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Interview with Pete Mountanos of Charitableway

By Michael C. Gilbert, June 1999
 

Pete Mountanos is the founder of Charitableway [ http://www.charitableway.com ], which is a client of mine. He is an outsider to the world of nonprofits, but he identifies passionately with the small and medium sized donor and he is out to change the nature of charitable giving. If you read this interview, I would love to know if you think he can do it.

Michael Gilbert: Give me a one paragraph introduction to Charitable Way.

Pete Mountanos: A donor-centric internet destination for philanthropic activities, focused on being the most efficient, easiest method for donors to engage with charitable organizations. We strive to help engage NEW donors, keep them engaged on behalf of the charity and make the overall process a pleasant experience.

Michael Gilbert: From the nonprofit perspective: How does CW differ from all the other services out there that are claiming to help nonprofits raise money?

Pete Mountanos: We cap their costs at 9.9%, although we expect costs to be much less than that. Some of our programs can be as low as 1% or even 0. Most of that fee goes into remarketing on their behalf. We have been able to raise a very large commitment in capital to insure we can deliver on technology that scales well enough to drive costs down.

Michael Gilbert: From a donor perspective: Why should someone give through you, rather than directly?

Pete Mountanos: Several reasons.

1. Most of the money goes to paying costs and continuing to market for the charities. For example our banking costs gets lower through volume and we pass that on. By bypassing us they make a short term decision that prolongs the older less efficient means of fundraising.

2. Hopefully they realize that the reasons charities sign up with us it is that it is more efficient for them as well.

3. We have a number of programs that enable them to be active with other donors, and only through opening and using a donor account can they have the greatest impact.

4. Obviously, large transactions will involve lower percentage costs.

5. We provide a single point for them to keep track of ALL their activities. Thus, they can see how much they have given to date, and it will be from several different programs.

Michael Gilbert: Do you see yourself in the fundraising business? In the transaction business? Both?

Pete Mountanos: Both. Our scale will let us do transactions more efficiently than any single charity can hope to achieve. But that only is a small piece of the problem. Most of our costs are marketing our charities on line, providing them with tools to do "electronic touch and ask" as appropriate, and developing a new model of donor to donor community creation.

Michael Gilbert: Do you feel that, because of your marketing and your scale, that you can offer more to a nonprofit than an in house program can offer? You feel you'll bring in new donors, for example?

Pete Mountanos: Absolutely.

Consider, if 50,000 charities simply try to do this themselves. They must all compete to try to have their charity stand out from the crowd. By aggregating we can advertise and drive traffic to a single site and then let them stand out. We want to make a level playing field. We believe strongly in informed donor choice, and want to facilitate that.

Michael Gilbert: This was driven in part by bad experiences you've had as a donor. Can you talk about that and tell me what you think donors want?

Pete Mountanos: I am a classic baby boomer. This is my experience:

1. I get solicited. Message is always about the good of the program, not who does it, how efficient it is, is there a better solution.... I want to find these things out easily.

2. Currently there are programs that are easy, but it is fire and forget, I get little communication unless I deal directly with a specific charity.

3. I get frustrated by what I consider to be information held close to the vest. I want this part of the industry to be public so people can see how little profit if any we make.

4. What pushed me over the edge was working for Microsoft. The most generous company I ever encountered. But it was too hard for me to reach back to my native California as opposed to WA.

Michael Gilbert: Do you think you'll bring in people who have never been donors before? And if so, why?

Pete Mountanos: Absolutely. In fact when I talk to charities they are astounded I have found many donors who wish to be anonymous. So consider:

1. Initial donors can in fact be anonymous. I offer to collect info for them and send it on. This is part of building trust.

2. Giving is a core part of our cultural heritage. However, the information revolution needs to provide changes in recognition of that. I consider it a cultural imperative not to keep asking the wealthy to give more, but rather engage the next generations as well.

3. It is hard to have high trust when you make a donation and then are repeatedly solicited by others.

Michael Gilbert: In the long run, what do you believe you'll drive your costs to, as a percentage of donations? How do you hope to get there?

Pete Mountanos: Tough question. I don't expect to turn a "profit" for at least two years. Our current internal financial models use 8% for the next two years. We know we need to drive costs down even faster. It all depends on volumes. Profits are capped to a test of reasonability, which I think is much less than 2% of a donation. At that point if you provide donors with high trust and positive user experience they would accept it. But in the end, if you treat donors as "customers" they will ultimately decide.

Michael Gilbert: Another tough one, I hope: Donors and nonprofits are both, to varying degrees, suspicious of for-profit intermediaries in the fundraising business. How do you reassure people about the fact that you are a for profit company in this field? Are you worried that some people will just think you want to skim off a percentage?

Pete Mountanos: I think that is our single greatest communication challenge. Obviously one solution is disclosure. We believe if we do a good job more and more charities will give us a testimonial.

I believe a for profit company has many advantages. With a public company everyone could see accounting reports. It is able to attract and hold excellent people for long periods of time. It is able to attract capital. If it does a great job, employees can be compensated outside the donation stream.

I have encountered many people who had tried to get an endowment to do this as a NPO. Even if one had found it, I believe this is a better long term model for building the public trust. In the end though I submit the model is irrelevant. What is important is being the most efficient and effective solution for fundraising. We believe it is our structure.

As an aside my local Better Business Bureau advises the number one category of consumer complaints is about NPO's. Structure alone does not guarantee anything.

Michael Gilbert: Last question from me: How can donors get involved now? How can nonprofits get involved? Is there a way for them to sign up for more information?

Pete Mountanos: Donors should contact us at info@charitableway.com. We will put up some structured surveys later in the Summer prior to launch. We are building a very large scalable IT site so we don't want to rush in taking donations.

Charities can help by signing up early so we can do their webpages over time rather than as part of a Fall rush. They should go to: http://www.charitableway.com/signup/.

Michael Gilbert: Anything else you want to add before we wrap this up?

Pete Mountanos: I wish we had time for me to tell you about how we are pursuing company and foundation matching funds to drive fundraising costs down and donor participation up.

Michael Gilbert: Another time. This was a pleasure. Thank you.

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