GiveWell Case Study

Ideation GiveWell started off in a very simple way. A group of about 8 friends were hanging out and they were searching for a charity to give too. And the big question came up, where should I donate? They were all financial business people so in there spare would research good charities to donate too. They soon realized that this was a very time consuming process. They were not very pleased when they would ask different charities how the donations were being spent or what the charities stood for. They believed that this information should be made available to the public. This is want really prompted Holden Karnofsky and Elie Massenfeld to leave their jobs in 2007 and begin Give-Well as their full time jobs. They raised $300,000 from friends and co-workers to start this company. They wanted to create a place for people to donate but feel good about where and to whom they were donating too. Strategies GiveWell’s initial business  plan was based on the problem that “no resource exists for publicly evaluating the actual effectiveness of charities.” This is taken from the initial business plan penned in 2007. This group of friends saw an opportunity for changing the flow of donations and how charities compete. Their approach to seizing this opportunity was to create a “Clear Fund” that charities could compete for by being efficient and transparent in how they used their funding. They sought initial startup funding and then after there first year was funded they focused on the publication of their research and soliciting donations to continue their work. They offered the opportunity to become involved in their company by “…providing (a) thoughts and feedback; (b) donations; and (c) contacts who might be able to provide these.” The Goals of GiveWell have remained largely unchanged since 2007. The goal of creating a public evaluation resource had remained the goal of tho organization. They promote the flow of information from these nonprofits to them by issuing grants, “adopting this strategy means that the bulk of our budget will not simply be facilitating our project: it will literally fund the activities of the charities that we select as the best. A donation to the Clear Fund will therefore both fund the best charities the Clear Fund can find.” This strategy ties the growth and success of charities to GiveWell, as well as rewards the cooperation of charities that provide information freely to GiveWell by accepting donations directly from investors (who will feel that they are more donor than investor) to GiveWell, who seems one-in-the-same as the charities it studies. Launch: GiveWell officially launched in 2007. GiveWell was intended for all markets when it first launched. Their main focus was on identifying outstanding charities. They wanted to focus on donating to a few charities that excelled. As they matured and developed they then began to place the burden of proof of validity on the charities. If they charities do not show proof themselves that they are having a positive impact GiveWell will just automatically assume that is the case. This safe time and efforts on GiveWell staff and puts more accountability on the charities themselves. They must provide their own data that is accurate. They also began to focus on developing world charities and expanding their horizons beyond U.S. borders. The Millennial generation volunteers more than any other generation and international charities are profiting more than ever. Once GiveWell became a reputable and known charity evaluator they began investigation charities more thoroughly. In 2011 GiveWell announced GiveWell Labs. GiveWell Labs is described as “an arm of our research process that will be open to any giving opportunity, no matter what form and what sector.”. This new entity of GiveWell aims to give charities more access to large grants. GiveWell is now successfully serving charities and donors internationally. Revenue GiveWell’s revenue streams are mostly propelled by donations and grants. While the vast majority of money is earned through donations, it also makes a small amount its profit through investments according to tax forms.  It is a non-profit organization, so the focus is not about making money. That being said, it does bring in a small profit. In 2012, GiveWell brought in about $2.5 million in revenue, but it only made a profit of about 200,000. GiveWell reported it first positive profit in 2007 (its first year). It continually makes six-figure profits with the highest being $582,461. Interestingly, GiveWell has been successful all but one of their years of operation. It reported a negative profit of about $250,000 for 2010. While I have yet to find a concrete reason for the negative profit, GiveWell reported that it gave $300,000 to other charities. Bottom Line We can learn quite a bit from GiveWell. First of all we see the importance of an entrepreneurial mindset and passion. Holden Karnofsky and Elie Manssenfeld saw an open market in which they had passion and quickly moved on it. The paring of these two qualities is a strong factor in the success of GiveWell. We also see the importance of networking. Holden and Elie were able to build GiveWell based upon donations from friends and co-workers. They continue to show their networking skill through the consistent streams of donations funneling into their organization. I have no doubt in GiveWell’s future success. It has continually shown an increase in donations. As long as GiveWell stays transparent in its communication, then I see no reason for a decline in donations. These factors paired with the founder’s entrepreneurial mindset, passion, and networking will allow the company to grow and flourish.  SlideShare PowerPoint

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