The following is a conversation between Ben Erwin, President of Charitybuzz, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer WNYM, in New York City.
Denver: Many listeners who have attended charity galas are familiar with the auction part of the evening as the nonprofits try to raise additional revenue from those in attendance. In recent years, many of these auctions have been conducted online to reach an even bigger audience. The world’s premier, full-service charity auction site is Charitybuzz, which offers once-in-a-lifetime experiences to a community of hundreds of thousands of bidders. It’s a pleasure to have with us tonight, Ben Erwin, the President of Charitybuzz. Good evening, Ben, and welcome to The Business of Giving.
Ben Erwin
Ben: Good evening, and thank you so much for having me. Excited to be here.
Denver: Charitybuzz is part of the Charity Network. Tell us about the parent company and the other components in addition to yourself.
Ben: Charity Network is a relatively new entity. Been around for a little over three years. Founded by Todd Wagner, the owner and CEO, and it comprises three separate businesses that each tackle a very specific problem all charitable organizations need. First is Charitybuzz, full-service auction company, really focused on high net worth individuals. Think about it as the digital version of the gala – instead of running your live auction for 300, 400 people in a hotel ballroom – put it in front of our virtual stadium, 200,000-plus high net worth individuals who are socially conscious, engaged, and want access to the types of things we put on the site.
Second platform is Prizeo.com. Still focusing on the experience, the access, but we’re democratizing the method of entry; a true sweepstakes model which allows organizations to receive smaller donations for tens of thousands, in some cases even hundreds of thousands of new donors which could result in millions and millions of new unrestricted dollars for the benefiting organization.
And the third business is Global Philanthropy Group – the newest of the three to enter into the Charity Network, traditional consulting firm, but focused on impact, strategic philanthropy… an incredible team of experts in the space, who not only do the research, the recommendations, but they do the implementation and the execution– which really differentiates themselves from the rest of the consulting world.
Denver: How many nonprofit organizations, Ben, has Charitybuzz worked with? And how much money have you been able to help them raise?
Ben: Glad you asked. I’m most proud of these two statistics: we’ve been in business for a little over 10 years. We’ve raised over $300 million for 4,000-plus charitable organizations. That number continues to grow significantly. Last year was our best year ever. This year, we’re projecting growth, so we’re really eager to cross that half a billion, and hopefully that billion-dollar number a lot faster than it took us to get to $300 million.
Charitybuzz is a destination to live out your wildest dreams and support a great cause. It’s unlike a ballroom or an auction that an organization has ever been a part of. We like to leverage all of the best practices and insights of what our users want, what our marketplace supports, and empower our partners to go out to their network of supporters and engage them in new and exciting ways.
Denver: Very exciting. What do you do for a nonprofit client? For instance, do you help them secure a celebrity or an experience? Or is it more focused on the marketing and the backend operations?
Ben: The latter for sure. We fancy ourselves as a technology platform. We do not solicit donations for any of our partners. What we’ve built is this really unique marketplace. Charitybuzz is a destination to live out your wildest dreams and support a great cause. It’s unlike a ballroom or an auction that an organization has ever been a part of. We like to leverage all of the best practices and insights of what our users want, what our marketplace supports, and empower our partners to go out to their network of supporters and engage them in new and exciting ways. From there, as I mentioned, we have about 200,000 high net worth individuals. We are always thinking about new ways to target them, get the right information in front of the right person so that we can increase dollars raised and help organizations reach a brand new audience of donors.
Denver: Take our listeners through the process of, let’s say, a typical auction for the charity, for the celebrity, for the bidder– How long do these go on… and things of that nature?
Ben: When Charitybuzz first started, we were mimicking probably the auction season of most charitable organizations. We would do an auction around the Spring gala or the Fall gala, but as we really started morphing into a platform, we’re now hosting auctions 365 days a year, which gives our partners more flexibility, more freedom to take advantage of time-sensitive opportunities, match their listings with peaks in the market. I always use sports as my reference because I’m a sports guy – if you had tickets to the Super Bowl, it would be a lot more beneficial to post them in December or January than right now because we know the market will be 5 – 10x at that point.
