Interview with Bright Funds, a New Way to Manage Charitable Giving

She explained that Bright Funds provides an investment approach to individual giving to ensure that donor dollars are channelled to non-profits that are highly impactful. There is a certain pattern in giving: 1) choose where to give and, 2) give; however, missing from the usual equation is 3) find out what impact your giving had on the cause. Julia noted that Bright Funds closes that “feedback loop” between donating to a nonprofit and following up on the impact of your donation by featuring non-profits that have a track record of being highly impactful in certain core sectors.

Specifically, Bright Funds uses multiple lenses to identify impactful nonprofits including assessments from platforms such as: CharityNavigator, Charity Watch, Universal Giving, GiveWell, and Philanthropedia.Individual donors (i.e. Bright Fund investors) choose the percentage of giving for each of four broad sectors: water, poverty, environment, education, health, or they can choose their own fund of non-profits not included in the Bright Funds list.  They can then research and select specific non-profits that serve their interest in the sector.Julia said that creating a portfolio based on sector was by design—because it shifts the focus from charities to the causes they champion. By aligning yourself with causes that are important, you can better assess impact on the issue, rather than the organization.

Q2 | Innov8Social: What tools does Bright Funds offer?

A2 | Julia, Bright Funds:

Julia overviewed the quick protyping and release of Bright Funds offerings. The startup launched a consumer-facing site in 2012 on #GivingTuesday, enabling anyone to create a profile and begin designing and tracking their charitable giving—all for free. The team is now in the midst of launching an enterprise platform.

The enterprise tool integrates with a company’s benefits system. It lets employees design and track donations and customize the list of nonprofits featured. So far, Bright Funds has seen interest in the new tool by various Fortune 500 and mid-sized Bay area tech companies. Many companies already feature allocated giving programs, but most haven’t designed a holistic approach to help employees manage their giving. Bright Funds sees potential for more-effective platform for personal giving, that can allow for efficiencies such as direct deposit (from an employee’s paycheck) as well as utilizing a company’s donation-match policies.

Q3 | Innov8Social: How does Bright Funds vet the nonprofits featured in its funds?

A3 | Julia, Bright Funds:

As mentioned, Bright Funds has identified major five major categories, each of which form a different Bright Fund (i.e. there are currently 5 Bright Funds: water, poverty, environment, education, health, or customized fun).

If donors are interested in supporting a specific cause or effort, they can read through the descriptions of the non-profits for each Fund to identify the “facets” (or focus areas) for each non-profit and can select or deselect individual non-profits to support on that basis.

Julia noted that Bright Funds strives to be objective in selecting nonprofits to be in porfolio offerings. As mentioned, Bright Funds looks at 5 different insititutional charity evaluating bodies, each of which has its own criteria to identify funds. Pooling information from various assessment platforms enables a more holistic view of non-profits—so as not to favor more-established charities over newer ones, etc.

Notably, Julia added that consumers can add any nonprofit/favorite nonprofits. For companies, if they support a group of local nonprofits, Bright Funds can build company fund portfolio.

Q4 | Innov8Social: Can individuals support social enterprises in their Bright Funds portfolio?

A4 | Julia, Bright Funds:

Julia said that at this time, individuals cannot support a social enterprise in their Bright Funds portfolio. She noted that Bright Funds has a non-profit foundation, through which donation is channelled. So it is possible that a donation to social enterprise could go through the Bright Fund Foundation.

Q5 | Innov8Social: What legal structure has Bright Funds’ selected?

A5 | Julia, Bright Funds:

Bright Funds is structured as a for-profit startup and non-profit foundation. Specifically, the for-profit entity is a commercial fundraiser– which means that it has signed contracts with all charities in the fund to act as a fundraiser for the nonprofit.

Julia noted that originally both cofounders considered becoming a nonprofit, but wanted to be able to leverage the initial investment. The decision to become a commercial fundraiser was based on idea that 100% funds should be tax deductible.

Q6 | Innov8Social: Is Bright Funds scalable?

A6 | Julia, Bright Funds:

Julia noted that since Bright Funds is a cloud-based platform, it is relatively easy to scale.

Q7 | Innov8Social: How has Bright Funds been funded?

A7 | Julia, Bright Funds:

Julia shared that Bright Funds has been backed by investor funding. It closed its first round of funding from angel investors around time when consumer platform launched in 2012. It is also a portfolio company at Hattery in San Francisco. She also mentioned the immeasurable assistance and mentorship that Leila Janah, Founder of Samasource and Bright Funds Board advisor and mentor, has provided.

Q8 | Innov8Social: How is Bright Funds monetized?

A8 | Julia, Bright Funds:

Julia explained that with its commercial fundraising status, Bright Funds takes a percentage of the raise. And noted that the amount taken is often about half of what the non-profit would budget for marketing and attracting donations.