Season 2 Episode 6
Charles Best, founder and philanthropistHow creative marketing tactics can help you grow your business as a new entrepreneur
Charles Best is a philanthropist and founder of DonorsChoose. The former teacher launched the nonprofit as a solution to connecting teachers with critical supplies and funds for dream class projects. He had zero experience as an entrepreneur and plenty of challenges to overcome in the early days of digital.
Tune in to hear how Charles grew the crowdfunding nonprofit against all odds via savvy marketing, a surprising partnership and learning from mistakes along the way.
Charles Best was working as a school teacher when he developed DonorsChoose to connect educators with essential supplies and funding for dream class projects and field trips. Despite being a new entrepreneur in the early days of digital, Charles persevered and got creative to make DonorsChoose a success.
Charles’ tale is one of bouncing back from major missteps, making savvy marketing moves and identifying major areas of opportunity. The philanthropist-founder guides us from the origins of DonorsChoose through gaining national attention from The New York Times, Newsweek and Oprah.
This is part one of our conversation with Charles Best. Want to be alerted when we drop the conclusion of this conversation? Visit theentrepreneurs.studio and subscribe for notifications and other exclusive content from The Entrepreneur’s Studio.
In this episode, you’ll hear Charles Best discuss:
- Funding classroom supplies, projects and field trips
- Crowdfunding in the early days of digital
- Getting scrappy: free food and creative marketing
- Perfecting your branding from day one
- Cold calling for media coverage
- Learning from tough mistakes
- Increasing brand awareness through partnerships
- Identifying areas of opportunity
Funding classroom supplies, projects and field trips
Chris Allen: Hey, Charles Best, thank you so much for coming to The Entrepreneur’s Studio.
Charles Best: Chris, I’m thrilled to be here. Thank you.
Chris: So talk to us about being a teacher and what got you enthusiastic about having to do something about this lack of resources that teachers have.
Charles: Well, the origin story starts with being a teacher. I knew I wanted to be a teacher since I was in high school. I had this amazing English teacher and wrestling coach. His name was Mr. Buxton. I really looked up to him. I wanted to be like him. So I knew I wanted to be a teacher. I started teaching my first year and my colleagues and I were spending a lot of our own money on all the school supplies you can imagine: copy paper, pencils, markers, poster board. What I really wanted for my students was for them to be able to read “Little House on the Prairie”, and I would go to the photocopy shop every morning at 5:00 am and make photocopies of that day’s section of the book, which probably violated some copyright laws. And I thought about all the other things that my colleagues wanted to do with their students’ books. They wanted their kids to be able to read a field trip. They wanted to take their students on a science experiment that just needed microscopes.
And I just figured there must be people out there who’d want to help teachers like us if they could see where their money was going. I felt there are folks who want to support public school classrooms, but who are skeptical about writing a check and feeling like it’s going off into a dark hole of a bureaucracy. But I thought, “Well, what if we teachers (who know our students better than anybody else in the system and know exactly what materials would make the biggest difference in their education), could post requests for those very materials, and tell the world about the projects we wanted to do with our students.” And then if donors could choose the classroom request, choose the project they wanted to support, well, then my colleagues and I would be able to take our students on that field trip, get them that set of books, and be able to do that science experiment. And it just kind of made sense, even though this was years and years before crowdfunding was a word or a thing.
Chris: Well, there’s a lot of things that you did before it was a thing, and we’ll get into that. But here’s what I remember. We’d have orientation, the parents would be like, “Here’s the list of things you need to bring.” And that was kind of it for the year, not to mention the book and to go on the field trips and all the other things that you were talking about. I’m like, “Man, that’s an advanced move. Those things were not really done back when I was a kid”, I have four kids and they’re not using the same technology in some cases, but some of them are using DonorsChoose, which is cool.
Digital is just becoming a thing. And you have this idea that other people are out there because your audience wasn’t just parents of the class. So talk to us about how you have this hunch and go, “I believe that there are other people out there who would do this”, and this idea to bring people who don’t necessarily have a vested interest in their child wanting to do things based on projects.
