Believe.in and the business of charity

Sunday must have been one of the biggest days for charity fundraising the UK has seen.

Over the course of its history, the London Marathon has seen more than half a billion pounds raised for charity and most of this year's 37,000 runners were raising healthy sums for their chosen causes.

Many will have used web-based donation services like JustGiving and Virgin Money Giving, which are making an ever greater contribution to fundraising. But a London technology start-up called Believe.in says it has a plan to make the whole process even more efficient.

Believe.in has what looks at first a very simple, indeed unbelievable, pitch: it will pass on 100% of the money you raise in donations and Gift Aid to your chosen cause.

In that, it contrasts its approach with that of other services, notably JustGiving, which has most of the online giving market. It takes a 6.3% cut - 5% from the donation plus a share of the Gift Aid and credit card fees.

Metternich wants to offer charities more than a means of collecting cash

JustGiving is a business with staff to employ and investors to keep happy, and it has done a good job for charities by promoting the idea of online giving. Whether its profit margins are too high is a matter for debate - though it should be said that profits were actually down last year.

So how can Believe.in afford to charge nothing? After all, it isn't a charity. In fact, it is a well-funded start-up backed by some very savvy investors including Index Ventures and Greylock Partners.

When I met one of the co-founders, Matthias Metternich, he was keen to stress that the company was about far more than delivering a more efficient payments system. "It's about charitable identity," he explained. "It's about what does it mean to be a charitable person."

Believe.in aims to deliver a range of web services to three groups - charities, businesses looking to expand their philanthropic activities, and ordinary individuals involved in fundraising. It plans a "freemium" model. Charities will get something for nothing but will then pay for more sophisticated services.

I was sceptical about how big the market for this idea was but Metternich told me there was a huge number of smaller charities without any idea of how to build an online presence. "They're asking things like how do we process payments online, how do we build a community, how do we handle social media?"

Overall, the charity sector raised £58bn last year but smaller charities were caught in a cycle where they raised money one year, then spent a lot of it on attracting donors to keep them going the following year. "Small charities have never had access to the kind of technology they need to make the process more efficient," he explained.

It is clear that the charity sector is ripe for a digital revolution. A study last year found that while 50% of people in the UK now shop online, only 2% were donating on the web, and the levels of investment by charities in their web operations were tiny.

Believe.in is part of a wider movement in the UK's tech community to change this. But it faces two big challenges - the dominant position of JustGiving as the recognised brand for online fundraising, and the inertia of the charity sector. Change comes slowly in the charity sector, so the investors backing believe.in may need to be patient.