New York partner powers software firm’s drive to make charity more efficient

“If they were companies, they wouldn’t survive. Someone would come along and roll them up into an efficient infrastructure. But in the not-for-profit sector, all it takes is one or two well-intentioned donors to keep something alive that would be better combined with something else.”

The giving business is giving back for Benevity, which took over three floors of a brand new seven-storey building on the north side of the Bow River in downtown Calgary late last year and is already looking to expand into a fourth floor.

The company has come a long way from 2008 when de Lottinville decided to execute his idea to reinvent corporate giving.

From four software developers working in a tiny office over a shawarma shop, the company has grown to employ 425 people, mainly in Calgary, but also in offices in Victoria, San Mateo, Calif. and Gloucester, U.K.

This year it expects to distribute about $1.2 billion to 150,000 charities around the world.

The Benevity system is all about choice and options, de Lottinville says.

Participant companies can design their programs to allow any level of matching for any term by any group of employees. They can support as many or as few charities as they wish. They can also use the system to handle grant requests.

About 87 per cent of donations via Benevity are distributed electronically, compared with only about eight per cent of the $390 billion per year in donations to charities in North America.

Most of Benevity’s revenue comes from extracting a 2.9 per cent “support fee” from donations made by about 300 big corporate clients, with the fee capped for large individual transactions.

Like many software-as-a-service businesses, Benevity isn’t making profits — yet. De Lottinville says the equity investments allow the company to grow bigger, more efficient and, hopefully, profitable.

Last year, Benevity was hired to track a program at Telus Corp. through which the telecommunications company gives $1 per volunteer project hour worked to a charity of the employee’s choice. This year, it asked Benevity to organize its donation-matching program for its 28,000 staff in Canada.

“They have created this system where they already interface directly with charities,” said Jill Schnarr, Telus vice-president of corporate citizenship. “Before … there was a huge administrative burden.”

In January, the company announced that General Atlantic, a US$25-billion New York-based growth equity investment firm founded by American philanthropist Chuck Feeney, had become a major owner and partner with an undisclosed investment.

Since then, Benevity bought companies in the U.K. and California to expand its geographic reach and gain access to their brand name clients.

The financial injection allowed de Lottinville to pay back with interest the 40 or so small private investors who initially invested in Benevity — he jokes they thought they were making a charitable donation at the time. The company was also able to reduce the stake held by JMI Equity of Baltimore, which initially invested $38 million in 2015.

Alex Crisses, managing director at General Atlantic, said it decided to invest in Benevity because it is “truly different” than the other companies in the space.

“It’s really about employee engagement and making sure employees feel valued,” he said.

He said General Atlantic is a long-term investor with no pre-set targets or liquidity timetable. It has a presence on Benevity’s board of directors but fully supports de Lottinville’s vision.

De Lottinville is talkative when discussing business but turns quiet when asked if his childhood growing up in Ottawa shaped his interest in helping others. When pressed, he concedes it’s a factor, and part of the reason he volunteers with YWCA Calgary.

“I grew up with a single mom and she was a vulnerable person, so some of that is personal resonance,” he said.

His business resume starts with training as a lawyer in Ottawa and working in Toronto with a corporate finance practice.

There he met Mogens Smed, founder of a company that made modular construction components in Calgary.

The two hit it off and he joined Smed International as an executive in the mid-1990s. He helped grow it from $20 million in annual revenue and 200 workers to $300 million and 2,500 staff before it was taken over by a competitor in 2000.

De Lottinville then joined iStockPhoto as chief operating officer. It was one of first multi-sided platform businesses to employ user-generated content and crowdsourcing. It was sold for $50 million to Getty Images in 2006.

Building and selling businesses paid handsomely but the “recovering lawyer” said he yearned to do something to make the world a better place.

He decided he lacked the skill and patience to work directly for a charity. He made an angel investment in a “consuming for good” software loyalty program startup but it failed miserably.

Benevity satisfies both his entrepreneurial and philanthropist sides.

De Lottinville said his latest goal is to find a way to help companies work together on big projects — water conservation, for example — instead of donating to multiple charities all trying to do the same thing.

The efficiency appeals to him.

Follow @HealingSlowly on Twitter.

Dan Healing, The Canadian Press

by Canadian Press

New York partner powers software firm’s drive to make charity more efficient

Pro Tips