Charles: You’re really putting your finger on it that our primary audience was actually not parents when my students and I created DonorsChoose. I was teaching at a public high school in the Bronx, in a very low-income neighborhood. My students’ parents usually did not have the means to buy all the stuff on a checklist. And so I just saw my students going without, and the idea for DonorsChoose was not so much to be a way for parents to donate to their own kids’ classrooms, because that would probably attract mostly middle income and upper middle-income folks.
We wanted to be the place where a teacher in a low-income community could get discovered by donors far beyond their personal network. We thought that would be a way to be a force for equity, to be a force for ensuring that kids in low-income communities can get the same books and art supplies and science equipment that kids in upper-income communities do. And yet that was setting out to do something a heck of a lot more difficult than just being a donation payment processing mechanism for a parent to give to their own kids’ classroom. We were setting out to put people together who, as you just said, had never met before.
Crowdfunding in the early days of digital
Chris: So I listened to your story, and it’s like there were really three innovations: the first innovation is a digital marketplace, the second is crowdfunding, and the third is cause marketing. Talk to us about the birth of each of those ideas and then how you got it off the ground.
Charles: Absolutely. Well, let’s start with crowdfunding, which then we’ll move into digital marketing and cause marketing. The very first crowdfunding campaign was in the 1880s. It was the installation of the Statue of Liberty. This guy, Joseph Pulitzer, who was the publisher of the New York World newspaper, saw that the US government didn’t have the funds to actually install the Statue of Liberty that had been given to us by France. And he called on his readers to all come together and make small donations, whatever they could spare — $1, $2, $5, to collectively fund the installation of the Statue of Liberty. That was probably the first crowdfunding campaign ever. Fast forward to the late 1990s, there was a British rock band called Meridian, and they wanted to do a reunion tour, and they wanted to circumvent their record label and do it on their own. And they did what you just said, they sent a blast email out to their fans, and without a website, nevertheless got their fans to all make small donations to fund the reunion tour of this rock band.
Chris: Mail your cash to this address.
Charles: Basically, yes. That’s right. DonorsChoose then started in the year 2000, and we didn’t appreciate it at the time, but what we were endeavoring to create was the first digital marketplace, the first platform where people on the frontlines, and our case teachers, could create project requests and where anybody could then be a philanthropist, a patron, a financier. We didn’t realize that this kind of represented the birth of crowdfunding. In our minds, this was just common sense. We teachers have all these ideas of just what resources would make the biggest difference for our students. We know there are folks out there who’d probably want to support public school classrooms where the need is greatest if they could see exactly how their money was being spent. Let’s just bring those two groups together on a website. But I think it was a little more significant than we realized. That’s right.
And I can share that on the digital marketing front, I used pencil and paper to draw out this website where teachers could create project requests and donors could support a project of their choice. I found a programmer, who had recently immigrated from Poland for $2,000. He was willing to take my pencil and paper drawings and turn them into version one of DonorsChoose, which was so rudimentary. We had no backend. We just had one page that you would scroll down and down and down for 15 minutes until you got to the teacher or the project record that you were looking for.
Chris: So people were trying to get to the top.
Charles: Exactly. To process a donation, I needed to use one of those black boxes that you’ll see at the grocery store while they’ll punch in your credit card number, expiration date, and send it over a telephone line. That’s what I used to process every donation by hand. I also realized I had forgotten to toggle an important setting, so I actually was never transacting any of those donations that I thought I was. And then six months later, I had to call all those donors and say, “We actually never managed to transact that donation. I’m going to run it again, six months later. Hope that’s OK.”
Chris: Oh, man. Lessons learned.
Getting scrappy: free food and creative marketing
Charles: Yes. So that gives you a sense of how new we were at this, my students and my colleagues who were creating the first projects. That was how we got the tech created. And I’ll roll into how we got folks to actually use the site. Is that all right?
Chris: Seriously. Now we’re getting into the marketplace because it’s like, how do we get the teachers, and then you’ve got to go get the donors. So tell us how you brought them together.
