1/ After 10+ years in the nonprofit sector, I’m convinced that relying on donations is an ineffective way to scale impact. Here’s why the donation trap is a broken model:
Yes, I’m arguing impact per dollar goes down as nonprofits scale bc they spend more $ / time per dollar on fundraising. The problems that arise from having one group pay while another benefits seem to compound as nonprofits scale.
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On what basis are you making the argument? Does the data show that larger nonprofits spend > budget % on fundraising? I don’t often hear that. That said, nonprofit work often doesn’t scale like software. Nothing scales better than SaaS. And how much of it’s $8B budget does ...
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No, the data doesn't show larger nonprofits spend more on fundraising. It says the opposite! I'm arguing that self-reported data is not accurate (see accounting gymnastics tweet). Also not sure why we're comparing nonprofits to software/saas, we're a nonprofit and we sell saas.
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And yes having one group pay while another benefits compounds the problem. Nonprofits are more analogous to media companies like Facebook in that way. There are two product market fits. One user doesn’t pay. Need to find something to offer to the one that does.
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Interesting analogy. But I think there's more correlation between advertisers / users on FB than donors / beneficiaries w/ nonprofits. If users stop clicking ads, advertisers stop paying. If the Red Cross builds 6 houses, they still get $500Bhttps://www.washingtonpost.com/news/morning-mix/wp/2015/06/04/the-red-cross-had-500-million-in-haitian-relief-money-and-it-built-just-6-houses/?noredirect=on&utm_term=.185c2dd5257e …
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Salesforce spend on sales and marketing? HALF! $4B! Not many nonprofits have a $4B fundraising budget. Or would be allowed to spend half their budget on fundraising
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This is the crux of my point... companies can invest in sales / marketing to grow markets (i.e. GDP), but nonprofits are fighting over a fixed market that's 2% of GDP. Salesforce can get ppl to buy more stuff, but nonprofits can't seem to get more ppl to donate. It's zero sum :(
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Also even though I just did, I think comparing to for profits is dangerous. Nonprofits are often best served with a strategy unique to these perceived weaknesses. I just tried to argue that herehttps://hbr.org/2018/08/what-the-best-nonprofits-know-about-strategy …
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