We engage with charitable organizations at many different phases throughout their auction process. In some cases, they’ll come to us with a fully-baked idea, and it’s a matter of us optimizing it, pulling together a launch plan, and getting it on the website. In some cases, they’ll say, “We know we want to work with you. How do we get the process started?” That becomes a little more consultative. We sit down with them; we understand their entire web of sponsors, board members, supporters, committee members; and then we show them all the different ways they could be engaging these people to support them in a completely different way. In a lot of cases, it’s transitioning the check writer to also be offering up a lunch, a round of golf at their private club. The possibilities are endless, which is the most exciting part of our business.
…the only people that come to Charitybuzz are individuals who are looking to bid. There’s no content; there’s nothing else. It is a shopping experience, for lack of a better term. So some of these old school ideas about the auction, about what guests want, I’d say, is the biggest mistake because they’re starting off at a point that isn’t necessarily informed by reality.
Denver: Being the experts on charity auctions, aside from maybe not working with Charitybuzz, what are some of the most common mistakes a nonprofit will make with their own charity auction?
Ben: I think a lot of it starts with this notion that auctions have to be at the gala and only available to the 300, 400 people in attendance. Over the years, this has definitely shifted, but the notion has been that our guests want, need this auction. They come to our event to bid on this auction. I’ve even heard organizations say, “We know that we could raise more money with you, but we don’t want to upset a couple of our key supporters who like coming to our event and get a bargain.” These are fundraisers, and our mission is to maximize the amount of dollars raised. Really just keeping that central concept in mind; that, if you have access to great opportunities or experiences, auctions are a numbers game. If you get that in front of a larger group of people who are engaged… the only people that come to Charitybuzz are individuals who are looking to bid. There’s no content; there’s nothing else. It is a shopping experience, for lack of a better term. So some of these old school ideas about the auction, about what guests want, I’d say, is the biggest mistake because they’re starting off at a point that isn’t necessarily informed by reality.
Denver: Give us a few examples of some of your more successful auctions, and how much money they were able to raise.
Ben: The most exciting part about Charitybuzz to me– as someone who’s been there almost since the beginning– is the evolution of the marketplace. It started off as primarily offering up celebrity experiences, and while that remains a very popular category, in order for this business to grow, we had to widen the parameters and figure out: how else could we engage a larger number of charitable organizations? A great example of that is, back in 2013, we were fortunate enough to auction off a cup of coffee… 30 minutes at Apple headquarters with Tim Cook. Everyone in the office was excited. This was cool. Was it going to raise $25-, $50-, $100,000 – we didn’t really have any comps to reference. Three weeks later, the auction raises $610,000, generates over a billion media impressions, all referencing the benefitting organization, Robert F. Kennedy Human Rights. So incredible awareness.
Then, if we wanted to stay on the Apple bandwagon, about three years ago, we auctioned off one of the first Apple I motherboards that Jobs and Woz created in a garage outside Cupertino, probably the farthest thing from the celebrity experience the business started. But we took a page out of a traditional auction house, did a lot of pre-auction prospecting, marketing, and we ended up selling it for over $800,000, which today remains the single highest hammer price we’ve ever achieved on Charitybuzz. We’ve really made this entire spectrum as wide as can be, and are always thinking about new ways to leverage what we built to help more organizations succeed.
Denver: Picking up on Tim Cook, have celebrity entrepreneurs and iconic business leaders become a really sought-after market for these bidders?
Ben: Today, business experiences are our most successful and popular category. We like to say that when the Tim Cook auction happened in 2013, it was a watershed moment for Charitybuzz. Everyone scratching their heads. Okay, business experiences are appealing to our base. Many more charities have access to business leaders through their board of directors than A-list celebrities. Let’s really start pushing this out, suggesting this as an avenue for our organizations and new organizations. And that was probably best memorialized in our first-ever entrepreneur auction, which happened back in 2015, which was the first time that Charitybuzz created our own auction.
So, instead of it being the Ben Erwin Foundation Auction, where the only thing that was connecting all the different auction items was the cause, we started looking at categories. Let’s get a hundred different organizations to each donate one or two experiences with business leaders, but let’s put it all under this big umbrella, and then use all of our marketing channels, all of the targeting that’s available, and create an online event that helps move all of these organizations up in terms of dollars raised. And it remains one of our most successful campaigns. We just finished the 2018 one up in December, and it raised nearly $1.5 million.