Charles: Old school. So I don’t know how it is at Heartland Payment Systems. I suspect it’s similar to what it was like at Wings Academy, the public high school in the Bronx where I was teaching, where if you really wanted to get folks to do something, you’d give them a little free food. Does it? All right. So when this programmer had created version one of DonorsChoose, I had to get the first teachers to create the first projects. So I asked my mom to make her famous roasted pear dessert, which she would roast these pears with orange rind and apricot jam and all these spices, roast them in the oven, and the juices would swirl all around.
And let me tell you, these tasted something delicious. So she made 11 of those pears, and I brought the 11 pears into the teacher’s lunchroom. And as my colleagues got ready to pounce, I said, “Hold up. There’s a toll. If you eat one of these pears, you’ve got to go to this new website called DonorsChoose, and just ask for whatever it is you most want your students to have.” That sounded like a good enough deal. They ate the 11 pears. They posted the first 11 project requests on the site. My aunt, who’s a nurse, funded the first project. I didn’t know any more donors to fund the other 10 projects. There was no liquidity in this nascent marketplace.
Chris: Was there a time limit on these things? Did you have that or were they up there in perpetuity until they were funded?
Charles: They would’ve been up there forever, but I think I only had a month or so to prove that it worked enough that my colleagues would want to spread word to other teachers. So I anonymously funded the other 10 projects, because I didn’t know any more donors beyond my aunt who had stepped up for the first one. I could afford this because I was still living at home with my parents, and they were not charging me any rent so I could spare some of my teacher’s salary to fund those 10 projects. I funded my colleagues’ projects anonymously. So they mistakenly thought that the website actually worked and that there were all these donors just hanging out on this website waiting to fulfill a teacher’s classroom dream. And that rumor spread across the Bronx, and teachers started posting hundreds of projects on our site, projects that needed a whole lot more money than...
Chris: And then your wallet had a problem.
Charles: My wallet had a big problem. And honestly, I didn’t quite know what I was going to do now that there were a couple hundred projects from teachers all over the Bronx on our site, but my students came to the rescue. I think they could see the potential of this experiment, or they just felt bad for me. I don’t know which one, but it was enough to inspire them to volunteer after school to help get this thing off the ground. And they hand addressed and put together about 2000 letters to people all over the country, telling them about this website where someone with $10 could be a classroom hero. They got the addresses out of my high school and college alumni directory.
Charles: They’re writing these letters to people all over the country. We sorted the mail ourselves so that we could cut the cheapest postal rate. So every desk in my classroom represented a different part of the country piled high with letters.
Chris: Is this during class time or after class time?
Charles: It was after school at least. It was after school. And then we carted these sorted letters to the post office and my students’ letters, those 2000 letters generated $30,000 in donations to projects on the site. So we were kind of able to just hand crank the pump and get the flywheel to start to spin. But I think the key lesson here is that there was not a techy silver bullet, digital solution to jumpstarting the marketplace. We went with food bribery and handwriting letters to get teachers and donors onto the site.
Perfecting your branding from day one
Chris: That is amazing. How did you shop for the domain name?
Charles: I paid $8 for DonorsChoose on GoDaddy. Honestly, if there’s one thing I wish I could do over, it’s the name. DonorsChoose is a decently literal indication of how the site works. But it doesn’t say anything about education. The syllables are actually hard to say. People have a hard time remembering the name DonorsChoose. They want to switch it to DonorsChoice or just call it Donors, and they put apostrophes in funny places. And I really wish I could rewind and actually bring in an expert naming branding consultant to come up with a different name.
Chris: Like The Entrepreneur’s Studio.
Charles: Exactly. You’re probably familiar with Eric Ries’ book, “The Lean Startup”. And as you probably know very well, it argues that entrepreneurs should not try to perfect and polish their product. They should launch as quickly as possible with a minimally-viable product to start getting customer feedback ASAP and to iterate. But I feel like there should be an official exception to “The Lean Startup” school of thought for brand names, which you cannot launch in minimally-viable form, and you cannot iterate based on customer feedback change.
You can do a hard pivot, but you cannot iterate on a brand name. And before you know it, there might be some news coverage of you using your original name. And so then you’re like, “Well, even if our name isn’t ideal, I can’t switch it, because then this news story, which is my calling card, will be referring to the old name, so I’m stuck.” And I think actually that I’m allergic to bringing in consultants and outside experts, but I wish I had, with our brand name.
