A substantial set of challenges faced the young founders trying to get their project off the ground. Raising the first $75,000 was “really tough,” according to Backstrand, because foundations are not set up to provide funding for an unproven idea. “Hiring was tough too,” he says. “The Internet was exploding in 1999 and there was virtually nobody to hire, especially without stock options. In part, this reinforced the need for good pay, since we wanted workers to come and build value and stay. It’s unnerving to lead an organization while trying to innovate on many levels—capital, recruitment, competition, governance—all at the same time,” he points out. “The team felt like they were breaking new ground on every front and it took a lot of thought: it wasn’t just a matter of making a product and going out to sell it.” Unlike typical Internet start-ups, they weren’t building a site in hopes of selling it off to a big company. “Luckily Carnegie Corporation and others were willing to buy in so we didn’t worry about going out of business month-to-month,” he adds. “Without that level of philanthropic support I don’t know if we could have thrived the way we did.”

Since 1998 there has been an average 58 percent growth rate per year in the number of nonprofits using VolunteerMatch as their Internet doorway and personal recruiting service. These organizations gain efficiency as they adopt the site’s Web-based management tools, increasing their capacity to engage their communities in their missions. VolunteerMatch also offers nonprofits a critical marketing channel to deliver their social message to new audiences and to solicit donations through the tracking tools the service provides. Research indicates that eventually most volunteers become one-time, then annual donors (more than one-third of the site’s users now donate to participating nonprofits); eventually some become members, advocates and may even serve on the board.

Major corporations depend on VolunteerMatch to manage their volunteer initiatives. In exchange for a membership fee, VolunteerMatch provides companies such as Hewlett-Packard, Merrill Lynch, Google, Johnson & Johnson, Target, Dell, HGTV and Gap with customized Web services that link their employees with nonprofit organizations in the community. This revenue-earning component offsets a portion of VolunteerMatch’s activities and is critical to long-term sustainability. So is income from licensing fees charged to Internet portals and corporate partners that recognize the value of promoting volunteerism. These entities feature a customized version of VolunteerMatch on their sites or direct Web traffic to VolunteerMatch.org., offering new and improved ways for people to get out and do good in their communities.

VolunteerMatch distinguishes itself as a nonprofit by consistently applying established benchmarks in each of the organization’s key areas and sharing results via comprehensive quarterly reports distributed to supporters (an example appears on pages 6 and 7 of this report). It continuously fine tunes its method of calculating social return on investment (SROI)—the value of savings and volunteer hours the community receives compared to the amount spent building the service—an important tool used for self-evaluation. By the organization’s latest measure, that figure topped $96 worth of community benefits for every $1 investment in VolunteerMatch in 2007. “Our quarterly reports aren’t just to show our constituents how things have been going, they also have helped us set goals and understand what we inside the organization are trying to accomplish,” says Backstrand. “They really help move the needle. At the same time, they enable us to be collaborative and transparent, to build very tight relationships with our key funders. And when we’ve messed up we told them. Everything is in the report so there’s no big wall between staff and support.” There’s no better proof of this tight relationship, he maintains, than the fact that Vince Stehle, a program officer with key funder the Surdna Foundation, became a member of their board. “We thought it was great that Surdna was OK with Vince having a board seat, because it’s not generally done. But we wanted him to have governance responsibility.”

Vince Stehle says VolunteerMatch “set the bar high from the very beginning with their quarterly reports of results. Over the long term, some were up, some were down,” he admits, but “what’s important is to be transparent, to present quarter after quarter and show investors where you are.” Stehle agrees that the reports do more than justify activities to funders. “They have a dramatic effect on managers and on creating a culture that promotes results-oriented activities.” The reports are one aspect of the get-it-done approach to a start-up that was critical in the dot-com era of the late 1990’s. VolunteerMatch was born out of that community and way of thinking, Stehle stresses. However, getting a pure play Internet project going as a nonprofit was unusual, a fact that made it difficult to raise funds; it wasn’t a good fit with the programmatic organization of typical funders. “Most foundations are set up to fund a particular program area, such as the environment or education,” he says. “They aren’t prepared to support an infrastructure strategy designed to serve across all categories.”