Why Tab for a Cause doesn’t give 100% of its money to nonprofits
People often ask: why doesn’t Tab for a Cause give 100% of its revenue to nonprofits? (Our financials are public, so we welcome everybody to dive in and ask these questions.)
It’s an excellent question. As a company with a social-good mission, it can be difficult to decide how to spend money. After all, every dollar we spend on costs is a dollar that’s not going to nonprofits — so it better be worthwhile!
The answer: investing in the future of Tab for a Cause better fulfills our mission and increases the total amount of money our community can raise for nonprofits. If we didn’t believe this, we wouldn’t spend the money.
This post shares our rationale for investing in growth, how our thinking has evolved, and how investing in growth has dramatically increased the scale of our community’s impact.
What is Tab for a Cause?
Tab for a Cause makes it extremely simple for anyone to do good every day. It replaces the default new tab page in the browser with one that has a beautiful background image, info on your social impact, and some ads. We use the revenue from those ads to raise money for amazing nonprofits like Conservation International, Partners In Health, Save the Children, Water.org, and many more.
Screenshot of Tab for TeamSeas. Each tab opened removes plastic from the ocean.
The Beginning: 100% to nonprofits
For the first few years that we ran Tab for a Cause, we gave 100% of revenue to nonprofits, and my co-founder and I covered operational costs out of pocket (and had other jobs to pay our bills). We believed, almost as a moral imperative, that minimizing overhead costs was core to our mission. However, as the community continued to grow, we realized a few things:
- The costs to maintain the project, both the monetary cost and the demands on our time, were growing quickly
- Given #1, if we didn’t have the resources to keep the lights on, Tab for a Cause would inevitably fade away
- People loved finding out about Tab for a Cause, enough so that we suspected we could give more money to nonprofits by spending money to spread the word
- Judging social-impact organizations solely on whether they minimize their costs can be debilitating to their long-term efficacy (Dan Pallotta outlines some of those issues in this talk)
We began to wonder if we were undermining our mission by not investing in the maintenance and growth of the community. What good was 100% of $0, if we couldn’t keep the project running? What long-term impact were we sacrificing by not investing in the future?
Weighing the options
We saw two potential paths:
- Continue giving 100% of revenue to nonprofits. We’d keep the scope of the project to a level we could manage with our spare time and money, and we wouldn’t spend money to grow the community.
- Reinvest some portion of revenue into growth. We’d have a full-time team to support and improve the product, and we’d see whether we could sustainably grow the community through marketing.
The pros and cons we considered are:
Pros of investing in growth
- We can reach more people if we invest in spreading the word about Tab for a Cause. As long as we’re careful that every dollar spent will lead to more than a dollar raised for nonprofits, we’d all raise more money for great causes.
- Tab for a Cause is dependent on ads, and advertising is more effective at scale. With a bigger audience, not only does the total volume increase, but so does the value of each ad.
- We would have the resources to improve the product and experience for our users (basically: provide fair wages to a skilled team).
Cons of investing in growth
- Investing in growth can be risky. Our assumptions might be wrong, and we could end up wasting resources that could have gone to nonprofits.
- The “purity” of the project will be ruined. We built Tab for a Cause out of love, and it felt weird to make it a job. Some people will disagree with our decision to have costs at all.
- Without clear guardrails, this could be a slippery slope where the social mission becomes secondary to growth.
This was a pivotal and difficult decision for Tab for a Cause. Whatever decisions we made, we wanted to do it thoughtfully and with our mission in mind.
Choosing growth and protecting our values
Considering the paths in front of us, it became clear that Tab for a Cause would reach more people and raise more money for nonprofits if it was a sustainable business that could grow alongside its audience over the long term. We otherwise felt we’d be ignoring a huge opportunity to do good.
At the same time, to protect our values, we took a number of steps to minimize the potential downsides of investing in growth
First, we decided it was imperative to pledge a percentage of gross revenue to nonprofits, whereas many social-impact companies pledge a percentage of profit. While the distinction probably requires its own post, the short version is that profit is “the money left over after everything else is paid” — so pledging 100% of profit might not mean much if your costs are ballooning. Gross revenue, on the other hand, is the total money that the company receives before any costs. We believe benchmarking on gross revenue is the more responsible choice, it’s easier to understand, and it doesn’t leave wiggle room to hide behind increasing costs. We set that a minimum of 30% of the money Tab for a Cause receives will go to nonprofits.
Second, we wanted to be wildly transparent about how we were spending our money and started publishing our financials.
Third, we would always pay our employees a fair, living wage. The vast majority of our non-charity expenses are paying the salaries and benefits of the team behind Tab for a Cause.
Finally, we set up frameworks for spending money on marketing to ensure that whenever we spent $1 we were reasonably confident it would result in more than $1 being raised for nonprofits.
Ultimately, we want Tabbers to know that every dollar they raise makes the world a better place. At least 30% of every dollar will always go to nonprofits, and our costs will go toward things like hiring an exceptional team to keep improving Tab for a Cause, sponsoring great content creators (examples: here, here, and here ) to spread the word, and paying professional lawyers and accountants to ensure Tab for a Cause is built for the long term.
Has growth paid off? (Yes)
Deciding to invest in growth has been an unmitigated success. With a full-time team and marketing behind it, Tab for a Cause quickly grew into a sustainable and growing business that has already helped Tabbers raise over $1.4M for nonprofits. We’re confident that the alternative path — keeping costs to 0% — would have our community raising only a fraction of that sum.
Now, our investment in the future continues. We remain vigilant about how our costs support our mission and long-term good. We can see that continued growth should unlock efficiencies that will allow us to give an even greater percentage to nonprofits. In a few years, we’re optimistic that we’ll look back at today and feel similarly proud of how our community’s impact has grown.
We’re constantly astounded by the amount of impact a few (well, quite a few :) tabs can have on the world, and Tabbers are just getting started!
What future do you see for Tab for a Cause? Did you find this breakdown of our decision-making process helpful? What other things would you like to hear more about from the Tab for a Cause team? Comment below or reach us at firstname.lastname@example.org