Chris: Naming choices are really huge to me. People struggle with that with products, struggle with it, like the names of companies and things like that. It’s a real issue. You look at just Facebook and Google and how they’ve changed their parent company names because they outgrew. They are different companies now. And those are just really products inside of their company. So I would agree. As a marketer, one of the hardest things to do is to take brand equity. What people know and what they think of and how they feel about it. To port that over to something new is really hard, really hard. It takes a lot of money to do it. And very few people do it successfully. So I’m in your camp on that. I think there are some people who really stress about it, but I do think that “The Lean Startup” idea of getting to market quickly, and getting feedback, and trying to find initial traction of product market fit is really, really, really, really important.
Cold calling for media coverage
So the marketplace was a sort of hand-delivered success. How did you get into a little bit of traction where it went beyond the grassroots marketing? How did you make the first step into acquiring donors that were maybe outside of the warm network?
Charles: Cold calling for news coverage.
Chris: Wow, OK.
Charles: So I just found the phone numbers — and sometimes the email addresses, because remember, this is the year 2000, so calling people up on the phone was still the most common form of communication. And I would cold call every reporter whose name I could find, and I probably had to make 50 phone calls for every one reporter who was interested enough in our story to cover a new kind of charity operating out of a classroom in the Bronx. You know, it had a decent hook, but we were brand new and had not gained that much traction.
But we started to get some reporters doing stories about us. And actually when 9/11 happened, this is just one year into DonorsChoose now, teachers at the public schools surrounding Ground Zero started posting projects on our site to recover from the attacks on the World Trade Center. There was a math teacher, whose students’ calculators were sealed at the disaster site, and she needed a new set of calculators for her students. There was a teacher in the Bronx who wanted to bring in an artist who had immigrated from Afghanistan for students to be able to meet someone from that country. And there was a first-grade teacher whose students had been saved by a particular group of firemen. And she and her students wanted to thank the firemen who had saved them by doing a musical performance in front of their fire-ladder company.
Charles: And for that they needed musical instruments. So there are hundreds actually of these projects focused on 9/11, and this was right when people yearned to participate in the 9/11 recovery effort. The Red Cross had almost too many blood donations than they could put to good use. And here was this direct, vivid way for people to participate in the 9/11 recovery effort around Ground Zero. And that was enough of a hook for several other news outlets to do stories on DonorsChoose.
Chris: I mean, that’s incredible because some people had to know about the site in order to publish those things. And then the way you started to acquire, I’d say coverage, you had at least some stories that had been done. And then the stories accelerated, and it was like you’ve got a nexus or initial traction. What team were you working with and what was going through your mind when it’s like, “OK, I’m a New Yorker, we’re going through this thing as not only a New Yorker, but 9/11 and then I’ve got something that is helping people contribute”?
Learning from tough mistakes
Charles: Well, it was exhilarating to feel like some folks were putting their faith in DonorsChoose as their way to be of service. That felt exhilarating. It felt like a big honor. It felt like we had to do right by that. It felt like an opportunity for DonorsChoose. I will tell you one of the most embarrassing things I ever did as an entrepreneur was right at this time.
Chris: Let’s hear it.
Charles: I had cold called a reporter at The New York Times who was covering philanthropy. Her name was Stephanie Strom. She was a new reporter covering this new beat of philanthropy and charities, and I mailed her some materials. I didn’t hear back from her. So I called her up and she said, “Yeah, I got your materials, but DonorsChoose. This is not exactly a newsworthy story. Maybe if ever I’m asked to do a listing of online charities...” Which was a new concept at the time. “Maybe I’ll do a story on you, but this is kind of small potatoes.” So I was like, “All right, too bad.”
And I figured I’d try one other big-time reporter. I called the senior editor at Newsweek. His name was Jonathan Alter. I called him first because his letter showed up, his last name was first in the alphabetical directory. And his assistant must have been out to lunch, because he picked up the phone and I said, “Hey, I’m a teacher in the Bronx. I started this nonprofit with my students. Do you want to hear about it?” And he said, “Sure.”
