From Unknown to Known: R+D in the Non-Profit Sector
If our current system only rewards proven outcomes, how do we try new things?
Last week, I spoke to a group of over 100 business leaders at the Nasdaq Entrepreneurial Center in San Francisco. It was an audience that knows intimately the importance of taking risks when it comes to getting an invention or concept from idea phase to reality. I couldn’t resist sharing my big dream with them: bringing R+D to the nonprofit world.
In this country, 7 out of 10 people born into poverty will remain in poverty their entire lives. That’s true even here in the Bay Area, one of the wealthiest regions on the planet. In part, this problem persists because despite being in the hotbed of “big ideas,” non-profits are often excluded from the opportunity to dream.
We expect non-profits to tackle and solve massive social problems, but we do not offer them the capital, autonomy or talent to make that happen. Non-profits are rewarded and funded based on their ability to deliver proven solutions. Just think about the language we use to describe our operating model. In the for-profit world, we say “infrastructure” — it sounds essential, as it should. In the non-profit sector, it’s often referred to as “overhead” or administrative expenses. Anything over 20% in this category is highly scrutinized.
It’s normal for for-profit entities to devote a sizable portion of their resources to R+D. Last year across all industries, companies spent $145 billion on research and development. In the non-profit space, we spend virtually zero.
When it comes to investing in social services, it makes sense to fund what works — what’s known. That’s a big part of how Tipping Point approaches its philanthropic investments. But we also know that this alone is not enough. There are so many people we have yet to reach. So many things we still don’t know.
With my eye on bringing R+D to the nonprofit sector, I pitched Tipping Point on my idea for T Lab five years ago. T Lab is a six-month program where we hire a group of diverse professionals to work on the issues of childcare, early childhood education and incarceration.
We know that here in the Bay Area, there are 80,000 low-income children waiting for the chance to go to preschool. During T Lab’s first year, our early childhood education team came up with the idea of converting a bus into a preschool classroom. They partnered with longtime Tipping Point grantee, Aspire Public Schools, to bring the bus to life.
While the concept of a mobile preschool is not revolutionary, the R+D approach allows us to spend time immersed in research, prototype a concept to learn more tangibly about its risks and benefits, and incrementally refine until we arrive at something that suits the needs of a specific community.
This is uncharted territory for us. It’s forcing us to write a new set of rules.
We know that it will never be enough to throw some risk capital into the mix and hope for game-changing solutions to emerge. Whether it’s reimagining what happens to a young adult after they are released from jail or how a single working mother secures childcare, we will need to grant ourselves the permission to try and fail.
This work is resource intensive with no guarantee of outcomes. It can take months to years to yield tangible results. We had to shift our mindset from that of “investing in known outcomes” to “investing to learn.” In the pharmaceutical world, it takes about 12 years for a drug to travel from the lab to the market, and still only 10% ever do. It takes a long time, but the results can save lives.
At the end of the day, it’s not about a bus or any of the other nascent products and services coming out of T Lab. It’s about being given the room to experiment with rigor and intention. It’s about finding new solutions to long-standing problems.
To see more, check out my full presentation:
