Ep #87 | Relentless Optimism

Softgiving.com.jpg

Matt Pfaltzgraf, Founder and CEO of Softgiving, is a payment processing expert whose mission is to revolutionize the way people can support nonprofits through passive recurring fundraising technology. Prior to launching Softgiving, Matt was the Regional Payment Association Director at SHAZAM®, where he handled critical issues including ACH rules and regulations, payment security, and emerging financial technologies. During his time in the payment industry and severing as fundraising chair for many nonprofits, Matt observed firsthand the difficulties nonprofits had raising money for important causes.

Armed with his payment processing background and passion for helping cause-based organizations, Matt saw a gap in the marketplace, and that is when Softgiving was born. Softgiving's innovative fundraising technology enables nonprofits of all sizes to expand their donor base while increasing retention and engagement through passive donation solutions that better fit their supporters’ lifestyle. From humbling beginnings, as a child, Matt was once on the receiving end of charity from nonprofits, but now he empowers them through Softgiving's innovative fundraising solutions.

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Shantel: Hi Matt, welcome to the Imagine More podcast.

Matt: Hey, How are you?

Shantel: Good, thanks so much for coming and for all of our listeners tuning in. We're certainly excited to learn more about Softgiving and I can't wait to hear how you got started, the history of that. Was it a pivot point to start something? So let's just dive right in and will you share with our listeners a little bit more about what soft giving is.

| NEXT GENERATION OF DONORS |

Matt: Yeah Absolutely and thank you for having me on today. So Softgiving what we do is create alternative recurring fundraising solutions for nonprofits and so what we are trying this all for is really getting that next generation of donors and supporters of nonprofits, activated so that they can become a strong, reliable source of revenue for nonprofits going forward is their parents stop giving as much and nonprofits need to find more sources and so we try to specialize in tools that can help really provoke them into giving more and giving more frequently and that's what we spend each and every day doing. Trying to figure that out.

Shantel: That's amazing. So, when you talk about activate kind of those customers for nonprofits, what do you mean by that?

Matt: Sure, so what we want a prospective donor or supporter of a nonprofit to do is we want them to start giving just a little bit every single day and just start building that habit of giving back to organizations they care about and micro transactions to really feel like they are part of that nonprofit and supporting them without being financially disruptive to that own individuals budget.

Shantel: That's really interesting so how can you kind of tap into, it’s almost like a Venmo-type transaction and it just auto drafts you know like you say “I want to donate a dollar to this foundation every day and a dollar to this one.” How does that I guess back end what does that look like?

Matt: Sure, so a big part of it is we treat it like, we kind of mix the benefits of like an infinity card or kind of rewards card in to giving and we tie it to micro donations which are essentially small amounts of change that somebody gives daily. And so a couple of ways in which we do that, One is through our product called Roundup where a donor links their debit card or credit card to their favorite nonprofit and they donate the rounded up change from every day purchases. So every time they go to Starbucks, they go to Publix, they go to Chick-fil-a, that transaction is rounded up to the nearest dollar and donated to their favorite nonprofit to where they linked their card. The other method is what we call daily change and that just enables somebody to give just a small amount of change every day. So, they can give anywhere between 29 cents and 99 cents per day, we keep track of it and when the total donation approaches ten dollars we then debit them and credit their nonprofit. It allows somebody to give small amounts frequently without having adverse effect to their budget.

Shantel: Oh okay so is the platform similar to um I don't think Go Fund Me is like this but some of those crowdsourcing sites where you guys, I guess business model wise get a percentage of whatever is donated? Is that the business model?

Matt: So we actually charge a fixed amount per donor per month and the reason why we do that is when we started we looked at other different business models and we thought, Oh everyone is doing percentages so we should do that too and what we really found out was that on top of the percentages all these companies were charging these one off fees, these setup fees, these subscription fees and they weren't really delivering much from a donation standpoint and so a nonprofit would receive you know... an example receive a hundred dollars and thirty dollars of that would go towards fees and obviously that is on a super small scale. With us we package other different services along with each donor tier so if somebody signs up for our lowest donor tier they're giving a fixed amount per donor per month but we're not really supporting that nonprofit at all so they are kind of on their own and they can just license our service or platform. Where at our high donor tier we are an extension of their marketing team so we create marketing plans, we create assets, we create email, social media posts, we facilitate rewards programs, engage social media influencers all these various different aspects on that nonprofits' behalf and they only pay if we are successful so they pay per donor.

Shantel: That's so interesting and I think such a disruption to those typical models like you mentioned. How did you come up with the idea?

| CLEAR & CONCISE |

Matt: Sure, so early on we thought okay, we can just beat our competitors or we can just make it look like card processing and so we can just charge 1-1/2 percent plus twenty cents per transaction and then call it a day but as we kind of kept going in to the model further we just wanted to keep simplifying it and making it easier and easier and we kept thinking like okay, the process to sign up for our solution is really easy, someone just links their debit card or credit card the way they are but when you're communicating the pricing it just got really confusing and we knew other companies did that intentionally just so they could maximize their fees so we had the novel idea of just being straightforward with our pricing. So we backed away from the implementation fee, the subscription fee, the transaction fee and we thought, you know what we can bundle this all together and make one fee that is clear and concise as to what it's going to cost the nonprofit and what that did is enable nonprofits to work with us at a much quicker pace because they weren't having to go back and look at their budget and figure out how much they had allocated to new software. They can say yeah we can give this a try because we're not out anything because it’s only going to cost us money if it works and we only credit the nonprofit money raised and so we just deduct our fees out of the funds that we've received and credit them the remainder amount and so the nonprofit signs up with soft giving they are only receiving money, they are never actually paying us and being debited.

Shantel: Did you come from a nonprofit background?

Matt: I did, just a real quick kind of background of me and nonprofits, I grew up raised by a single mother. My brother and I back in Ankeny, Iowa, my mom was a secretary and, well they call them secretary back then now she is an executive assistant and in order for her to support us she had to go and get her associates degree at a local community college and then work full time. We didn't have any friends or family in Iowa at the time because we were pretty new there so in order to support the family we had to go to the boys and girls club after school. We had to go to the Y.M.C.A. over the summers. We got our clothes and our bicycles from Salvation Army and Goodwill. So we had to depend on a lot of nonprofit services in order for us to really be a cohesive family. In growing up at the time we didn't recognize them as nonprofit services we just thought it was going to daycare, going to summer camp, getting a bike, getting clothes. So it was really a testament to the services they were providing. As I got older I eventually started volunteering a lot more and that led to me sitting on some nonprofit boards where I just saw that the fundraising setup today is really antiquated. It relies on check donors so that 90 percent of donations received today come in the form of a check, it’s wealthier individuals that are giving more. Those that can write the larger checks, the nonprofits aren't really set up to receive donations from smaller individuals and they just didn't have the tools or the technology and so at that same time I happen to be the director of a payment association back in Iowa at a company called Shazam. At that time, I was just going around the country speaking on payment issues and what was being done for and the for profit space I just couldn't shake an idea that I had in my head about how you could use payment technology to really grow charitable giving so after a few years I quit my job and started down the path to get Softgiving going.

Shantel: I love that. I appreciate you being vulnerable and sharing. History and the idea and I think it’s really interesting how a lot of the business owners we talk to on this show come from, yeah know they saw an opportunity or they saw something that they could make better with a solution, and I think it’s always neat to hear what sparked the idea in the first place and the need that was there and the solution that you have created. Kudos to you, I think it's an awesome product and sounds super innovative. What are kind of your thoughts on, I feel like the markets craving this transparency on where their money is going, specifically in the nonprofit space or perhaps like certain generations want to know how they're giving, how it's actually contributing. Have you in working with so many nonprofits have you started to see any of them shift in to this transparency model where like 100 percent of funds go here, or just kind of a different model as a whole in the nonprofit space?

Matt: Yes, we have some of our partners that are very clear about marketing, that 90 percent, 85 percent of their donations go directly in to the field and so they try to maintain an administrative cost of around 10-15 percent of whatever they raise and they know like by being transparent about that it'll make the donors more comfortable and they will be willing to give more. It's a real change from the past and so my parent's would sit down at the end of the year and they cut checks to the same nonprofits every year and they just knew that giving was something they were supposed to do and they didn't really know exactly where that money went but they were conditioned to give where our generation it's almost more transactional so okay if I am giving you twenty dollars what is my twenty dollars give me in value? Am I helping build an orphanage or am I helping five students to read, am I providing shelter for four animals? Like exactly what does my per dollar value look like and then they can make a determination like that. It's truly become almost like an Amazon set up as far as how people use their funds these days.

Shantel: Do you find that sometimes you're almost in kind of like a consultative role of well we have seen this nonprofit do really well because this is kind of the messaging that they've led with or do they lean to you guys to say what actually performs best?

Matt: Some do and some don't so the challenge that we face week in and week out is there's no fundraising professionals at nonprofits with a background in alternative fundraising. They all have a background in raising money from check donors and so when you go and approach them and you try to communicate the solution and what they need to do, they more often or not fall back in to what they know and so our challenge is really finding those that are willing to listen to our advice, take our guidance and really think outside the box in how they approach that next generation of donors because they just don't respond the same way as their parent's do. It can be a real challenge and unfortunately there have been a number of times where we haven't been successful with a nonprofit because we just can't get over that hurdle. There are those that it does work really well and they see a lot of success.

Shantel: Are you challenged sometimes with, when initially starting like the chicken before the egg, you had to find the nonprofits but then you also had to get people signed up as a donor, was that a challenge initially? Is it ever still a challenge?

| NEW GIVING ECOSYSTEMS |

Matt: Absolutely and we're still working through a lot of that today. Being a very young company our solution is not an ubiquitous solution and so it's not something that every nonprofit has in fact it’s just a very small amount of them do so we are consistently trying to introduce it in to new giving ecosystems and in getting the nonprofit to embrace it because you don't have donors coming to them saying like "Hey, I want to give to you, but I want to give to you in this way." You don't get that kind of feedback; the nonprofits are the ones listening to donors and donors only give if they are solicited and so very much a chicken and the egg and trying to show success like early on when you have such a limited amount of data and sample size was certainly a very very hard thing to do. We're slowly continuing to gain more momentum but we expect it to become like ubiquitous as soon as some of our lager ones start rolling with it. That provides the kind of cover for the smaller ones to get behind it and push it harder.

Shantel: Is there also kind of, I'm excited to play around on the software and but I guess from the consumer standpoint do you also help match them with like, I'm interested in animals or I'm interested in helping kids and you can provide a list because I think sometimes that's daunting for someone who wants to give but where do you start and who do you give to and uh mm have you guys had worked in that in some of the design.

Matt: And so, early on we just kind of took the approach of having the nonprofit be the leader of the marketing. And so we give the solution to them and then we help them promote it through the channels that they already have established but soft giving really sits in the background. What we learned from that is If your just marketing to the list you already have you’re not reaching new donors, you’re not reaching new supporters that might care about you and so what we are now doing is we are rolling out with an influencer program where we're engaging with social media influencers and we're connecting them with nonprofits that have a similar mission to whatever that influencer believes in and saying hey this is a perfect match, your promoting these athletic brands or these restaurants or these various different things, well your supporters or your followers obviously care about that so how about you promote them ways that they can give to these nonprofits that share those same causes. We then build in incentives for the influencer and their followers to engage in giving as a way of really opening up a whole new stream of fundraising that doesn't exist today.

Shantel: Wow, I'm excited to see where that goes, I think that's a very innovative idea by just leveraging the power of the social networks and influencers. And talk about the team, how you built the team, who’s on the team, how big is the team? Are you still wearing quite a few hats? Like what does your day to day look like?

| A GREAT SOCIAL MISSION |

Matt: Sure so right now we have ten people on the team, we attracted with at the beginning of last year, January 1st we had two people and so now we're up to ten, we've hired some developers and so we have four developers and three of them are in Athens, one of them is in Michigan, we have six people in our main office here in Atlanta and three of them work on kind of the operations and the marketing. Two of them are in business development and myself. The way the team kind of grew is we would keep having opportunities coming our way and we would start staffing up to anticipate the growth that we would see from the larger nonprofits that need to scale our operations and so we would really getting a feel for different people just through just different networking and LinkedIn and just references through people we knew and my development we found somebody in Athens through an IT recruiter and brought them on board and now that developer has brought on then his own team of people that he knows and trusts and has worked out really well. Half of them came from StitchfFix because they wanted to be part of a team that had a great social mission and doing social good wasn't just like a side project for us but was truly what the business model was. The same with some of the others, one, my cofounder Chip Hardin he had been at Bank of America merchant services. Him and I had met at a dinner and talked payments for a couple of hours and just really geeked out on it and then a few months later he was like looking for a new opportunity and he called me up and we grabbed coffee and just halfway through the coffee I'm just like you need to come on my team and come be a part of it. He came on and has sold just massive nonprofits ever since and just really kicked everything in to high gear and has also led the charge on partnerships and so we're about to do a formal press release announcing a partnership with First Data which is, I'm sure one of your listeners knows are a top 100 payment processor. That was something Chip that brought us and worked though his relationships and for a company of our size to be able to get that kind of partnership in place yeah know it doesn't just happen. It only happens if you have really good people in place that work well as a team and we are very lucky to have that.