And we talked for my whole lunch break, and he wrote a couple paragraphs for the Newsweek website saying that here was this charity that might change the face of philanthropy. So I called up Stephanie Strom at the New York Times, all excited, and I was like, “Hey, Newsweek saw us as newsworthy, at least for their website, so won’t you give us a second look?” And she said, “I wouldn’t touch your story with a 10-foot pole now that another outlet has covered you. The New York Times does not follow in the footsteps of other publications.”
Charles: So I felt like an idiot for having not realized that, you know, you don’t talk about another outlet covering you if you’re pitching The New York Times. And I wrote her an email apologizing for being so dumb, and she wrote back, and she said, “You know, you shouldn’t feel so bad because—”
Chris: Yeah, who knows that? And you’re like, “Well, it makes sense now, but like who knows that?”
Charles: Right, exactly, exactly. So she wrote back saying, “You know, you shouldn’t feel so bad because you didn’t have a chance in the first place,” because her editors had asked her to focus on charities responding to 9/11. And I was like, “Oh, wait, so here’s actually my opening. Because all these teachers beside Ground Zero are posting projects on our site, focused on 9/11 recovery.”
So I wrote her an email over the weekend telling her about all those projects, and I called her up over the weekend so I wouldn’t interrupt her while she was on deadline. Left her a voicemail saying, “This is the last time you’re going to hear from me. If you could just read this one final email.” Monday I was back at school teaching. I checked my email in between periods. Stephanie Strom had written back. She said she wanted to come do an interview for a major feature story in The New York Times.
Chris: Oh, man.
Charles: I forwarded her email to my friend, and I said, “Guess who said she wouldn’t touch our story with a 10-foot pole and now wants an interview? That’s what hustling will get you.” I beat my chest, I talked all kinds of smack, and then I realized that I had not hit forward. I’d hit reply, and the moment I sent the email—
Chris: You just baited me, because I totally thought that the most embarrassing thing was like, “I didn’t know about this information.”
Charles: No, no.
Chris: No, wait.
Charles: No, it was so much worse than that. So I sent this trash-talking, ‘guess who said she wouldn’t touch our story with a 10-foot pole and now wants an interview’ email directly to that reporter. And I yanked the electrical cord out of the computer to try and turn it off before the email would send, but I was too late, and it sent. So I sent her another email apologizing for being so dumb again. And she took mercy on me, and it didn’t hold her back from proceeding to do a story that said, “DonorsChoose might be the future of philanthropy.” And that is really to her credit and to my boneheaded-ness. But yeah, and I’ve never—
Chris: So two apologies in.
Charles: Two apologies in, and everybody needs that experience of inadvertently replying when you think you’re forwarding, and mine was just especially traumatic.
Making the best of good momentum
Chris: I do know there are people in the room who have experienced that feeling before. OK, so what happened after the story?
Charles: She does this story, and I had mentioned that the Newsweek writer, who had first done a paragraph or two about us, well, Oprah Winfrey’s producers saw that one paragraph in Newsweek and called up, and said, “Seems like what you and your students are doing is kind of interesting, we’d like to feature it on Oprah.” And I was ready to hustle, I wasn’t actually that media savvy, but I did know enough to know that that was kind of a big deal if Oprah was looking to shine a spotlight.
Chris: Well, during that time, I mean, she’s just a massive celebrity at that point, wow.
Charles: Yes, yes, yes. My students were on their very best behavior when her show sent a limo to pick me up after school.
Chris: Oh my goodness.
Charles: My students thought I was pretty impressive.
Chris: Yeah, yeah. They’re like, “My teacher is badass.”
Charles: They were very well-behaved for at least two days. That’s what Oprah was good for.
Chris: They’re like, “This person is not only digital savvy, he’s got Oprah picking him up in a limo.” Teacher in the Bronx. This is amazing. OK.
Charles: And she shined her spotlight on DonorsChoose. In fact, she came into the green room right before the show and said, “Normally the rule for Harpo Productions, for Oprah’s production outfit, is to send viewers to oprah.com and then find a link to the website that she was recommending.” But she said, “Because you’re a teacher, I’m going to dispense with that rule, and I’m just going to call out DonorsChoose.org on air. I’m not going to tell people to go to oprah.com and find a link. I’m going to just send them all straight to your website.”
