{"id":954,"date":"2017-07-10T08:27:58","date_gmt":"2017-07-10T08:27:58","guid":{"rendered":"\/blog\/?p=954"},"modified":"2019-07-03T12:49:15","modified_gmt":"2019-07-03T12:49:15","slug":"time-to-giveback","status":"publish","type":"post","link":"https:\/\/www.lemonade.com\/blog\/time-to-giveback\/","title":{"rendered":"Time to Giveback!"},"content":{"rendered":"

Once a year, mid-year, Lemonade gives back underwriting profits to nonprofits. Today is Giveback Day, and we wanted to share some of the stats, implications and feelings.<\/span><\/p>\n

What’s a Giveback?<\/strong><\/h3>\n

A quick reminder: when you sign on for Lemonade, we ask you to choose your \u2018Giveback<\/a>\u2019 cause. People choosing the same cause form a \u2018virtual group;’ behind the scenes, we use their premiums to pay their claims, and we Giveback any leftover money to their common cause.<\/span><\/p>\n

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So how much is the 2017 Giveback?<\/strong><\/h3>\n

In dollar terms, the 2017 Giveback is $53,174, amounting to 10.2% of the revenues Lemonade recognized from its September launch until June 30th. Accounting rules mean that Lemonade\u2019s <\/span>rapid growth<\/span><\/a> will only be recognized in next year\u2019s revenues, holding the promise of an exponentially larger Giveback in years to come.<\/span><\/p>\n

So while dollar amounts are important for evaluating the impact of the 2017 Giveback, percentages provide a \u2018leading indicator\u2019 for how impactful Giveback can be as the business scales. In this report we\u2019ll cover both.<\/p>\n

Giveback percentages<\/strong><\/h3>\n

We had 21 cause-centric-groups as of June 30, and 14 (66.6%) received a Giveback. Among those 14, the average Giveback is 18% of its members\u2019 earned premiums.<\/span><\/p>\n

All told, Giveback this year amounts to slightly over 10% of our revenue. As a point of reference, the Fortune 100 give 0.08% of their revenues each year (<\/span>CECP<\/span><\/a> p.36). So if year-one is anything to go by, Giveback has the potential to 100X that benchmark. Time will tell, but it’s an encouraging start. \u00a0<\/span><\/p>\n

\"Revenue

Source: CECP<\/p><\/div>\n

Beyond the change in scale, Giveback is a change in kind, because it isn\u2019t dependent on profits<\/a> (Lemonade hasn\u2019t turned a profit yet). We think of Giveback as a social contract among our community, where the size and allocation is determined not by our big profits or big hearts, but by the good fortune and good behavior of our members.<\/span><\/p>\n

As you\u2019d expect, the fortunes of our members varied, dependent on claims<\/a>. Some groups had no claims at all, and 40 cents of every dollar these members paid went to their cause. These include MEET (bringing Palestinian and Israeli youth together through technology) and New Story (transforming slums into homes). The New York Society for Prevention of Cruelty to Children (The NYSPCC) came close, with a 36% Giveback (meaning their supporters had only a 4% \u2018loss ratio\u2019).<\/span><\/p>\n

Other causes had a bunch of claims, leaving nothing for Giveback this year. Unfortunately, the Friends of Firefighters, for example, won\u2019t be getting a Giveback this year, ironically because of a huge fire-related claim. Hopefully, next year they will. The model always predicted that not every group will get a Giveback every year, though we hope most groups will have more good years than bad. Again, time will tell.<\/p>\n

The impact of $53,174<\/strong><\/h3>\n

While we expect the Giveback to grow as we grow, in the right hands, $53,174 can already be impactful. Well, 2017\u2019s Giveback is in the right hands! A complete list of the 14 Giveback causes is detailed at the end of this post, but here\u2019s a sample of those dollars at work:<\/span><\/p>\n