Customer

Nonprofit startups face all the challenges nonprofits face, plus all the challenges of for-profit startups. The compounded nature makes it more difficult, not less, to start a successful, lean, and sustainable nonprofit compared to a similar for-profit. One of the key pieces that nonprofit founders frequently forget is that not making a profit doesn’t mean you can ignore the revenue side of the equation. You still need to raise enough money to pay for the services you provide (and to fuel growth), whether that is through donation-based fundraising, corporate partnerships, grants, or a fee-for-service model (or some combination of several of these options).

With a for-profit model, when you convince someone to pay money for your product or service, you have also convinced them that you are providing them value equal to or greater than the cost. You have succeeded in creating value, and identifying a revenue stream.

In the nonprofit world, value is often provided to one party, while another party pays for it. With few exceptions, beneficiaries are not customers. Of course, donors also receive some value in this transaction, but it’s an indirect value proposition. If you’re starting a nonprofit startup, you need to find a way to create value, convince one party to be the recipient (not always as easy as it sounds), and another to pay for it. Further, sophisticated funders demand proof that the actions your organization takes are, indeed, providing the promised value, so you must measure the results of your value creation and compare them to other methods of value creation to ensure that you’re being as effective as possible.

Have you started a nonprofit organization? We’d love to hear your story.