This is, in a lot of cases, the only way you could get in with the head of a big hedge fund, CEO of a Fortune 500 company, and what’s really cool is: you’re walking to this meeting with a shared connection that you just supported an organization that the business leader is passionate about.
A lot of these experiences begin with the business leader thanking the winning bidder for supporting their organization, so the icebreaker’s a little out of the way, and you can make the most of this 30 minutes to an hour; and there’s been examples where that relationship has existed beyond an initial meeting, and there’s been deals made; there’s been relationships forged. It’s a really cool and unique aspect of our business we are continuously strengthening and putting muscle behind.
Denver: Some of these business experiences with these leaders are not just to get to know them; people sometimes come with a mission and a plan, correct?
Ben: Absolutely. We like to market or position them as a foot in a door. This is, in a lot of cases, the only way you could get in with head of a big hedge fund, CEO of a Fortune 500 company, and what’s really cool is: you’re walking to this meeting with a shared connection that you just supported an organization that business leader is passionate about.
A lot of these experiences begin with the business leader thanking the winning bidder for supporting their organization, so the icebreaker’s a little out of the way, and you can make the most of these 30 minutes to an hour; and there’s been examples where that relationship has existed beyond an initial meeting, and there’s been deals made; there’s been relationships forged. It’s a really cool and unique aspect of our business we are continuously strengthening and putting muscle behind.
Ben Erwin and Denver Frederick inside the studio
Denver: Another piece of your business is Charitybuzz Curates. What’s that about?
Ben: The entrepreneur option was the beginning, the foundation of Curates. After that succeeded for the first two years, again, another head scratcher – how can we make this bigger and better and use it to help more organizations take advantage of what we’ve built? So, we looked through; we did a huge analysis of the data. What are the areas where we have a unique strength in? … meaning, they succeed above average on the site, that we also believe a large percentage or high number of our partners have access to these types of things? So, it’s become golf, it’s become Broadway, it’s become fashion, and it’s become music, which based on just the types of organizations we work with, we have an incredible variety of music connections and experiences which will be on display in Charitybuzz Curates Music, which will be happening later in the Spring… which will have everything from signing guitars, meet and greets with Billboard’s top artists… to the chance to have your demo listened to by an A&R executive at a top record label. Again, this notion of foot in the door, this is how maybe you get your big break.
Denver: You mentioned a moment ago that you were a sports guy. Let me ask you this about that industry. How can teams, players, and experiences be better leveraged and utilized to raise more money for the participating charity?
Ben: In reality, the world of sports is very philanthropic. You’ve got professional athletes who do an incredible amount of work in their communities, in the schools, around junior sports leagues. I don’t think they get enough credit. You only hear the bad news about athletes…the few bad apples, so to speak, who are breaking the law or getting in trouble. But you very rarely hear about the football player who has single-handedly funded and revamped the junior football program in his hometown; that’s been in a great after-school program.
For one, the teams, the leagues, the agencies, need to do a better job of celebrating what these guys are already doing because that would then encourage the newer generation, the newer players to be following in the footsteps of them because it’s good for business. I think sponsorships, the limelight would only increase as they have a positive image of giving back into the community. So I would like to see the leagues– more so than even the teams– invest more in giving a bigger platform to their players, lifting them up, shining a bright light on all the work that they’re doing because it’s the right thing to do; and candidly, it’ll help the leagues out. This will help ratings, sponsorship, everything works. It’s like cross-marketing for brands back in the ‘90s. It’s an obvious next step that hopefully we’ll see a lot of movement in coming up in the next few years.
The more intimate or unique the experience, the more successful it’s going to be. A lot of times, that’s going to be speaking to the core fan base or pool of people who’d be interested in a specific experience. If you know Bill Murray– who loves to play golf because he’s’ on display at Pebble Beach every year at the AT&T–an experience to play a round of golf with Bill Murray is going to outraise and outperform the chance to sit down at lunch with him. Fly fishing, going to the movies, having dinner at a really fancy restaurant – the more unique and intimate you can make the experience, the better it performs.
Denver: I know what’s hot today may not be hot tomorrow, but it is today; so what’s hot? What are the experiences that bidders are really interested at at the moment?
