Looking to Startups for the Future of Nonprofits

Entrepreneurial nonprofits--those that train people for jobs or sell things as part of their model--are becoming increasingly popular.

San Diego nonprofit Kitchens for Good trains people to be chefs and helps them get jobs afterwards. Photo: Shutterstock

Nonprofits have been struggling for years to maintain the donations and grants that they need to pursue their missions. While some are pretty well set up, others have to scramble, especially those just starting out or addressing a problem that isn’t yet widely known or understood. While donations form the majority of most nonprofits’ income, there are those that are taking on a more entrepreneurial mindset.

There have, of course, been very successful entrepreneurial nonprofit efforts in the past—Girl Scout Cookies and Goodwill stores come most readily to mind—but the world of startups is changing rapidly every day, and it’s a good idea for the nonprofit field to take notice. Well-established nonprofits and charities might not benefit as much as, or even be able to implement ideas taken from, business incubators and the like, but for newer and smaller, more flexible organizations, it’s worth a look.

The core of this idea is that fact that businesses move products or services, through which they generate revenue to cover costs and, ideally, generate a profit. The difference is this: in an entrepreneurial nonprofit, revenue beyond covering costs goes toward achieving the organization’s mission.

“The social enterprise model, with the fact that it has sustainability and revenue built into it, is a much stronger model and it’s a much stronger story to tell people who are giving their money,” Chuck Samuelson, founder of Kitchens for Good, one such entrepreneurial nonprofit, told Voices of San Diego.

By providing goods or services, successful organizations can ensure a steady stream of revenue, one that can rely on a wider variety of “donors” who might be willing to continue purchasing those products even when money becomes tight and they wouldn’t otherwise be able to donate.

Depending on the product provided, such organizations can also provide jobs to people who need them. For groups focused on tackling poverty, this is an excellent added benefit. Feeding the homeless is one thing, but giving hungry people jobs to help them get back on their feet is another thing altogether. A well-structured, entrepreneurial nonprofit can routinely do good at every stage of its operations.

Kiva and the Microloan Phenomenon

Microloan programs like Kiva have proved themselves to be helpful and sustainable.

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Think you have to have big bucks to donate to charity? Think again!

Microloan nonprofits like Kiva.org offer the average Joe an opportunity to donate where it counts. Boasting a 4-star overall rating from Charity Navigator, Kiva provides microloans for people in need who want to serve their community or start their own small business. So far, 2.3 million borrowers in 82 countries have been loaned a total of $930.7 million.

Kiva was founded in 2005 in San Francisco with the goal to alleviate poverty in a new way. It was one of the first truly successful microloan ventures of its kind. Kiva employs staff in the US, Nairobi, and around the world.

“We envision a world where all people hold the power to create opportunity for themselves and others,” Kiva says on their website. Their microloan method benefits both the borrower and the lender: the borrower gets a professionally-managed loan they can pay back over time instead of just a one-time handout, while the lender can donate in increments of $25, making charity involvement more possible for more people.

Since microloans are, first and foremost, loans, those who donate often want to know if and when they’ll be repaid. Interestingly, Kiva has a very high repayment rate—generally about 97 percent. So not only are people able to use the funds to create sustainable businesses and better their communities; they’re eventually able to pay back donors as well. And that gives donors the opportunity to donate another microloan to another would-be entrepreneur. Farmers, artisans, students, shopkeepers, builders, restaurant owners, and others all benefit from the funds Kiva donors provide.

Potential borrowers are vetted before being declared eligible for microloans. Kiva Field Partners in the borrowers’ home countries do background checks and get all the details about the borrowers’ plans for the money before officially setting up with the Kiva website to solicit donations.

Researchers have become intrigued by the microloan process as embodied by nonprofits like Kiva. Teams at the University of Michigan determined in a recently released report that Kiva’s structure, which allows lenders to join teams that all work toward funding a single individual, is extremely effective.

The study, which looked at 60,000 Kiva lenders using the Kiva website’s forums to communicate and form teams, found that team membership didn’t just correlate with increased donations—it actually caused them. Forum posts including a chosen borrower, a fundraising goal, and a link to the borrower’s page produced an average of 11 more loans a month. And new lenders who joined teams donated an average of $392 more than those who didn’t.

The microloan strategy of nonprofits like Kiva not only allows more people to become involved with charities and donations; it also provides much more financial support to people across the world who desperately need it.

Indoor Farms and Food Deserts in Denver

Although Denver is doing well as a city, there are still "food deserts" in low-income neighborhoods.

