Jay Whitehead is chief executive of Tickets-for-Charity, a for-profit company in Boston that funnels money to nonprofits through sales of tickets to sporting events and concerts. He recently sat down with reporter Callum Borchers to talk about the company’s new deal with Major League Baseball, its all-star team of investors, and the sobering realities of social entrepreneurship.
Your business model seems simple enough: Fans buy tickets, and a portion of the sale price goes to charity. But how does it work, exactly?
We have two types of tickets that we sell. A consigned ticket comes from a team, typically, and they’ll say, “Jay, of that $105 [face value], we want $50 back.” We then sell that ticket on our site, we give them their $50 back, take our $17 service charge, and the rest goes to charity. Another type of ticket comes from a corporation that donates the ticket. They get 100 percent of the face value as a tax deduction. We get the ticket, charge our $17, and the rest goes to charity.
Which charities get the money?
About 75 percent of the charitable funds raised from tickets go the people designated by the consignor or the donor. With the teams, that’s usually their own foundation. Then about 25 percent are assigned by the people who buy the tickets. The charities have to be on our platform, and we vet them.
As the ticket buyer, do I get to see how much of my purchase goes to charity? Can I take a tax deduction for it?
You get our patented technology, something called a bifurcated receipt. It charges your credit card twice: once for our service charge and the amount that goes back to the team, and the second time for the charitable donation. You get a receipt that you can take to your tax accountant that says, “I donated to that charity by buying this ticket.”
Am I getting decent tickets or just the unwanted leftovers?
With consigned tickets, you’re getting pretty good tickets, and they are priced at or just below the marketplace. Corporate donations are great tickets, too. They just happen to be on nights when somebody in the corporation couldn’t go. Sometimes we’ll have suites.
The company is eight years old. You’ve been CEO for a year. Are you profitable yet?
We’ll turn a profit late this year for the first time. It’s taken about $24 million of investor money to put us in this position to make money. We’ve raised almost $12 million for charity. Our investors will eventually make a lot of money on this company.
Who are the investors putting up all that dough?
They are some of the highest net worth and most successful entrepreneurs in New England: David Lowe, with his sister Stacy Madison, built Stacy’s Pita Chips, a company bought by Frito-Lay for $250 million; Paul Fireman, the founder of Reebok, is one of our investors; George Overholser, one of the founders of Capital One; Steve Pagliuca, who owns [the Celtics]. For a serial entrepreneur like me, it’s nirvana. It’s like if I were a basketball player and I had Larry Bird, Magic Johnson, LeBron James, and Red Auerbach as my consultants.
As of last month, you’re the official charitable ticket partner of Major League Baseball. How big a deal is that?
Cracking baseball was really important. Other leagues follow baseball. Baseball’s the lead dog. Without the Major League Baseball deal, teams won’t give us big bunches of tickets.
Any advice for would-be social entrepreneurs?
A lot of young kids in business schools — especially around here — will say, “I want to be a social entrepreneur.” It’s a great way to get a date in a bar. It sounds so sexy and so cool. [But] for social entrepreneurs, the lesson is to make sure your product is as good and as value priced as your competitors’ because nobody will pay a premium for a social benefit. They just won’t. If you build your value proposition around the reality that people won’t pay a premium — but all things being equal, they will pick you — then you win.