How Donors Can Help Nonprofit Tech Organizations Succeed (and Why You Should Care)
Jason Friesen | Founder & Executive Director, Trek Medics
In many countries, nonprofit organizations have been relied upon to provide goods and services to vulnerable populations who have been neglected by the government and/or a free market. From a business standpoint, the main difference between nonprofit organizations and for-profit organizations is found in their focus — is the emphasis primarily on the mission or the margin? For certain populations in certain market sectors, an emphasis on mission over margin serves everyone for the better; building a profitable business off the less fortunate can quickly run afoul, while nonprofit organizations can offer a mission-based business model that does not disincentivize less profitable endeavors.
Yet, while nonprofit businesses are nothing new, nonprofit tech companies are, and the past decade has seen a dramatic increase in the number of tech companies who are prioritizing mission over margin and choosing to form as nonprofits. Though there aren’t many nonprofit tech companies who have reached a global scale yet, I think it’s clear there should be. The few that have made it — like Wikipedia, Firefox, Change.org and Khan Academy — have undoubtedly changed this world for the better.
As the founder of a nonprofit tech startup, Trek Medics, I’ve seen clear evidence of how crucial nonprofits are to reducing disparities and improving the quality of life for vulnerable populations. And in an age where technology is taking over every single aspect of society, the need for quality technological solutions that aren’t priced like iPhones will be key to ensuring protection of the vulnerable. Over the past several years I’ve also learned a lot about the nonprofit tech space — how the traditional dynamics and relationships with donors, users, and beneficiaries are shifting. Included here are a few personal experiences and observations I’ve collected that will hopefully help donors who are supporting nonprofit tech companies improve their grant’s chances for success.
Be willing to commit for longer periods
A common trope in the nonprofit world is that a successful nonprofit will put itself out of business. The logic is that once the organization has solved the problem, there won’t be any more need for them, so they’ll close up shop. That’s generally not possible with tech organizations, and would in fact likely make things a lot worse if that’s how they behaved. In the case of Trek Medics, we’re building mobile phone technologies to coordinate emergency 9–1–1 response systems in countries that don’t have them. This is complicated, but fully possible[1]. If we were to successfully launch several programs using our software, then consider the job done and walk away, in less than 12–24 months our software would likely be useless. Just a couple major updates to third-party operating systems, platforms or plugins, and the whole thing falls apart. Once we solve someone’s problems through a new technology, we need to continue maintaining that technology or else we may leave things worse than before we started. When it comes to funding nonprofit tech companies, having support built in to grants to be able to manage long-term operations will go a long way in helping your grantees to succeed.
Don’t have venture capital expectations for a non-profit tech company
Few tech companies have ever gotten their technology right the first time. Constant testing and refinement is essential to the development process. In privately-funded ventures, as long as the potential for profits exists, funding to improve the software will likely continue. The same principle should apply to donors who are investing in a nonprofit’s mission: as long as the potential for impact exists, support to improve the software should continue. Clearly defining what “potential for impact” means will of course be a crucial part of any evaluation, but, assuming all else seems to be in order, giving an organization one shot at getting the software right, is a high bar to set. The same can be said for setting expectations on impact: When a private tech company raises money through venture capital, the expectation is that there will be exponential growth and that the company will keep pivoting until they find the best way to achieve that exponential growth. It doesn’t really matter to the investors how the technology is used to achieve growth — if there’s a better way to use the technology to make money from a different target market, they’ll do it. Nonprofit tech companies don’t have the same liberties: their mission-based focus means the problem(s) they’re addressing and the market they’re in have largely been chosen and probably shouldn’t be changed without significant discussion.
