If you’re looking for something positive to smile about, this might do the trick: The Wall Street Journal recently reported that charitable giving for COVID-related causes now stands at about $13 billion. The paper said that exceeds the combined donations following the 9/11 attacks, the 2008 financial crisis, and hurricanes Harvey and Sandy, according to an analysis by Candid, a group that tracks global philanthropy.
But while it’s reassuring to see proof of human generosity, the charity space is undergoing a change during the pandemic, forcing a rethink. After all, a great many charities were dependent on live events locally, regionally and nationally pre-coronavirus, but that model won’t return for some time. And when it does, it won’t be the same big kinetic crowds of givers as before.
But the pandemic isn’t why Matt Pohlson co-founded Omaze, the Los Angeles, California-based, for-profit fundraising platform that’s created a sweepstakes model to not only democratize access to the upscale charities but to outraise traditional charities with a digital-first footing.
Pohlson recently told PYMNTS that he and Co-founder Ryan Cummins had been involved in producing landmark projects like the Live Earth concert series for climate-change awareness. During that experience, Pohlson said, “We were working with these really influential people … who authentically wanted to do good, but we realized we weren’t doing that much good. We were creating a lot of awareness around these projects, but we weren’t creating a lot of impact. We saw that it was kind of endemic to the cause space as a whole.”
Then, during an event at which high-net-worth individuals were making charitable bids to play one-on-one with NBA legend Ervin “Magic” Johnson, kismet struck in the form of a simple idea.
“We sat there and watched as the auction went up to $15,000 and we couldn’t afford to participate, but Magic was our childhood hero,” Pohlson said. “We were driving home that night [thinking that it] makes no sense. Magic has fans around the world, not just in that room.”
It occurred to them that the less-well-off equally deserve a shot at big philanthropic moments. “If we make this available to everybody online for the chance to win, you could raise so much more money — so much more awareness — and open up a whole new donor base,” Pohlson said.
Raising 2x To 10x More Without Live Events
So, the tweak that Omaze made to charitable auctions of amazing experiences is access.
“Traditionally, for people to have those experiences, they had to pay $25,000, $50,000, $100,000 or more,” Pohlson said. “We made it so that anybody in the world can donate $10 for the chance to win. We constructed [Omaze] as a sweepstakes. As a result, we can raise two times [to] 10 times what [is often raised] at auction by empowering people all over the world to contribute.”
A for-profit company, Omaze is paid a percentage of the money raised during such turn-key events. The company works with Charities Aid Foundation America (CAFA), which helps Omaze identify charities to work with.
The company has also partnered with Stripe and PayPal to collect and process donations. PayPal is eminent in the giving space, having processed $10 billion payments to various causes in 2019 alone.
‘Dream The World Better’
Not entirely comfortable being called a ‘disruptor,’ Pohlson told PYMNTS, “Yes, what we are doing has never been done before. Our aspiration [is] to be the first for-profit [fundraising] company ever to give a billion dollars to charity in a single year. That’s never been done before.”
He said that for a for-profit start-up to set such a mission for itself “is incredibly valuable. It shows people that you don’t have to make the false choice between doing good and doing well and that you don’t have to make the false choice between being rewarded for your hard work and by benefiting society in a fundamental way. That’s where that innovation is.”
But by being for-profit instead of nonprofit, Pohlson says Omaze is free to hire and compensate top talent at market rates to market charitable events in ways nonprofits can’t.
“These are fundamental things that make for-profits work, and we don’t let nonprofits do that,” he said. “I was in the nonprofit space for a decade before Omaze, saw how it worked, and it’s clear that we needed to evolve the way that we approach [charitable giving] to maximize the impact.”
Noting that “our vision is to dream the world better,” Pohlson said, “we also get to help make dreams come true for the beneficiaries of the charities who get resources and opportunities that were not previously available to them to pursue their own dreams.”
Omaze’s selection of dream experiences for charity is most definitely out of this world, from winning a Lamborghini sports car to cooking with Chef Emeril Lagasse to enjoying a trip on Europe’s famed Orient Express luxury train. This isn’t your grandfather’s charity auction.
Not that the charity sector is untouched by the pandemic’s economic devastation. Pohlson noted that charitable giving is usually around 2 percent of gross domestic product — a percentage that hasn’t budged in decades. But with U.S. GDP way down so far this year, charities are preparing to take a hit in 2020.
However, Omaze believes it can help move the needle even in this rough climate. For instance, the company raised $1.4 million for a single charity in August alone. Pohlson said that “we anticipate that number is going to continue to grow month by month.”
We’re always on the lookout for opportunities to partner with innovators and disruptors.
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