Although Denver is doing well as a city, there are still “food deserts” in low-income neighborhoods. Photo: Shutterstock

“Food deserts” are urban regions where there are large populations but little or no access to fresh food. The Elyria-Swansea and Globeville neighborhoods in Denver are perfect examples: 10,000 people with no full-service grocery store, in areas with some of the lowest incomes in the city.

Without access to fresh food, people living in food desserts are often forced to resort to fast food, convenience stores, and other low quality, overpriced options to feed themselves and their families. Even if they have a car and the time to drive elsewhere to get groceries, that is an additional expenditure of resources for some very basic necessities.

“How can we say that we have this amazing, healthy city, and boast our outdoors life, but we have these communities that doen’t have access to healthy food?” says Coby Gould, executive director and co-founder of The GrowHaus.

The GrowHaus is a nonprofit that created Mercado de al Lado, a market run by The GrowHaus, an indoor farm that focuses on producing and distributing food to people in the area, as well as educating them on nutrition.

“Healthy food access in and of itself is not going to deliver the results that we intend. There has to be an educational process to healthy food access initiatives,” says Paul Washington, executive director of the Denver Office of Economic Development. That organization partners with The GrowHaus.

The GrowHaus has been operating since 2009, with the intention of not only feeding people but helping them learn about good food choices, and hoping to replace staff with locals who can keep the process going.

The market serves over 100 families each week, while The GrowHaus sells about 100 boxes of organic, locally sourced produce, and gives away another 50 such boxes to families in need.

Organizations like The GrowHaus are approaching problems that often go unnoticed. Urban and suburban centers can mask a great deal of income disparity and health issues. Just because Denver is doing well overall, doesn’t mean that everyone in that city has the same resources, and that’s where organizations like The GrowHaus help.

Nonprofits Are Needed and Trusted More Than Ever

Nonprofits are needed and trusted more than ever.

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One thing that the divisive presidential election cycle of 2016 brought to the fore was a widespread distrust of the government, but a commensurate trust of nonprofit charities.

While there is probably a lot that can be said about the state of American society that the government is so widely distrusted, it is good to see that people trust and want to support nonprofits. In many ways, that might help take the sting out of what will likely be four or more years of the wholesale dismantling of social safety nets and systems that will benefit anyone other than the rich.

But putting all that stress on nonprofits isn’t going to make their missions any easier, especially as there have been numerous reports that nonprofits are working harder to help more people with the same, or shrinking, budgets.

In Connecticut, for example, nonprofits handle many of the services that the state would in other states, and generally provide better care for less money. Dealing with changes in budgets and what can get funded is going to be difficult for those organizations.

It’s obvious that nonprofits are, and must remain, an integral part of American society, and that they help pick up the slack left over by the government. That slack seems likely to get worse, but it’s a safe bet that there will be less money going to organizations trying to help, at least from grants. After all, with a vice president who rose to fame for his homophobia, it seems unlikely that federal grants for LGBTQ organizations are going to expand over the next four years.

What does this mean for the nonprofits themselves? Careful consideration of where funding comes from, as well as how to use it to pursue a mission. That sounds like business as usual, but it’s important to realize that changes are coming, and that organizations might need to be more flexible. And of course, it’s good to know that, while the government might not be relied upon for funding, individuals seem more than willing to help out.

Eric Trump Foundation Is Under Fire

The Eric Trump Foundation has come under fire,

The Trump family. Photo: lev radin / Shutterstock.com

It looks like the charity scandal apple doesn’t fall far from the tree in the Trump family, as Eric Trump is under fire for his own Eric Trump Foundation’s seeming inability to follow IRS rules for charities.

Chief among the problems is widespread conflict of interest, as the foundation regularly makes donations to pet projects and groups favored by board members. The group also has a tendency to spend money with companies owned by those board members. The Eric Trump Foundation been accused of using fundraisers to charge people for access to the Trump family, something which is especially concerning now that Donald Trump is president-elect, and Eric Trump has a history of inflating how much money the organization has raised. There are even rules that ensure Eric will be the chairman as long as he stays on the board, and that any children he might have are guaranteed spots on the board.

So what’s the big deal? For one, nonprofit boards are supposed to represent the public and its stake in the group, but the Eric Trump Foundation is run by millionaire friends of the family. Furthermore, while this organization, unlike his father’s, actually does donate money to good causes—primarily St. Jude’s Children’s Research Hospital—it seems pretty obvious that this is a positive side effect of an organization primarily geared toward helping the Trumps improve their own position.

But nonprofits are supposed to exist to help alleviate social problems and improve the lives of others, not of the people who founded them. It’s one thing to draw a reasonable salary from a nonprofit for which one works, but using a charitable foundation to get rich people to pay handsomely in order to meet you and do business? That is clearly not within IRS guidelines.

