Social Startup Success: How the Best Nonprofits Launch, Scale Up, and Make a Difference

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Published: 1/16/2018
Kathleen Kelly Janus, a lecturer at the Stanford University Program on Social Entrepreneurship and the founder of the successful social enterprise Spark, set out to investigate what makes a startup succeed or fail. She surveyed more than 200 high-performing social entrepreneurs and interviewed dozens of founders.

Book Summary - Social Startup Success: How the Best Nonprofits Launch, Scale Up, and Make a Difference By Kathleen Kelly Janus

Key Insights

As a social startup, you must always test your ideas. It will help you avoid costly mistakes.

Learn from your failure and share the lessons learned.

Track your program activities. Just like private organizations, data is important. It will help you make informed decisions.

Incorporate donations and earned income into your funding model.

Offer complimentary services when collaborating with other nonprofits.

Empower your staff. Design and implement a governance structure.

Believe in the power of story-telling. It will help you connect with the donors.

Kathleen Kelly Janus, a philanthropy expert and the founder of Spark, illustrates how social service organizations and nonprofits can thrive. According to Janus, creative leadership and innovation is the need of the hour. She bases her study on different funding models of innovators in the tech sector. Her expertise in helping small non-profits beyond the initial funding stage has helped many leaders bring about a change. Social Startup Success is an inspirational book for social entrepreneurs, or for anyone who is interested in social service.

Key Points

Use a human-centered design to maximize funding and control costs.

Nonprofits rely on the government, activists, beneficiaries, and other similar organizations for funds. Money is always scarce. Like private organizations, there are no angel investors to take care of costs. Therefore, it becomes all the more important for nonprofits to craft ways to maximize their funding.

This is where human-centered design comes in. It is a creative approach to problem-solving. It helps you understand the people you are designing for, generate ideas, build low-fidelity prototypes, and test. The entire process is extremely cost-effective.

The approach is very useful when developing prototypes. Janus highlights the example of Aspire Public School, a non-profit organization providing education to children from low-income groups. The school made a prototype of its Preschool Bus using the human-centered design. With just carpet, Ikea furniture, and some tape, they successfully tested their idea. They understood the granularity of their design and its feasibility without spending money on expensive models made of industrial material. Such an approach also ensures low capital and operational expense.

Therefore, wherever possible, go back to using a human-centered approach to design your products and services.

Learn from your failures. Share the lessons learned.

Innovation doesn’t come without taking risks. It means that you may fail. Non-profit leaders are so committed to their ideas that they find it hard to admit failure. They keep the lessons to themselves and avoid taking risks. The team often commits the same mistakes because the real information was never shared with them.

Many Silicon Valley firms are successful because they focus on failing fast and learning faster. Therefore, nonprofits must learn to embrace failure and develop a tolerance for risk.

The best way to do this is to test your services in the field. If you succeed, great. If you fail, the lesson would yield valuable information that could be used in the future. To experiment is to learn, and innovative organizations know this truth. This means you can test more ideas, get faster feedback, fail fast, move quickly, and learn better.

Therefore, as a non-profit leader, you must communicate and be transparent with your team. You must tell them the realities.

GiveWell takes it a step further by sharing its failures on its website so that other nonprofits can learn from its mistakes.

Gathering data is important to understand the impact of your work. You can only improve what you can measure.

Creating a Dashboard is one of the most efficient ways to visualize your data. All private organizations use them to achieve their goals. Just like any other organization, nonprofits can improve their social impact by streamlining data. Invest in creating a simple and inexpensive dashboard that helps you define your key performance indicators. This will enable you to track outcomes and share progress reports with funders. Janus explains how Room to Read has a literacy dashboard with eight key metrics. This enables them to easily compare data and plan suitable interventions.

Another example of a non-profit that uses data to improve its services is The Coalition for Queens(C4Q). C4Q helps underserved people gain access to tech education. With sound metrics in place, they conduct data analysis and make necessary changes to create a better impact. Data helps in understanding the “outcomes” of your program. It becomes all the more sacred as your nonprofit grows.

It is necessary to look at qualitative data. You could incorporate feedback from your beneficiaries. Braven, a non-profit organization that helps low-income candidates get better jobs, conducted a survey to understand the people they were catering to. This helped in creating better mentoring opportunities and services that were aligned to the needs of the beneficiaries.

Therefore, add meaning to your qualitative and quantitative data. You could try using Google sheets or Salesforce to create dashboards. Define your KPIs, track them, compare them, and make informed decisions.

