Philanthropic Rounds—Why They're Worth Considering for Tech Nonprofits

August 7, 2015 | Thoughts

Philanthropic Rounds—Why They’re Worth Considering for Tech Nonprofits

Kiah Williams from SIRUM, Chase Adam from Watsi, and this week Kushal Chakrabarti from Benetech spoke to the Fast Forward cohort about philanthropic rounds for tech nonprofits, where an organization aims to raise a set dollar amount in a specific window of time. While the term is borrowed from startup culture, the functionality is not new to nonprofits. Philanthropic rounds are essentially capital campaigns with a tech twist. Both are milestone-driven and time-limited, but what are some of the advantages of philanthropic rounds?

Free up time for impact

It is often said that nonprofits have two businesses models—one for impact and one for fundraising. Many nonprofit leaders are forced to split their time accordingly. In a philanthropic round, securing donations is the top priority for a set period of time. It requires 100% effort from leadership. Following a philanthropic round, a nonprofit founder can fully dedicate his/her focus to running the organization and monitoring impact. Taking a cue from startup culture, philanthropic rounds happen at an earlier stage in an organization’s development than a traditional capital campaign. This is why philanthropic rounds require 100% focus from a founder. In early stage organizations, founders are the fundraisers.

Funding targets connect to data

In a philanthropic round, the funding goal should be based on projected impact data. For example, the tech nonprofit recently raised more than $3M in a philanthropic round based on data suggesting that money from the round would help their product reach one million patients by the end of this year. Consequently, a philanthropic round forces transparency about impact with donors and the need to stick to a specific plan. Throughout the round, tracking progress helps in specifying the donation amounts to ask for.

Fundraise more efficiently

Fundraising in a philanthropic round tightens the feedback loop to more quickly figure out what’s working and what isn’t. If several funders in a row find a metric confusing, it might be worth swapping it out. Additionally, the artificial deadlines imposed by philanthropic rounds may help motivate potential funders to close deals.