Ben: The more intimate or unique the experience, the more successful it’s going to be. A lot of times, that’s going to be speaking to the core fan base or pool of people who’d be interested in a specific experience. If you know Bill Murray– who loves to play golf because he’s’ on display at Pebble Beach every year at the AT&T–an experience to play a round of golf with Bill Murray is going to outraise and outperform the chance to sit down at lunch with him. Fly fishing, going to the movies, having dinner at a really fancy restaurant – the more unique and intimate you can make the experience, the better it performs.
In terms of the verticals or types of experiences, it really ebbs and flows with the calendar. Right now, in terms of sports, it’s basketball– First All Star as the playoffs are approaching. People are just inherently more interested in sports, business, experiences with finance executives. The market is tumultuous. People have a real interest in seeing what the most successful investors are going to be doing with their money. Right now, also travel is performing really well because again, this mimics the piece that you see in travel bookings across the web. When people are starting to plan trips, we want to make sure we take advantage of that e-com trend.
Denver: Charitybuzz is a technology company. You sit at a very interesting intersection of high-tech digital fundraising on one hand, and a sector that, by and large, is lagging in leveraging the full potential of technology on the other. From your perch, share some of your observations on what you believe many nonprofits would be well-advised to do to move forward in this realm?
Ben: Just embracing all of the innovations and digital solutions that are out there; there’s an amazing stat about the percentage of GDP that has been directed towards charity has remained virtually unchanged since it was first measured in 1970s. But the number of charities hasn’t remained unchanged. We were just talking about this. We’re approaching 1.5 million organizations. It really requires these charities to separate themselves, create a greater sense of transparency about the work that they’re doing, and take advantage of organizations like Charitybuzz to be able to reach new audiences, get their messaging out there.
We find too often charitable organizations who are just too comfortable in the status quo, and we don’t suggest that anyone stops doing what is currently working for them. Charitybuzz is not a substitute for your live auction. It’s not a substitute for your gala. It is complementary. It is incremental. One plus one. Don’t think that you have to give up what you’re currently doing in order to take advantage of this booming space. So many organizations are jumping in with a lot of great solutions. Think about there’s extra dollars, there’s extra awareness channels out there. Go out, learn more about it. Take a risk or two, and I think you’ll be really excited about the performance and the results.
Denver: One of the wonderful aspects of a charity auction is that, as a rule, they generate unrestricted dollars for the organization. With the nonprofits you work with, how important are these unrestricted dollars to them?
Ben: Before I took over as president of Charitybuzz, I sharpened my edges as the business development professional, head of the business development team. So, crafting our sales messaging was core to my job, and unrestricted funds would be in the scripts, would be in the collateral – underlined, bolded, font will be bigger than the rest. When you say this in a meeting or on a call, you can either see or hear the eyes enlarge. Unrestricted funds, it’s becoming more and more difficult for charitable organizations to raise, and it’s one of the biggest benefits of what we do across the entire Charity Network, not just Charitybuzz. And in some cases, it could be millions and millions of new, unrestricted dollars. It’s becoming more and more important every single day.
Denver: What’s the business model of Charitybuzz? And how do you go about generating your revenue?
Ben: It’s a 20% service fee. It’s a pure rev share, no upfront costs, no subscriptions costs, no management costs. We succeed when our partners succeed. It’s created… this culture within our organization of really feeling like we’re an extension of our partners’ teams. We’re in this together. It goes way beyond just raising money through auctions. We’re advising or a sounding board for lots of other decisions. Probably one of the other most proud stats that I am of Charitybuzz is the fact that our biggest partners are also our oldest partners. They stay with us. They become part of the family, so to speak. That’s really what helps us also retain great talent is: we’ve got the right people in place who believe in what we’re doing. That extends into this amazing relationships with our partners and allows us to continuously build and grow and help.
Denver: I’d be curious as to whether you had any thoughts on the charity gala. Here to stay, final innings, maybe what you see. Or what’s going to replace it in the years ahead?
