7 Lessons for Nonprofit Organizations From the Startup World
Organizations tackling social problems have taught entrepreneurs the importance of mission. Entrepreneurs know how to get stuff done.
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Philanthropy is a surprisingly complex world. There is just as much competition, red tape and politics as in finance or the startup world.
Other complexities exist between the old guard of philanthropy and the new, disruptive groups of young people in social good. Both groups are fighting to achieve their goals and get their share of voice and funds. There are many theories and approaches to philanthropy and how these organizations can and should be run, which can be both empowering and frustrating for those trying to impact social change.
It is important for entrepreneurs and start-ups to learn from philanthropists and continue with philanthropic efforts but it's also important for these social good organizations to understand how to operate like a startup for their own benefit and progress. So what can these worlds learn from one another?
1. Understand your dharma. Like with any brand, you need to truly understand what you are building. Your truth. Hence, I named my company "Marketing. Strategy. Dharma." The long-term mission. Not just the problem in front of you.
Toilet Hackers is trying to do more than just build toilets. They are trying to revolutionize the global approach to sanitation with innovation. They have short-term goals and long terms goals. The clearer these are, the more people will understand how they fit in to your mission.
Everything they do, say or create reflects this dharma. Identifying your dharma is critical part of starting any organization, whether you will turn a profit or not. Ty Montague calls this "Metastory' in his book True Story. You can tell straight away when a brand/non-profit is doing this well or not.
2. Room to pivot. Startups pivot because they have learned something about their customers' behavior or they have discovered a better way to solve an adjacent problem. They retreat, regroup and re-enter the world with a properly branded pivot.
Impact brands have the exact same liberties to do this, if the new direction is actually a better way to solve a problem for those they are helping. Don't blindly stay with your mission. You are an organization that can learn, evolve and grow, just like any other. It's more important to stay loyal to your Dharma than to your shorter-term goals. Your fans will likely respect you more for admitting what you discovered and bringing them along for the ride.
Related: Philanthropy With a Business Model
3. Know your weaknesses. You are never going to do everything well. No one organization can.
Impact organizations have to know when to call in other resources. Rather than re-inventing the wheel in areas you lack expertise, bring in other organizations to fill the holes in your organization. See how you can barter services. Start-ups do this all the time, especially when they are still developing their products.
Barter will keep overhead down for your impact organization, especially when it comes to tech skills, finance, legal or infrastructure work on the ground in a particular region.
4. Smarter advisory board. Smart start-ups don't go after advisory/board members who are only in their vertical. Diversity on your board is critical. You need input and advice from multiple verticals and schools of thought to really innovate. A health startup should have on its advisory board someone in entertainment, impact, health, fitness and let's say, consumer goods .
Impact organizations need to think about this the same way. Your board shouldn't just be filled with deep pockets. You need dynamic and inventive thinkers. Don't chase the money, chase the revolutionary thinkers. They will be worth far more in the long term.
5. Consider turning a profit. That so many start-ups have been acquired or given very high valuations before turning a profit speaks volumes about perceived future value of a company. Anyone starting a for-purpose company these days should seriously consider what their sustainability model is.
Being a B-Corp is just as important, viable and powerful as being a full-on nonprofit. In fact, if you can make a marginal profit, help lots of people and sustain your company, you are likely to garner more fans, advisors, investment and the right board members to catapult your vision.
There are very inventive ways these days to turn a profit while making a real difference. Your lowered dependence on your donors will force innovation, talent and energy to your organization.
6. Marketing. Marketing is not a luxury. It is a necessity. The more people who know about your startup, the more people will try it out, the easier and cheaper it is for you to acquire users. The same goes for impact causes. The more people hear about your cause, what you are doing and how they can be a part of the movement, the more likely your cause is to move to the next level.
Marketing includes not just the flashy videos and website you develop to spread the word, but working with organizations like PVBLIC to broadcast your message. There are a lot of smart, efficient ways to spread your message. Spend the money on the production, go cheap on the distribution – just as a startup would.
Also, pay close attention to strategic partnerships for exchanging content and sharing audiences. Tthat could be an effective distribution model.
7. Staff. Hire the best. Not the cheapest. Whether your goal is to make money or to build schools, you are running a company that needs to produce.
Dan Pallotta, in his brilliant TED talk, says that if we want to recruit the top-level talent to the impact space, we need to be paying top-level wages. There is nothing wrong with making a good living while doing good for the world. In fact, you should feel better about yourself making a healthy earning while trying to improve the world, than moving stocks around.
Start-ups raise money so they can hire the best. Impact firms should operate no differently. Overhead is not a dirty word. It's a hard fact about operating any organization. Impact firms should not be judged based on their overhead costs. They should be judged on their output, just like any other organization.