Photo courtesy DonorsChoose.org

Founding a Startup With No Funding and No Tech Expertise

Charles Best didn’t initially set out to help pioneer crowdfunding. In 2000 he had the idea to use the massive scale and transparency of the web to provide a way for teachers to post projects for their classroom that they couldn’t otherwise afford to do. So, while teaching full time in the Bronx with no technology expertise, no funding, and no startup experience he launched the site DonorsChoose.org.

DonorsChoose is like a Kickstarter for classroom projects, empowering teachers to seek funding for everything from science projects to school plays. This last year alone, the site saw just shy of $50 million donated to roughly 80,000 projects created by teachers.

In the process of founding DonorsChoose.org, Best and his team have helped forever change the nature of philanthropic giving. We sat down with Charles to discuss hustle, facing rejection and why you should not be afraid to start small when trying to change the world.

You started DonorsChoose.org in 2000 with no tech background and way before the idea of crowdfunding even existed. What was that like?

We started so small and with a simple question: “What if we could connect philanthropists that had maybe $5 minimum with a teacher in need via the web?” This led to us sketching out the website as a wireframe in the lunchroom. I then went online and found a freelance developer in Eastern Europe to hack together a site off these ideas.

Once the site was up I convinced my colleagues to post ten projects. The problem was I didn’t know many donors, so I anonymously funded those projects myself just to test everything out (laughs). At the time, I would personally run each donation by punching in the credit card number like those boxes at the grocery store.

Behind the website were all sorts of human beings doing what theoretically the robots are supposed to do. The back end admin was just one page and as we grew I eventually had to scroll down it for literally 10 or 15 minutes to get to the teacher or the project that I was looking for.

For the first couple of years I recruited my students to help after school and eventually converted my apartment into an office as we found volunteers and moved back in with my parents.

So, I’d like to think that we used a Minimum Viable Product (MVP) approach. I like how in Eric Ries’s The Lean Startup book he talks about a “thin veneer of professionalism.” So, we were rudimentary to say the least in our technology and operation.

Charles Best in the classroom.

Charles Best in the classroom.

What was DonorsChoose.org’s big break?

After 9/11 there was a first grade teacher whose students wanted to do a musical performance to thank the fireman who had saved them and for that they needed to use school instruments.

So, there were all these incredible projects and I thought that local reporters would jump on the story but they all pretty much ignored my pitch. I did finally manage to persuade Jonathan Alter, a senior editor at Newsweek to hear my pitch (he was the first reporter not to hang up on me). He went on to write a great web story arguing that this little experiment growing out of a Bronx classroom might one day change philanthropy.

What can non-profits learn from for-profit companies?

Well, we obviously pride ourselves on being as data-focused, performance-minded and technologically agile as any for-profit company.

So, we undertook a 10-year struggle to hit break-even by getting as many donors on our site as possible. When somebody chooses a project on our site to support they are encouraged to allocate 15 percent of their donation to support the organization of DonorsChoose.org.

Interestingly, just over three-quarters of the donors keep that 15 percent allocation in their gift and the income that is generated now pays all of our bills, enabling us to break even every year.  Which means, we do not have to seek operating support from funders. Anything left over gets funded back to projects on the site.

We are one of the very, very few non-profits that does not have to go hat-in-hand asking for help with the rent payment. We call that sustainability but in traditional business circles they might call it profitability.

Being trained as an educator and then becoming a social entrepreneur, did you struggle with that kind of transition?

When I was teaching I had a class called “Virtual Enterprise,” which enables students to run simulated businesses and learn how to write a business plan. At the time, I barely knew what a business plan meant, so the night before I was teaching my students I went on the web, read up, and taught myself about the components of a good business plan. I then taught it to my students the next day and the following day I was able to write the business plan for DonorsChoose.org.

At the time, I was still operating out of my classroom, so it all kind of happened in reverse. You’re supposed to become an expert in something, do it a lot, then (and only then) do you teach it. But I had to teach it before I knew what I was really talking about. That experience did help and I suppose it was the start of a segue from teaching to launching DonorsChoose.org.

You’ve recruited an impressive Board of Directors that includes Stephen Colbert and Fred Wilson - What tips do you have for people that are trying to build a strong network?

We try to earn a reputation for being very respectful with people’s time.  I know there are at least one or two instances when it has gotten back to me that a leader in his/her respective sector has said,  “I’ll always take a meeting with DonorsChoose.org because they’re super efficient and we often finish in under 20 minutes, even if there’s another 10 minutes on the calendar. I love how they’ll give that time back to me.”

Also, I’ve tried to earn a reputation for being, hopefully, infectiously enthusiastic and warm. Finally I’d say just keep your eyes open at all times to different networking possibilities.

What’s your take on the value placed on teaching creativity in schools today?

Teachers’ requests on DonorsChoose.org reflect this new emphasis on fostering creativity and from 2011-2012, art projects grew twice as quickly as projects in other subject areas. This growth also reflects donor interest as well: Over that same timeframe, 72 percent of all arts projects on our site were fully funded, while the funding rate in other subject areas was 67 percent.

Last year, an anonymous philanthropist fueled this trend by funding 50% of every arts project from a high-need school on DonorsChoose.org. More than 1,000 donors rose to the challenge and donated $300,000 to complete 1,052 art projects, ultimately reaching 191,000 students.

So, we are seeing an increase not just in teachers’ creative art projects on our site, but in donors supporting art projects.

The most frequently recurring words in art projects on DonorsChoose.org

The most frequently recurring words in art projects on DonorsChoose.org

What has DonorsChoose.org taught you?

I think at a higher level I’ve learned that DonorsChoose.org speaks to the power of the web. This movement avoids centralized bureaucracies and instead empowers the individual. This works well for us, as these individuals are the teachers in the classroom working hard every single day with limited resources.

How about you?

Have you ever bootstrapped a business? How’d it go?

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Jake Cook

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Jake Cook is an entrepreneur, professor, and writer. A co-founder at Tadpull, he also teaches Online and Social Media Marketing at Montana State University. He’s fascinated by the intersection of design, technology and creativity. Follow him at @jacobmcook.
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