Chris: No way.
Charles: Which meant that we melted down immediately at the first mention of DonorsChoose.org. We couldn’t even show a fail whale or an error message. It was just blankness.
Chris: 501 error, yeah.
Charles: Yes, yes. We were obliterated. And it took us, I think seven or eight hours to get back up on our feet as it were. But when the traffic subsided, we got back up again. And then we started fielding phone calls from people all over the country who wanted to see DonorsChoose expand to public schools in their cities and states. Because at the time, DonorsChoose was only open to New York City Public Schools, and that meant the beginning of our expansion across the country.
Chris: Wow. So the Oprah thing happens, you get a significant amount of, I’d say, media attention. So you’ve had two stories and Oprah.
Charles: That’s right.
Charles: That’s right. That’s right. And most of the guys who would call in the wake of “The Oprah Winfrey Show”, interested in seeing DonorsChoose expand, all had to begin the phone call with an excuse as to how it was that they were watching Oprah. They were like, “My wife had the remote and I was just channel surfing. And I saw the story on DonorsChoose.”
Chris: “It’s complicated. That I was watching Oprah.”
Charles: That’s right. It was complicated. Yeah. The first guy who was self-actualized enough to be like, “I love Oprah,” was the first philanthropist we engaged with and expanded to North Carolina Public Schools.
Increasing brand awareness through partnerships
Chris: Man, that’s amazing. OK, so that’s initial traction. That initial sort of nexus is one thing, but expansion-wise, how did you start to bring more and more growth? How did you get the traction to build a more expanded marketplace?
Charles: This conversation is staging maybe even better than you realize. So if the beginning was food bribery and handwritten letters to start the flywheel spinning of teachers and donors coming to the marketplace, and the next stage was media coverage to get more donors and teachers onto the site. I think the third stage was cause marketing. And an example of this would be the partnership we did with Crate & Barrel in the very earliest years of DonorsChoose where we went to them saying, “Hey, we’ve created a new feature on DonorsChoose for a gift card so that someone can give another person a DonorsChoose gift card and they can spend that gift card on a classroom request of their choice. It’s like a philanthropic gift card.”
And we went to Crate & Barrel and we pitched them on giving DonorsChoose gift cards to their best customers. And we kind of ghost-wrote a cover letter for them writing, “Hey, Crate & Barrel customer, you’ve invited us to enrich your home by shopping at Crate & Barrel. Now we’d like to invite you to enrich a classroom. Here is $25 for you to spend on the classroom request of your choice and get the feedback from the classroom.” And Crate & Barrel was up for it. They were even up to do a test, a study, to see whether or not giving out these DonorsChoose gift cards had lifted purchase intent and even sales at Crate & Barrel by the customers who got these gift cards. And the short answer is yes.
And in fact, The Wall Street Journal did a story writing, “Ah, here finally is a demonstration of a company doing well where they actually quantified just how well they did through an act of charity.” Because all the Crate & Barrel customers who got this DonorsChoose gift card were like, “This is amazing, no company has ever done anything like this for me before. I’m going to spend that $25 on a classroom request of my choice. And you bet, I’m going to be back at that Crate & Barrel store sooner than I had planned, and ready to spend more than I would have otherwise.” And that’s an example of—
Chris: Like this is the tester in me. Did they do that in geographies, or is this some sort of, like, they had some attribution where they had their customer and they looked at the profiles that they sent them to and saw their accounts go up?
Charles: They actually did a random assignment. It was customers within, I think, a five-mile radius or 10-mile radius of a Crate & Barrel store who had spent more than $200 over the last six months. So we’re talking about engaged, important customers, not far away from a Crate & Barrel store. That was the population and—
Chris: Sending email or physical mail?
Charles: It was a physical mail gift card at first, and subsequently it was email. And there were random assignments so there could be true isolation of just how much did purchase intent and actual purchases increase as a consequence of doing something good, but putting the power in the hands of the customer. It was not just Crate & Barrel saying, “We out of our philanthropy budget did this good thing, you should know about it.”
