VolunteerMatch.org
The Challenge
As VolunteerMatch's seed funding was spent, earned-revenue increased but philanthropy revenue fell. As a result, the organization's total revenue went from a high of $4.0 million in 2003 to $2.2 million in 2005. During the same period, as was expected, annual operating expenses exceeded revenue by $900,000 in 2003, $1.6 million in 2004, and $800,000 in 2005.
By the end of 2005, annual earned-revenue was at $1.2 million, but the organization's remaining net assets were down to $2.5 million.
Post seed funding, VolunteerMatch's top priority shifted from growth to sustainability. "We are experiencing the same venture funding lifecycle that for-profits went through on the internet," says Greg Baldwin, VolunteerMatch's president.
Meanwhile, potential partner organizations had widely differing expectations of what a partnership with VolunteerMatch should involve, particularly regarding:
- branding of the volunteer matching service (e.g., private labeling vs. co-branding vs. teaser-page sponsorship followed by transfer to VolunteerMatch's main website)
- marketing rights to newly registered users
- service fees, if any, payable to VolunteerMatch
For instance, the federal government's USA Freedom Corps. wanted to leverage VolunteerMatch's technology and services under its own name, but wasn't expecting to share the costs, Baldwin says. The result was a strategic partnership without a funder or clear revenue model. It prompted questions such as which organization "owned" the rights to the user registration data, or whether VolunteerMatch could legitimately solicit donations from the newly registered users. Though VolunteerMatch was expanding its marketshare through this partnership, management continued to question, "Is this helping us, or are we being asked to give away our core value in a financially unsustainable way?"
Tempting offers and competitive moves continued to test the organization's resolve. For instance, when internet-giant Monster.com sought a private-label partner for volunteer-matching services, VolunteerMatch was its logical choice. But Idealist.org was willing to offer its volunteer-matching services to Monster.com as a "loss leader." After much soul-searching, VolunteerMatch elected not to retreat from its position.
With sustainability in mind, Baldwin summarized: "We've had to differentiate between marketing partnerships that directed unrestricted traffic to our main website, versus private label arrangements where the user registration data and marketing rights belonged to the partner."
