Learning from Startups: Efficient Fundraising for Nonprofits

Fundraise Like a Startup

Nonprofits and startups have a lot in common. They often begin as a labor of love for a small group of devoted individuals and they both have to convince investors (donors) that their money will be well spent.

Some startups, however, are able to build tremendous value before they ever turn a profit. Back in February, many people had never heard of the instant messaging startup, WhatsApp, but they probably heard about the $19 billion dollars Facebook paid to acquire it. But in 2009, the founders got their start by asking a group of friends to invest $250,000.

While Google and Facebook probably aren’t going to write your nonprofit a billion dollar check, the strategies used by startups to build a strong, sustainable company can help nonprofits be more agile and adaptive in their fundraising. So here are some approaches from startups that nonprofit fundraisers can learn from.

Starting Up

Another quality that startups and nonprofits share is that they both begin with an idea, usually to fill some kind of void the founders noticed. And while many successful startups spring from one simple idea, they often end up with a very different product than they pictured at the start.

As brilliant as your idea is on paper, if people don’t want to buy it, the business will fail. Eric Ries, a celebrated blogger and author of The Lean Startup, advises entrepreneurs to build a minimal form of their product as soon as possible so that they can start testing its performance and appeal. And right about now you’re probably wondering what testing a product has to do with nonprofit fundraising. Don’t worry, we’re getting to that.

You may not have a product, but you do have fundraising campaigns, both of which can benefit from the Lean idea of “build-measure-learn.” Rather than spending tons of time and money trying to build a final product for launch, Ries advises entrepreneurs to get a simple form of their idea out to the public, so that they can begin gathering information and adapting to what users actually want. Translating this to the nonprofit sector, it might be better to start a new campaign or method of fundraising sooner rather than later. At worst, it doesn’t work out and you try something else.

Let’s say your organization wants to begin peer-to-peer fundraising. You could spend months planning the launch of your P2P campaign and drawing up all sorts of strategy. But what if the campaign starts and your fundraisers are immediately confused or apathetic to your appeals? You thought you were getting prepared, but without getting any feedback along the way, you may not know how to guide your supporters in their fundraising.

If you borrow from the philosophy of The Lean Startup, though, you can spend the early stages of your campaign learning and adapting to what works. Instead you start by asking a small group of devoted advocates to make pages. Then, by maintaining open communication with this group of fundraisers, you can identify the problems they face and find solutions early on.

And, later, when you ask your wider community to create pages, you will already know some of the questions they will have. This foresight can help you identify what information and resources they will need to succeed and raise money for your cause. By starting small and building up, you can quickly make adjustments to your campaign as you go, rather than planning based on assumptions and guesses.

Network like an Entrepreneur

If you recall the story of WhatsApp’s beginnings, their initial funding came from friends willing to invest. And if you have ever worked at a startup, you know the importance of networking and creating a presence in your industry. Nonprofit fundraising, and peer-to-peer fundraising especially, rely on similar skills.

You are constantly utilizing your contacts to find resources and supporters. While a startup founder might ask a wealthy family friend to invest, a nonprofit board member might meet with a former colleague to gauge their interest in making a donation. Peer-to-peer fundraising takes this strategy and disseminates it to your whole community.

Think of peer-to-peer fundraising as throwing a party. You start by inviting ten good friends that you know will come (devoted, reliable donors). But you tell them to bring their friends. Let’s say, on average, your 10 invited friends each bring two more people to your party. Now your party has thirty guests. There are 20 people who didn’t know you, but they are having a good time at your party. You then tell them they can invite some people over.

If ten of those 20 people each invite another two friends, you could have 50 guests at your party. All you had to do was send out 10 invitations, but by asking your friends to invite their network, you ended up with five times the amount of party-goers. Now replace the word “party” with “fundraiser” and the word “guest” with “donor.”

Culture Matters

When you think of a startup, it often brings up thoughts of laid-back offices where the CEO plays ping pong with the intern. Many startups are very conscious of their company culture and for good reason. A recent open letter (please note: the post has strong language) from Brian Chesky, the CEO of Airbnb, explains how having a strong and consistent company culture can save the bureaucracy of extensive corporate procedures.

When the culture is strong, you can trust everyone to do the right thing.

– Brian Chesky, CEO of AirBnB

While organization culture is often thought of as an internal issue, making sure your staff and supporters understand your nonprofit’s values can help them reach out to the right people and make good decisions, whether it’s in regards to fundraising, online presence, or any other area. Take the time to identify the basic values and goals that drive your organization and share them with everyone.

Be a Professional Innovator

Both startups and nonprofits are driven by a passion to change the world, to solve problems, but neither can succeed without a lot of hard work. By borrowing some best practices from startups, nonprofits can learn to adapt their fundraising campaigns for constant improvement. While startups work to make their product reach huge markets, charitable organizations can use peer-to-peer fundraising to reach huge numbers of potential donors. Use these parallels to turn your nonprofit into a savvy startup for the common good.

Want to Raise More Money Online?

Image Credit: SumAll

Where social entrepreneurs go to learn and grow

Join over 20,000 leaders just like you who get their weekly dose of technology, innovation, fundraising ideas, and the latest industry trends.