By Shannon Farley, originally posted on Forbes.com on 10/26/22
This is likely the first time you’re seeing the term “high-growth tech nonprofit.” It’s brand new to the lexicon.
Ten years ago, the number of tech nonprofits in existence could be counted on one hand. You know them: Khan Academy, Mozilla, DonorsChoose, Wikipedia, Kiva. Like all tech nonprofits, these organizations are using tech to solve market failures.
A decade later, the tech nonprofit sector looks very different. There are around 1,000 tech nonprofits solving every manner of social problem. This number is growing rapidly. And now, the sector’s breakout stars are navigating the transition from startup to grownup. We call them high-growth tech nonprofits. These organizations are uniquely positioned to scale: they have proven product-market fit and are on the path to being revenue self-sustaining.
But there is a dearth of philanthropic support for high-growth tech nonprofits. Traditional funders tend to avoid investing in technology solutions, instead opting for more conventional nonprofit models. A lack of familiarity has led to a lack of funding. As a result, tech nonprofits have not had the chance to scale to their full potential. Both sides are missing out.
Today, the tide is shifting. More and more philanthropists are seeing the potential for high-growth tech nonprofits to solve our biggest social problems. Philanthropists can make smart, meaningful investments in high-growth tech nonprofits by deploying a threefold strategy: invest in big markets, tap into tech ubiquity, and leverage tailwinds. I dig into these strategies through the lenses of climate, early education, and criminal justice.
WattTime: A High-Growth Climate Tech Nonprofit
High-growth tech nonprofit WattTime is working on another seemingly intractable problem: climate change. Today, fossil-fuel energy use is the top cause of climate change. Of the 50B+ tons of CO2 emitted each year, almost 25% results from electricity use. Yet not all electricity is created equally. Electricity that comes from wind or solar power plants emit zero carbon, whereas electricity that comes from a coal plant is carbon intensive. Therefore, when – and from where – devices pull energy is a key factor in reducing emissions.
WattTime’s product, Automated Emissions Reduction (AER), is an algorithm that scans power grids in 27 countries every five minutes to detect whether clean or dirty sources of electricity are available for use. It can then instruct IoT devices to prioritize pulling clean energy when it’s available. There are 20B+ internet-connected (IoT) devices across the world that are flexible on when they consume power. Think: electric vehicles that remain plugged in while they’re parked – long after they’re charged. Or: 10M+ Nest thermostats in homes and offices. The bottom line? IoT devices are everywhere. Philanthropists interested in climate can unlock unprecedented impact through a solution like WattTime that leverages the ubiquity of devices.
The timing couldn’t be more in favor of WattTime’s solution. First, a surge in EV manufacturing presents a massive opportunity for more devices to pull power when clean energy is surging. Second, political tailwinds are also in WattTime’s favor. Renewable energy creation in the U.S. is skyrocketing. Now, with the passing of the Inflation Reduction Act and its incentives for wind and solar development, clean energy availability is set to grow exponentially. As our power grids get greener, the number of “clean energy” moments in a day increases. With this shift, the potential emissions-reducing impact of AER increases. A problem as massive as climate change requires a solution as transformative as WattTime. Philanthropy has an unprecedented opportunity to make inroads against climate change.
Rocket Learning: A High-Growth Education Tech Nonprofit
In India, almost half of first graders can’t recognize the alphabet. This learning gap is problematic, since first-grade curriculum assumes school-readiness. At the same time, 30M+ children are enrolled in government-run “anganwadis,” free daycare centers that focus on nutrition – not education. Millions of children are missing out on foundational building blocks key to succeeding in school, and meanwhile, the government has a captive audience of families enrolled in free day care.
Simultaneously, smartphones are becoming ubiquitous across India. Parents and caregivers are not only online, but they’re also tech-literate. In fact, close to 70% of households with children enrolled in anganwadis – and over 95% of teachers and daycare workers – have a smartphone. Enter: Rocket Learning.
Rocket Learning helps low-literate parents use their phones to get their children school-ready. Through WhatsApp groups composed of the parents of students in anganwadi classrooms, Rocket Learning delivers age-appropriate analog activities to prepare children for school. A daycare worker facilitates the WhatsApp group by nudging parents through the content, and Rocket Learning returns personalized feedback to parents.
Early-childhood education has an incredibly high social return on investment: $13 for every $1 invested. Plus, policy-focus by the Indian central and state governments has never been stronger. In this unique moment, Rocket Learning is poised to massively scale its tech to change the lives of 30M three- to six- year olds. Read: philanthropic investment is a no-brainer.
Recidiviz: A High-Growth Criminal Justice Tech Nonprofit
The U.S. incarcerates more people than any other country, with almost 6M people in prison or on probation or parole. Over 300,000 of these people could return to freedom using laws already on the books. The market has immense potential for impact. Particularly when you consider the longtail, societal impacts of release.
But it’s surprisingly hard to understand who is eligible for release because the data that underlies the U.S. criminal justice system is fragmented. Federal prisons, state prisons, county jails, and city police departments each run their own constellation of data systems. And those systems — many of which still include printed reports and handwritten notes — often don’t talk to each other.
Across every other industry, real-time data is instrumental to effective decision-making. In criminal justice, real-time data should also be the standard. But it isn’t. Recidiviz’s tech aggregates fragmented data across thousands of databases. Its data helps paint a full picture of what’s happening across the criminal justice system, for the first time ever. These data include numerous factors like stable housing, drug test results, and that court fees are cleared – all of which have the potential to get people out faster. Recividiz pulls this data into one place, providing a real-time, end-to-end understanding of the system.
Post-pandemic, corrections agencies are facing acute staffing shortages of up to 40%. They simply do not have the staffing to clear their long lists of folks who have met the conditions for release, even though many agencies are eager to shrink their lists. Tailwinds are in favor of releasing more eligible people. This need presents an aligned opportunity for philanthropists to double down, transforming the carceral space for good.
High-growth tech nonprofits present a unique opportunity for the philanthropic sector. Right now, tech nonprofits like WattTime, Rocket Learning, and Recidiviz are poised for exponential impact. But they need catalytic capital to get there. By taking advantage of large markets, the ubiquity of tech, and political and social tailwinds, philanthropists have the chance to make more leveraged investments than ever before. This is the philanthropy opportunity we’ve been waiting for. The problems are bigger. The tech is everywhere. The time is right.