FreePledge is a social venture started by Stanford alumni, students, and affiliates. FreePledge aims to strengthen non-profits by helping them tap into the power of Internet and Technology. The primary offering is an e-commerce platform that leverages marketing programs set up by retailers and turns commissions into donations: each time consumers use FreePledge for their online shopping, a percentage of their purchases is directed as a donation to a chosen charity.
Since its launch in September 2005, FreePledge has attracted more than 40 non-profit organizations, including Palo Alto American Red Cross and California Academy of Sciences. FreePledge was also a semi-finalist at the Stanford Social Entrepreneurship Challenge, a business plan Competition among socially-conscious business concepts.
I had the privilege of interviewing FreePledge founder Jonathan Xu, below is the transcript:
What motivated you to start FreePledge?
I have always strived to build things that would make a big impact. And I have found a great fit in starting a company to help the non-profits last year. It started out with brainstorming ideas on advertising and affiliate marketing. A couple of good ideas came out but we thought it was too small or not innovative. Then the bulb goes on; why not bring affiliate marketing and other innovations to the non-profit sector, where people need them.
What is your biggest challenge?
Our biggest challenge is to focus and deliver something new, innovative, and simply works. Some companies in this space have tried and did mediocre jobs. We believe in delivering truly innovative ideas that can make an impact. Online charity malls have been done before and we took a look at what are out there and decided we can do better. We also plan to offer other new services that have not been tried before and will bring new revenue streams to the non-profits.
How much help did it help to incubate this at Stanford GSB?
Stanford is absolutely the best place to start a technology company, and it is also the best place for social entrepreneurship. We are really lucky to be here and have access to the resources available for our vision that brings technology and non-profit together.
How did you discover affiliate marketing and what were your thoughts leading up to using it as a model for fundraising?
I was quite interested in online e-commerce, affiliate marketing, advertising in general and a couple friends and I were doing a few projects in those areas. We looked at companies like Ebates but we thought most people would not bother with it, as extra $20 rebate isn’t worth the effort of changing our everyday shopping behavior. We thought the impact would be much greater if the affiliate fees can be aggregated towards a bigger goal. At that time Michelle was involved with fundraising for Junior League and she talked to us about how ineffective fundraising events can be. And we thought, hey, fundraising is a bigger thing a lot of people would care about, and people wouldn’t mind 2 or 3 extra clicks to donate $5.
Professor Jim Phills has noted that “Without timely, cost effective, and broad distribution, the remarkable innovations [social entrepreneurs] had engendered would fall short of their potential.” How will you solve the problem of gaining broad distribution for your innovation?
That is a great question. The social sector is incredible diverse and segmented. Distribution builds on trust. We started with just friends and families to reach non-profits and that has been working wonderfully. And we help non-profits to reach their constituents. There are a lot of things in research and we will continuously test them out and see what works.
Are there other social ventures that are doing what you’re doing? If so, what sets you apart?
There were many ventures that offer similar affiliate marketing fundraising service. Many of them went bust. Among a few that survived, there are iGive and GreaterGood. IGive has lost its “social” touch, as they keeps most of the affiliate fees instead of giving them to non-profits; both iGive and GreaterGood have not done anything innovative since they started. A couple of things we do differently include: 50-100% higher donation rates, no account registration required to make the experience super easy, we work with non-profits side by side to promote this new way of giving. And a key differentiator is that we will continue to innovate and bring out new services.
Have you heard of Goodsearch? (Also started by Stanford alum). If so, do you have any thoughts about them?
GoodSearch is a novel idea. We started watching them last year. The idea is incredibly simple. I think their challenge is to scale. Their donation to non-profits is $0.01 per click; they need to get massive number of clicks to make a big impact. A similar challenge that we have is to get people to use our site repeatedly. Going through GoodSearch every time is not that intuitive but they have made great progress with their new search bar.
Any advice for aspiring social entrepreneurs?
Have passion – just do it. Bootstrap if you can, it does not take a big budget to start a big idea.