An alternate earning model is a good source of income.

Every organization needs to be self-sustainable. Generate funding or create an income model that takes care of all the operational needs. If you want to scale up then you’d need funds. As nonprofit, philanthropic funding should ideally be your main source of income. However, it is necessary to develop an earned-income strategy. Selling your goods and services is a good idea. For example, The Sierra Club charges a membership fee that takes care of its funding needs. On the other hand, Hot Bread Kitchen-a non-profit that trains women to work in the food sector relies on philanthropic sources for funding.

You must test different strategies to create a unique earned-income model that works for you. It should naturally align with the larger purpose of your organization. The Accountability Counsel, for example, represents communities fighting for environmental and human rights. They do not cater to big corporate clients because that would create a conflict of interest and may hurt their mission.

Organizations working for environmental protection and human rights have many ethical reasons to consider before accessing earned-income models. Whereas, nonprofits in the education industry, youth, and global development have a wider scope to explore and test earned-income strategies.

It is possible to sell your services while being true to your mission.

You may also consider selling your expertise to the private sector. For example, Code2040’s strength lies in working with students from different minorities and diverse backgrounds. They pitched their idea to Silicon Valley and helped the tech sector hire from various under-represented groups. Today, companies such as Airbnb and Twitter have incorporated diversity into their brand through continuous collaboration with Code2040.

As a non-profit organization, you could consider selling products that allow the seller to earn a commission. Living Goods and One Acre Fund are two such examples. They microfinance the Kenyan farmers, and help the community sell essential food and medicine providing commission on every sale. This is a brilliant method to keep your mission alive and to maintain steady earnings.

Strategize your fundraising efforts.

Access to foundations that make grants is always a challenge, especially for smaller nonprofits. However, with careful strategy and planning, you could secure funding from entities that share your vision.

To optimize your fundraising efforts, you may also collaborate with other nonprofits. However, this may not be very easy. For example, the Center for Youth Wellness came into existence when several San Francisco based nonprofits, working towards the same goal, came together in order to centralize their services. In the beginning, the fundraising confused the donors because they did not understand where the money was going. As a result, they ceased their common fundraising activity. They continued to collaborate behind the scenes, optimize resources, combine expertise while maintaining their unique public identity.

While asking for money, focus your conversations around the work you do and your organization as a whole. You may also solicit donors to act as brand ambassadors and leverage their network to reach other possible donors. Room to Read and many other non-profits do that. Sometimes, under the “100% model”, a key donor covers all your operational costs.

Therefore, since fundraising is important for nonprofits, explore different strategies including collaboration and identifying brand ambassadors.

Foster collaboration within the organization. Invest in your people.

The top-down approach is ineffective in a non-profit organization. Empowering your staff with personal accountability makes them a part of the mission.

When they are personally accountable, they’d naturally seek feedback and learn from each other’s experiences. You can say that accountability drives collaboration. This is in fact necessary for transformational innovation.

By reversing the pyramid and creating a “horizontal accountability system”, Kiva (a non-profit) allowed its staff to share their challenges, tackle them together, and grow rapidly. There is no doubt that collaboration helps you do a better job. It helps you get information, feedback on ideas, needs, problems, and strategy.

It is also important to invest in getting the right people to the organization and developing them. You must value all your employees, especially the front-line workforce because they understand the on-ground impact of your mission. Provide ample opportunities for your staff to bond and learn together.

When forming the board, get people who have the skills and believe in the organization’s mission. Do not seek mere funders. With a reliable senior leadership, you’d be able to align duties and responsibilities, and collectively own the organization’s success.

Use the power of storytelling to your benefit.

During fundraisers or within programs, use stories to communicate your ideas. Stories humanize us. It helps the audience understand the deeper issue, triggers an emotional response and inspires people to take action.

Stories about shared personal challenges, or the journey of discovery are very impactful. You may scan the media for stories that relate to your organization’s mission and encourage employees to share stories to create “institutional memory”. However, avoid using your beneficiaries’ personal stories for ethical reasons.

The Main Take-away

Nonprofit organizations cannot function like private organizations. Everyone involved needs to understand the bigger purpose and how that makes a difference. Funding is extremely important, and with the right strategy, you can do really well. It is all about aligning your KPIs, tracking data, making informed decisions, and keeping it human-centered.

About the Author

Kathleen Kelly Janus is a social entrepreneur and a lecturer at Stanford University. She is the co-founder of Spark, a non-profit that supports gender equality. Janus is the Senior Advisor on social innovation to Governor Gavin Newsom.

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