Ben: It’s tough to make any comments about the charity gala because there are so many different versions of them. There’s organizations like a Robin Hood, which have incredibly successful galas, which they should continue to do. For the large part though, as I mentioned before, the key function of these galas is fundraising. I would just stress that more and more organizations remember that. We get pushback at some point for our fee structure at 20%. You need to consider what the overhead or the rev share is for a gala. So, a few organizations consider the staff time, the board time, the resources that go into planning. But I believe the gala is here to stay if it is used as an engagement tool, a way to celebrate people who’ve done amazing work, to cultivate new people.
But if it’s a place to continuously sell things through an auction, we’re going to continuously prove that there’s better ways to take advantage of these opportunities. One big trend we’re seeing in New York over the past few years is the emergence of the paddle raise. You’ve got people in a room who are incredibly engaged. They just went through the whole program, so they’re aware of what you do. Instead of asking them to then go bid on a trip to the Maldives or a box at Yankees Stadium, they are willing to just give an amount of money to fund a very specific program or just overall budget. I think that is one where you’re going to see a much larger area of growth, and the way we fit in it is, you’re still going to get all those auction items, post them on Charitybuzz; you’ll make two, three times as much money. Take that 15 minutes to do a paddle raise in your room. You’ll raise just as much money, and then together, you’re more than doubling the amount of funds raised.
Denver: Makes a lot of sense.
You have been named by Fast Company Magazine as one of the most innovative companies in this sector. Tell us about the corporate culture at Charitybuzz, and what aspects of it have contributed to the organization being so innovative.
Ben: This is going to sound cliché, but I mean it. The success of Charitybuzz, the awards that we’ve received, are 100% thanks to the staff and the team we have. We’ve done a really good job of rallying everyone around our purpose and what we do. We are working around the clock. We crank, we hustle, but it’s to raise $30-, $40-, $50 million of incremental revenue for charities every year. That’s something everyone can hang their hat on.
The culture is just thanks to a core group of very passionate, very enthusiastic, and talented people. The injection of innovation and the award from Fast Company, I believe, has a lot to do with Todd Wagner– who acquired Charitybuzz, created the Charity Network. Todd was the first person, along with Mark Cuban, to stream media on the internet with Broadcast.com. He’s no stranger to innovation, but he has certainly encouraged, pushed us, to take a much more innovative approach to what we’re doing, so that we can move a little faster to the benefit of our partners.
Denver: Let me close with this, Ben. Sticking with innovation, what do you see is the next big innovation in this space, the next interesting twist, and what is your vision for Charitybuzz in the years ahead?
Ben: Fortunately, the charitable sector doesn’t move as fast as the for-profit sector, and we need to be cognizant of it as we think about the future. I strongly believe that Charitybuzz and Charity Network have just scratched the surface. We like to say, we’re still in the bottom of the first inning, and there’s a lot of work to do, just to maximize our core products. For Charitybuzz, it’s increasing brand awareness, increasing the number of charity partners and registered users within the US, but then also starting to take advantage of a lot of the trend in movement we’re seeing in the international markets, and really becoming a global brand. The same will be said across the Charity Network is, we, every single day, have a conversation about: what can we do today, tomorrow, next year, to make these businesses more beneficial to our charity partners? We’re advocating for them every single day. That’s really at the core of the business, the culture, and how we want to be positioned, moving forward.
Denver: Ben Erwin, the President of Charitybuzz, I want to thank you so much for being here this evening. For our listeners who might want to see what auctions are currently running on your site or who may want to speak to the company about an auction for their nonprofit, what’s your website, and how do they get in touch?
Ben: www.charitybuzz.com. Visit it often. There’s always new auctions appearing on the site. Our typical auction life cycle is about two weeks. It’s dynamic. Sign up for the newsletter. We send out really, really exciting emails every single week. Anyone who’s interested in partnering with us or just learning more about what we’re doing, email me, [email protected]. I will get back to every single person that reaches out, and we’re just looking forward to having conversations. And more than anything, thank you for the time. We really appreciate it. This has been a really fun time.
Denver: Thanks, Ben. It was a real pleasure to have you on the show.
Ben: I’ll be back with more of The Business of Giving right after this.
Ben Erwin and Denver Frederick
The Business of Giving can be heard every Sunday evening between 6:00 p.m. and 7:00 p.m. Eastern on AM 970 The Answer in New York and on iHeartRadio. You can follow us @bizofgive on Twitter, @bizofgive on Instagram and at www.facebook.com/businessofgiving.