Spending Giving Comes to Insurance, Credit Card

Imagine that every time a consumer buys something, the company they buy from donates to a charity of the consumer’s choice.

A world where spending and giving effortlessly merge is what Auckland-based brothers Colin and Jared Thomas are working towards with their impact startup Raizor.

Four-year-old Raizor orchestrates deals with businesses – ‘supply partners’ – which involve those business donating a set amount or percentage to charity each time a customer signs up for the deal. Among supply partners are Meridian Energy, Ray White, Event Cinemas, and insurers Malcolm Flowers, Crombie Lockwood, and NZHL.

A for-profit social enterprise, Raizor charges businesses a small fee but customers pay no extra. The business model is set to mirror the gold standard 75-25 split in the charitable sector, whereby the beneficiaries of charities get 75c of every $1 donated. But, in Raizor’s case, the customer’s full dollar goes to their nominated charity and the 25% cut comes from the supply partners. In fact, the brothers said, it is vital that customers get a genuinely good deal.

Going into the autumn lockdown, the brothers had six or seven initiatives at various stages of early development, and they realised they needed to zero in on just one or two.

“Lockdown hit us like a ton of bricks,” said Colin Thomas. “I think like most people, there was a need for us to sit back, think about the cash flow impacts to ourselves or charities of navigating these lockdown waters. And we really had a key moment where we pivoted and lasered in on what we think are our strongest fundraising tools and our quickest path to capital.”

The result was the just-launched SBS Pink Ribbon Visa and separate business arm, Insurance for Good. The credit card, issued by SBS Bank, functions as a regular credit card except SBS donates to the Breast Cancer Foundation $20 for every card issued and 5c for each transaction.

Insurance for Good is a competitive commercial insurance product serviced by Crombie Lockwood which charities can take out themselves to save costs and promote to corporate supporters. A portion of the brokerage commission goes to the charity annually, generating a long-term sustainable revenue stream that’s not subject to the vagaries of a company’s annual charity budget, which may be cut in a lean year.

The brothers ran the idea past a charity friend who was bracing himself to call around major donors to ask them to renew their donations in the midst of a global meltdown.

“He was like, ‘Oh, my gosh, thank you. You just made conversations so much easier, because I’m calling high-net-worth individuals or long-term donors, and I’m saying, ‘Hey, thank you for your continued support. Appreciate your house is probably on fire right now. So is mine. Can you write another cheque?’ And that’s a hard conversation to have; where we go: would you consider covering your business with this insurance program, and it’s going to give us ongoing support that will help further the mission?”

During the lockdown, the brothers signed up more than half a million dollars’ worth of commercial insurance, generating over $70,000 in donations and annual savings for the charities, and now have 11 active policies.

To date, Raizor has been in the R&D phase and not yet turned a profit, but the brothers expected that the insurance arm would start generating a profit next year, and see scope for growth especially in the small-to-medium enterprise market.

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‘Business as usual’ with benefits

The seed for Raizor was planted when Jared, now 27, was still at Texas Tech University. The brothers moved with their older sister and parents to New Zealand when the boys were aged four and seven. Their father had spent time in the country previously and wanted his children to be raised there, but also wanted them to get a college education in the US. The brothers got tertiary qualifications in Texas – Jared in geological science and Colin in business.

Jared was fundraising chair on for a fraternity organisation and he had the idea of approaching a local bar and grill. His pitch to the owner: ‘On Tuesday nights you’re usually quiet, how about I bring in a crowd and you donate 20% of our bill to the charity we’re supporting?’ The owner accepted and Jared got his first taste of spending-giving.

The next idea was to make a similar pitch to a local textbook store, whose margins were being eaten away by online competition.

“And now you’re raising thousands of dollars in an afternoon, as opposed to maybe a few hundred from a bar. And that sort of idea just started branching out more and more,” said Colin, who was by then working at KPMG.

The brothers brainstormed over Skype and Zoom how to turn it into a business and after six months interning at oil companies, Jared moved back to Auckland to give it a go. For seed capital, they fundraised from friends and family and persuaded a church connection in the US, a wealthy philanthropist, to put some money in, and invested sweat equity themselves.

There was initially a ‘chicken and egg’ issue: charities wanted to know which businesses were signed up and vice versa, but early support from charities such as the Parenting Place, where Raizor works out of now, and big-name supply partners such as Meridian helped build credibility. Nicholas Yates came on as part-time chief executive.

The brothers found they also had to reframe their pitch to businesses.

Colin: “We went in there initially very wide eyed and excited and said, ‘this is disruptive game changing innovative, the Uber of philanthropy’, all the cliches everyone likes to use. And we found that you know what businesses don't love a lot of change, especially not all at once.”

What the brothers call spending-giving, or cause consumerism, is a fairly new concept in New Zealand but more established in the US and UK.

“We really had to reel back and find, what are the right value drivers to pull here? And we’ve started to find our ourselves settling on: ‘Hey, guys, this is actually business as usual. We take a normal cost centre like your marketing budget, we effectively turn it into an impact budget. It’s promoted through charities to their supporters. And hey, this is a billboard that you only need to pay for when we successfully refer business’. So it becomes a really low-risk model for them. And the by-product is charity.”

Then it was a matter of helping charities promote the deals and products, which was still a major focus.

Raizor was in tune with the trend towards customers, business partners and new hires caring more about an organisation’s social impact, accelerated by Covid, and the emergence of an impact enterprise and investment sector in New Zealand.

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Partners, capital, staff

Looking towards 2021, the main focuses will be building Raizor’s insurance book, increasing the range of businesses and charities it partners with and promoting the deals, the brothers said.

They expected to be able to hire two staff, probably a marketer and a developer, and also seek a capital injection to fund growth, potentially partly through partnering with other players in the fundraising sector.

In the World Giving Index by the Charities Aid Foundation, New Zealand ranked third overall (behind number one US and Myanmar), so the brothers see their challenge as leveraging Kiwi generosity to make charities more sustainable as well as making Raizor sustainable.

Insurance for Good came off the back of developing a bespoke charitable scheme for Christian Camping after the multinational charity approached Raizor. The brothers plan to build it out and roll out the scheme into each member country, with Australia next.

Colin Thomas: “2021, looks pretty bright. And I think we’re very fortunate to be in that position.”

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Article originally posted in the NBR in December 2020.‍