trial subscription. "Hulu doesn't have the resources to find [and market to] every youth basketball program in the country," Fox explains. "So we become the middleman for them."
According to Fox, Crowdvance is the first online fundraising platform to do away with services fees (outside of credit card fees). He says competitors charge anywhere from 3 to 10 percent per transaction in service fees; Razoo and Fundly both advertise rates of 4.9 percent. "$19 billion in donations is made online," Fox says. "A lot of money is being lost to the middleman."
Crowdvance's new business model won
Values and Ventures, an international business plan competition held at Texas Christian University for student startups with a values focus. The award came with a $15,000 grant, which Fox says the team has added to its recently closed seed round.
Now that Fox has graduated, he can focus on Crowdvance full time. He and his team hired four summer interns and are working on adding "a dozen more" companies as rewards partners for the site. In the fall, Crowdvance is planning another seed round, which will hopefully allow them to hire additional talent.
This story has been updated to correct the amount of donations made online as well as the amount of money Crowdvance helps nonprofits raise.