Chris: We’re not looking for growth.
Charles: Instead, it was Crate & Barrel empowering its customers to each be micro-philanthropists and to support a classroom request of their choice. And that then became a model for a huge range of cause-marketing partnerships that don’t just drive dollars to teachers’ requests, but bring new people onto the site. That Crate & Barrel partnership meant that thousands and thousands of people were coming to DonorsChoose to spend the gift card that Crate & Barrel had just given them.
So this was not just about a company supporting DonorsChoose, it was a method for getting consumer donors onto our site. And today there are more than 200 corporate partners in businesses that we work with. We’re here in Oklahoma City, Sonic Drive-In is one of the most generous.
Identifying areas of opportunity
Chris: That’s amazing. I’d say, I don’t know, it’s a brilliant idea. I don’t know if it was an accident or what you were thinking about, but ultimately it’s like when you give a gift card, it’s typically two sales like that. And that’s what you guys found out is you’re like, “Hey, we can get the corporate partnership. They’re going to get a reputation benefit. They’re also going to get a financial benefit, and you’re going to get a sale too.” And both of you potentially get repeat, kind of repeat customers. And that’s one of the things that I think is really interesting about marketplaces, especially one of the things that you’re talking about is like, “OK, we got 9/11, we got Oprah.” We have these moments where you probably have surges. And then the thing where that’s really hard, I would say, is repeat donors, repeat buyers, repeat business. So talk to us about a little bit of a trough and how you’re like, “Oh man, this is how we get people to donate again.”
Charles: Again, you’re nailing it. One of the challenges that DonorsChoose has not completely solved is repeat giving. On average, one in five of the donors who give for the first time in year one, will be giving again in year two, right? So if we acquire five donors for the first time in one year, just one of those five donors will be giving again in the subsequent year, which sounds like a discouraging retention rate.
I think it’s actually typical of marketplaces where each item in the marketplace is kind of unique. I don’t know the exact data for Kickstarter, for Etsy, or for sites like that, but I think that our retention rate is not so very different. The good news is that we do tend to retain the most generous five donors. So on a dollars basis, our retention is higher than one in five, higher than 20%. And yet it means that DonorsChoose has to be really thoughtful about our email marketing and how we inspire donors we’ve acquired to give again, because it remains our big challenge.
Chris: Well, with it being such a niche where it’s funding teachers and projects, because you have a technology, but you also have a niche, right? And then you’ve got an audience, and it’s like you can’t just email for something that they don’t necessarily care about. There’s these moments that they probably care about. So it’s like you can’t just badger people for donations and you can’t just pitch this idea because you have to figure out what pulled their heartstrings or to get them to take out their wallet in the first place. And that has got to be really challenging.
Charles: You are capturing it exactly. The beautiful thing about DonorsChoose is that there are about 50,000 classroom project requests live on the site at any moment. They cover every part of the country and every topic imaginable. It means that you could come to the site and say, “I want to see teachers requesting the book that I read to my daughter last night. I want to see teachers requesting equipment for the sport that was my favorite in high school. I love fishing. I want to see the fishing requests that teachers have created on DonorsChoose. I love yoga. Show me the yoga projects.”
You can express a really personal passion and see projects that match. One immediate challenge is no one’s actually been asked before, “What is your philanthropic micro-passion?” People don’t have that answer ready, the search term isn’t at their fingertips. Like if I asked you, we might have to talk for a little bit before I could discover the ideal search term for you to express on DonorsChoose to find a project that would really speak to your heart. If we can get donors to say, “Show me the fishing projects. Show me the gardening projects. Show me projects for the book I read to my kid last night,” then magic happens and we capture that that’s their passion. And we subsequently will send them email marketing strictly for those projects that match that passion. So if you were really into gardening, we’d send you the latest gardening projects on DonorsChoose on a monthly basis.
In the absence of that, a lot of people defer to just geography, “Here’s where I am, show me what’s near me.” We did find that hometown is actually more resonant and leads to higher conversion than current location. So if we can find out where a donor grew up and show them classroom projects from where they grew up, that’s actually going to be more powerful than showing them classroom projects targeted to their IP address.