Forbes Releases List of Top Charitable Organizations

Forbes recently released its list of the top 100 charities of 2016.

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In mid-December of 2016, Forbes released its list of the 100 charitable organizations with the most donations for 2016. The list is based on cash and in-kind donations received, and doesn’t account for things like fees for services or sales of merchandise, so it does give us some idea of how much people are donating in a given year, which is useful information.

The organizations on the list all brought in at least $140 million in donations, and altogether account for about $45 billion in 2016. Donations overall were up in 2016, even though some of the highest-ranking organizations actually saw some decrease in donations. In total, the roughly 1 million nonprofits in the country brought in about $350 billion over the course of the year. That works out to about $1,075 per American.

The top five organizations in Forbes’ list are:

  • United Way Worldwide, which takes most of its contributions through employee-directed workplace paycheck deductions. The United Way consists of more than 1,000 local units, each of which determines its own charitable spending priorities based on needs in their geographic area. It brought in $3.71 billion in donations last year.
  • Task Force For Global Health, which sends donated medicines abroad to countries in need, received $3.15 billion in gifts in 2016. Much of the organization’s donations came in the form of “gifts-in-kind” of medicine from drug companies.
  • Feeding America, a Chicago-based umbrella for hundreds of food banks around the country, received $2.15 billion in gifts last year. Most of those gifts are in the form of donated food.
  • Salvation Army, which is both a social service agency and a church with its own doctrine, reported donations of $1.90 billion in 2016.
  • YMCA of the USA, with its network of youth facilities and health clubs, received $1.20 billion in donations in 2016, up 29 percent from the $930 million in donations it received in 2015.

If nothing else, these numbers can reassure people in the nonprofit sector that the money is out there. Americans are donating money left and right, so chances are, even for smaller organizations, there are people out there who want to donate to a cause, and might consider yours.

Although 2016 has been a difficult year in a number of ways, the spirit of giving is still alive and well, and even growing.

Can Patreon Serve as a Nonprofit Fundraising Tool?

Can Patreon be used as a fundraising tool for nonprofits?

The Internet has changed the way we do a lot of things, and there are many platforms available for crowdsourcing—that is, raising money through small payments or donations by a large number of people. These have been particularly useful not only to artists, who they are often created to serve, but also to nonprofit organizations. Many of these, like thee famous Kickstarter or Indiegogo, are best used for single projects such as publishing a book or renovating a community garden.

But what if you have an ongoing project in mind, or need a way to generate regular donations to support your organization’s mission? It might be worth considering Patreon as a possible source. Initially launched to help support artists on the internet, Patreon allows people to be patrons in the classical sense, paying an amount of money each month to help somebody realize their projects. Generally, people pay a set amount each month or per item, and get access to a variety of rewards for doing so.

So far the site doesn’t seem to have been used much to support nonprofits’ missions, but the opportunity is certainly there. There are countless blog posts and articles about how to successfully run and maintain a Patreon campaign, and there’s too much to go into here. While many of those pieces would be helpful in figuring out if Patreon could be a valuable fundraising tool for your organization, keep in mind that they are generally written from the point of view of people funding themselves, like artists and musicians.

For a nonprofit, figuring out how to make Patreon work might be difficult, and it will certainly take some thought, it’s not something to just jump into feet first. But it is a platform which allows creators to not only fund their work, but allows them access to some of their most loyal fans, and that kind of personal involvement can be a big draw for people looking for causes to support.

Volunteering: A Great Way to Fulfill Your New Year’s Resolutions

Volunteering has many benefits.

Photo: Joseph Sohm / Shutterstock.comVoluntee

Now is the time when everyone is thinking about what they’re going to resolve to do next year. Maybe you want to make more friends. Perhaps you’re looking to get healthier and happier, advance your career, or even have more fun. Did you know volunteering can do all of those things? Let’s take a quick look.

Volunteering connects you to others

Not only do you get to have an impact on your community, by volunteering, you can get to know your community better. One of the best ways to make new friends and find kindred spirits is to join together in a shared activity that matches your interests. It can also broaden your support network and help you connect to resources in your neighborhood or community.

Volunteering also gives you the chance to develop and practice your social skills, which can be really helpful if you’re naturally shy.

Volunteering is good for your mind and body

Among the many benefits of volunteering is that it helps to counteract the effects of stress, anxiety, and anger, all of which can harm both your physical and mental health. Meaningful connections relieve stress, and working with pets has been shown to reduce stress. It also combats depression and, because the brain is hard-wired to feel good when giving to others, volunteering can make you happy.

Volunteering can also lessen symptoms of chronic pain and reduce the risk of heart disease, and depending on where you volunteer, it could even get you exercising more.