Shantel: That's amazing so from two to ten in less than a year. I mean what have been some challenges in scaling a team and building a culture and maintaining that culture are there any moments that come to mind that were like Dang that was really hard?

| RELENTLESS OPTIMISM |

Matt: What's been hard, well everything has been really hard. Um I mean so much of it is like you come into it with like preconceived notions of what the customer's going to do and what the customers customer is going to do and um what your teams going to do. As soon as the rubber hits the road everything gets blown up and you have to put it all back together again. We have had some hires that have just not worked out at all and have been really big mistakes and cost us a lot of time and money. We've had other hires that have just been incredible and through those that you hire that's how we establish our culture and our culture is really that of We're solving really hard problems, we're all super stressed all the time trying to get through and get things up and running but we manage that stress by being able to collaborate together and communicate well and help the next person be successful at their job because by doing that then we are successful at ours. I mean the first year, we had two different development shops that we had hired to help build the solution or I did because it was really just me at the time and they were huge failures and cost us a ton of money and a ton of time. We spent a lot of time last year like guessing and trying to figure out the proper way of marketing our solution and getting different pieces of technology up and running and just things would go wrong left and right that we would be super jazzed and humbled very quickly. That is just the story of it, that's day in and day out we maintain relentless optimism and positivity but we face the wrath of reality frequently as well but we just work through it and we learn from those mistakes and learn from the different things that happen to us and then we say like okay this is a problem, how do we make it so instead of it being a liability it’s an asset for us. That's how the payment technology became what it was today. That's how things like the influencer program even came through the forefront because we faced constant problems and we finally put our heads together and figured out a solution.

Shantel: Yeah, I love that what you just said about relentless optimism. Seems like the highs are really high and the lows are really low and so only the people pieces for us is the most challenging. The best part of the day too but also sometimes the most challenging so I can relate to that. I just have a couple more questions.

Matt: The employees can bring me, no part of the company can bring me more joy and like more pain. And that's before lunch!

Shantel: Why did I start a company again?

Matt: Oh God I'm a babysitter like I'm not even a CEO anymore, I'm just babysitting.

Shantel: Yes ughh. That’s another conversation maybe over drinks.

Matt: Hopefully they don't listen to this anytime soon but we'll see.

Shantel: So couple more questions so we'd love to hear about some challenges and all of that in business but what is there one defining moment that’s been to you the most rewarding or something that your super jazzed about right now.

Matt: Yes so we had a campaign last year with Mississippi Public broadcasting and it was a day long radio drive and this was when we were really like three months old and it was like the most exciting and depressing day all in the same where we has all these donors that we signed up like more than ever like in this one day but then there were like all these failures to sign up all at the same time and we learned more about our system and our solution in that 24 hour period than any day ever since and we're able to take that and go to the drawing board and we made all these improvements to our software and to our marketing and now that same public radio is going to be launching a two day campaign next week where we are thrilled to see in the numbers like how much we've improved because we expect to see like an exponential improvement over what we did last year and that is just going to resonate just through everything that we've done and really provide that spark to keep going forward. The other piece that we have coming up is we Chip signed World Vision last year, and World Vision is the third largest centrally run nonprofit in the world and they are launching doing a mass campaign using our solutions to their supporters and donors that will just change everything for us for forever. It was one of those opportunities we got through a cold call and we were able to land the business and single handedly has helped us raise more money and recruit more people and sign up more nonprofits and now it's coming to fruition where that campaign will be launching and we couldn't be more excited.

Shantel: That's so exciting. Congratulations on that.

Matt: Thank You

Shantel: I just love that one day of just learning so much and I often reflect with my business partner and co-founder of like that day was horrible but I am so thankful we went through xyz because now we have a better process or a better system in place or now we won't make that mistake again and yeah it's interesting kind of reflecting in that moment you’re like shoot this is horrible, what are we going to do and then reflecting it's always like thank goodness it happened because now we're better and stronger and all of the above. Absolutely, you don't grow in times of like easiness and complacency you grow when times are hard and the difference between a successful company and a company that fails is just the belief and the energy behind the idea. So long as that is all still there the company will succeed so even though we didn't get as many donors as we hoped.

Shantel: Well Matt how can people get in touch with you and learn more about Softgiving?

Matt: Yeah sure so we have a website www.softgiving.com where there is a lot more information about what we do and the different services that we provide. There're ways to just fill out a contact form where somebody in business development can reach out to them and help them get set up to other nonprofits' setup, I'm also available Matt@softgiving.com. I'm always happy to field any inquiries and any questions and help anybody any way I can.

Shantel: Wonderful, well thank you so much for carving out the time, I'm certainly excited to follow along and I imagine our listeners are as well.

Matt: Absolutely, thank you for having me today.