Invest in people, not projects
In most nonprofits, the staff are overworked, likely working well beyond their official job description, and the CEO is wearing many, many hats. If you’re supporting a tech nonprofit, there’s probably a lot of other work beyond software development that needs to be done in the organization to make your support a success. If the workload balance shifts because of a grant you’ve given, providing extra support to help balance it out is important. In our own case, we’ve been fortunate to receive large grants to build new software components, but we’ve never had enough money included in any of the budgets to hire someone to actually manage the software — to design, develop, test, improve, and sign off on every change that goes into the software. As a result, every time we get new funding for software, what would be a product manager’s responsibilities falls to existing staff (most likely the CEO). All other job duties except the most critical are put on the backburner to make sure the software gets as close to perfect as possible because funding for code re-writes is usually not available. Above all, fundraising — any nonprofit CEO’s most important job — goes on the backburner. I think I may be speaking for a lot of other tech nonprofits when I say it’s rare to meet a donor who’s willing to underwrite the salary of a grant writer or other business development team member. But if the CEO is spending all their time raising funds, who’s the product manager? Or if the CEO is acting as the product manager, who’s raising much-needed funds? Ironically, the only thing we’ve been able to raise money for while in the thick of software development is more software.
When determining the size and shape of a grant, donors may be more effective by following a few general guidelines: Allow for unrestricted grants whenever possible. When unrestricted giving isn’t possible, focus on funding people, not projects. Give more money to fewer organizations in order to make sure those organizations can get the job done, instead of giving less money to more organizations and hoping the best ones rise to the top. In the less-money-for-more-organizations giving strategy employed by some donors, the least expensive technologies will rise to the top, but technologies that may be more effective, albeit more complicated, might be labeled as “underachieving” simply because they require more development.
Get your hands dirtier helping your grantees
Learning is expensive, and successful corporations and foundation board members have done a lot of it, making them experts in a lot of other skills that nonprofits could benefit from greatly. As Jeff Schlegelmilch, the deputy director at the National Center for Disaster Preparedness relates, “Private sector organizations have a lot to offer the non-for-profit community beyond their checkbooks. They have expertise in strategic planning, business development, project management, staff, and organizational development and external relations that can all contribute significantly to the knowledge-base, and ultimately the mission and impact, of not-for-profit organizations.” Here are a few examples of how that can happen:
- Introduce them to your marketing team — Very few people who start nonprofits or tech companies have a background in marketing — and even fewer donors are willing to fund it, making expert marketing help really hard to come by. Whether helping to develop a marketing plan, giving ongoing feedback on existing marketing efforts, or helping the nonprofit to elicit better feedback from their donors, users, or beneficiaries, there’s so much they could learn from. Making a pledge of just 2 hours per week over 3–6 months from one member of your marketing team to work with the grantee could make a huge difference in the success of your support.
- Introduce them to your strategic planning team — Pro-actively creating time for your grantees to chat with strategic planning teams or other subject matter experts from within your organization could do a lot to help improve the quality and effectiveness of the work you’re supporting, and, above all, potentially save them from a lot of time going down dead ends. Dead ends eat up your grant, eat up the staff’s time, and often look completely obvious in hindsight.
- Introduce them to other potential donors — This should be a major component of the support that every foundation can offer. Unless the organization was founded by software engineers, large cash grants are the lifeblood of nonprofit tech organizations as they provide the funding needed to hire the staff needed to build the technology. Few donors understand this like tech corporations do, so making introductions to other tech donors is key. We’ve used grants from large tech corporations to build and improve the major components of our platform, while relying on private foundations giving medium-sized grants for debugging, maintenance, small improvements, and operations. Introducing your grantees to other potential donors will undoubtedly help ensure that they can continue maintaining and improving their technology solutions.
Conclusion
Nonprofits are essential to ensuring that societies focus on more than just making money. They provide essential, life-saving services to vulnerable populations, they protect human rights and the rule of law, they advocate for the neglected and oppressed, and they fill critical gaps that for-profit businesses and governments don’t. In a world increasingly dependent on technology, more and more nonprofit tech companies are starting up every year to carry this legacy of mission over margin into a technological age. And little by little, the philanthropic community, seeking new solutions for old problems, has begun to embrace these new organizations. By understanding how to best support them as they work together for common goals, donors and grantees will have a much greater chance of realizing the world-changing potential of technology that Silicon Valley’s been promising all along
[1] In fact, emergency response via mobile phones is already happening of its own accord through existing technologies — albeit informally, ineffectively and quite chaotically.
Jason Friesen is a paramedic by training and the founder and executive director of Trek Medics International, a nonprofit organization that improves emergency medical systems in resource-limited settings through innovative mobile phone technologies.