Volunteering can advance your career

When you volunteer, you get the chance to practice important “soft skills” that can benefit your career such as communication, project planning, teamwork, and problem solving. You can also learn new skills ranging from web design to cooking to whatever you can imagine.

If you’re thinking about changing careers, volunteering can help you network with people in your desired field and get experience in your area of interest. You can also use your skills to benefit an organization: If you’re a good writer, why not try your hand at grant writing? If you design and build websites for a living, put your skills to work for your favorite nonprofit.

Most of all, volunteering brings a sense of fun and fulfillment to your life. It can be a relaxing way to get an escape from your day-to-day routine while also helping people. If you like being outdoors, for example, why not volunteer at a community garden or to help rebuild a hiking trail? It can also help you be more creative and motivated, which will carry over into your personal and work life, and it can even help you manage your time better.

What benefits has volunteering had for you? Please share your thoughts in the comments.

Trump’s Election Caused a Huge Spike in Donations to Nonprofit News Outlets

Nonprofit news outlets received a huge spike in donations after the election of Donald Trump.

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Perhaps it shouldn’t come as a surprise, but nonprofit news sources like ProPublica, the Marshall Project, or NPR, have seen a huge boost in donations since Donald Trump won the presidential election.

For example, ProPublica received $750,000 in donations after the election—much more than all the money raised from small-dollar donors in 2015.

This is a good turn of events for these organizations, because relying on grants from a few big funders is not a sustainable model for these groups, or any nonprofits at all, for that matter. The sharp rise in small individual donations shows that the general public has figured out the importance of the role of nonprofit news sources in advancing the public interest.

What nonprofit news outlets need to do now is figure out how to use that money and keep it coming. ProPublica has started regular coverage of hate crimes and the growing influence of white supremacists. Center for Public Integrity CEO John Dunbar told Inside Philanthropy, “We’re spending a lot of time right now deciding exactly how we’re going to cover President-elect Trump. Without a doubt, these funds will help us in our investigations of the administration.”

Nonprofit news outlets would be very well served to invest some of the influx of donations in fundraising capacity so they will be able to raise and maintain the diversified donor base that will keep them functioning for many years to come.

And of course, there is a political aspect to all of this that will be hard to address. While outlets like NPR are technically nonpartisan, they’re certainly favored by progressives, which can create the perception of a conflict of interest or biased reporting.

Will nonprofit news outlets be able to overcome this perception of bias? Probably not, since the extreme right already brands centrist major media outlets as “liberal,” but the important thing is that these organizations keep doing their work. They can expect to receive a lot of flack from more conservative news outlets and talk show hosts, though.

“Our mission is not to overthrow Donald Trump,” says Carroll Bogert, the president of the Marshall Project. “Our mission is to make more people care about criminal justice, and we do that through journalism. And that’s a very important function of media in a democracy.”

We Could Be Giving More Effectively

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Photo: Shutterstock

The holiday season is typically a time for extra generosity, whether because of a cultural association with the holidays as a time of giving or because of the desire to make end-of-year donations for tax purposes.

However, according to a recent article in the Wall Street Journal, Americans have a variety of fallacies that prevent us from being as generous as we could be.

The WSJ conducted a survey of its followers on social media and found that there are three main mistakes people make when giving to charity.

Mistake 1: The martyrdom effect

Dr. Christopher Olivola says that one of the biggest mistakes people make is what he refers to as the Martyrdom Effect. That is, people prefer to give in a way that requires sacrifice or discomfort, such as bicycling across a state to raise funds or taking the ice-bucket challenge, rather than writing a check. In fact, donating money can be a great deal more effective because a charity can use a cash donation to greater effect than they can one person’s volunteer efforts.

Mistake 2: The other-nothing neglect

In another study, Dr. Olivola concludes that people tend to think of donating as a means of giving up our own happiness for the sake of others. In other words, people tend to think of what they have to lose by being generous but don’t think as easily about what others gain by their generosity. If we focus more on the benefits to others, we won’t as easily fall prey to this logical fallacy.

Mistake 3: The unexpected joy of giving

In this logical fallacy, people believe that giving money involves a sacrifice of happiness. But study after study has confirmed that people actually feel happier when they spend money on someone else than they do on spending it on themselves. Think about how you feel when you give gifts to a friend or family member: Typically it makes you happy to purchase a thoughtful gift that you’ve bought just for them. It’s the same thing with philanthropy: Donating to an organization that helps people or animals in need just feels good.

Given, the study the WSJ did doesn’t meet the standards of academic rigor like the ones Dr. Olivola has done, but the anecdotal evidence produced by the WSJ survey certainly backs up what’s been documented in scientific research.