The business model of DonorsChoose

  • Business Model Shifts

A child’s education is very important for their future and a classroom can be a powerful place in which that education is delivered. A classroom needs a fair amount of resources though to effectively catalyze learning and make a lasting contribution in the lives of children. All the books, field trips, computers and other materials cost a fair amount of money. Read further to discover the business model of DonorsChoose to see how this is supported by crowdfunding.


The need for a new way of funding

A serious dilemma for many teachers working at high-poverty, public schools, is enriching the lives of students with a limited budget. Some teachers accept this while others actually take money out of their own pockets to buy educational resources for their classrooms. A noble act but hard to sustain over the long term. Teachers aren’t paid enough to be the benefactors of their students.

Crowdfunding is a simple yet effective concept which enables the public to directly contribute to causes of their choosing. Whether that may be a business via Kickstarter, a fundraising campaign for a charity on Indiegogo, or a friend’s next big adventure on GoFundMe. Crowdfunding has harnessed the power of communities to change the way funding works.


Support a classroom. Build a future.

DonorsChoose took a unique approach to classroom fundraising by creating a niche crowdfunding platform. DonorsChoose connects the public to (high-poverty) public schools. Teachers and schools are able to post requests for educational resources for the world to see and donate to. Teachers have to be specific in what they need as well as creative to convince donors to give.

The platform uses only 5% of all donations to cover their running costs, the other 95% is used to purchase educational resources and fulfill the fundraising requests. DonorsChoose handles all of the donations, which means that money does not directly go to schools. This prevents misuse of donations as DonorsChoose has a verified list of suppliers. The entire process is also completely transparent. Every dollar donated is tracked and donors can see exactly how and where their money is used to improve education. Having a centralized system for purchasing means that all the projects on the platform get supplies much cheaper, as DonorsChoose is able to bulk buy.


The business model of DonorsChoose

Business model canvas of Donorschoose


The power of the platform

The impact the platform has made is massive. While only serving the US, DonorsChoose has projects representing 84% of the public schools in the nation. Over 4.3 million individuals have donated almost $1 billion in funding. This incredible effort has impacted the lives of over 40 million students. This is the power of a platform in full swing. DonorsChoose connects a group in need of something with a group that is able to provide in that need. Without a platform, this connection would never have been made. In addition, fundraising has never been more transparent and efficient.


Want to learn more about the power of making the platform shift? Read this post about the business model of YouTube or reach out to us directly.


This case is part of the research for our upcoming book Business Model Shifts.


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