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“Social entrepreneurs can wield unexpected power if they design strategies that exploit the unique advantages of nonprofit status. Going nonprofit is more than a tax-exempt move; it is a strategy with unique advantages for tackling the toughest social problems of our time.”

– Kevin Barenblat, Co-Founder & President, Fast Forward

Would you believe it if we told you that being a tech nonprofit can be a strategic advantage? That for all the things we’ve told you about the tech nonprofit path being tricky, there are some powerful secret weapons that only a tech nonprofit can capitalize on?

After years of accelerating tech nonprofits, we can confidently confirm this as true. Our Co-Founder and President, Kevin Barenblat, likes to call this “nonprofit judo” – which he defines as, “a reference to the martial art that emphasizes how an apparently disadvantaged player can succeed through a strategy that turns weaknesses into strengths.”

Sounds awesome, right? Nonprofit judo is a powerful tool to have in your tech nonprofit toolbelt, and it’s important to use nonprofit status to your advantage from the beginning. Rather than going into your tech nonprofit journey imagining an uphill battle, turn the scenario around by tapping into the unique opportunities it presents. 

We break down nonprofit judo into four distinct categories:

  1. Customer Segmentation
  2. Marketing
  3. Product
  4. Sustainability 

Segment Customers Differently

For-profit companies target customers based on their potential to generate revenue, prioritizing customers with higher lifetime value and lower acquisition costs. An obvious example is a food delivery startup like DoorDash, which targets a customer who doesn’t mind surge pricing on that midnight pizza. In many cases, nonprofits do the opposite, focusing on customers currently ignored by existing solutions.

Let’s compare DoorDash to a food recovery app like Replate, which is also a food delivery SaaS platform. Replate has a nonprofit twist. With a mission of rescuing leftover food and distributing it to those experiencing food insecurity, its platform enables paid contractors to take unused, unspoiled food from restaurants, cafeterias, and event venues and deliver the food to soup kitchens. Although Replate’s users are hard to reach and less able to pay, with higher customer acquisition costs and lower lifetime value, serving the food insecure is the whole point.

This unwavering focus on an underserved market segment should drive your tech nonprofit strategy, pushing you to design the best solutions for your unique customer’s situation. This strategy sharply deviates from that of for-profits, which often start with a product or service and then work to find the most profitable customer.

TalkingPoints’ Nonprofit Judo

Let’s use TalkingPoints, the multilingual family engagement platform for parents and teachers, as an example again. There are a handful of companies providing tech-based parent engagement tools just like TalkingPoints, but they are largely designed for higher-income customers. TalkingPoints wants to focus on the needs of immigrant, low-income families who speak English as a second language. 

While a for-profit would face investor pressure to pursue the most profitable market segment, TalkingPoints’ nonprofit judo results in a product strategy that prioritizes translation in 150+ different languages and doesn’t require a smartphone to work. TalkingPoints’ focus on underserved customers positions the organization to dramatically increase family engagement in high needs schools and families of color, cultivate a loyal base of users, and acquire school and district partners who share these priorities.

Build on Openness, Goodwill, and the Wisdom of Crowds

Who doesn’t love free stuff?! Tech nonprofits have it good when it comes to the inputs and outputs of product strategy. Nonprofits have always made use of volunteers and donations, but such resources increasingly transcend geographic limitations as nonprofits engage expertise from around the world and leverage tools like Google Suite, Facebook Ads, and Salesforce CRM for free. Plenty of other tools like these, including Twilio, Okta, PagerDuty, Asana, and more, have significant discounts for nonprofits.

Crisis Text Line’s Black-Belt in Product

Crisis Text Line provides free, 24/7 text-based crisis response. The organization designed its nonprofit strategy around a squad of unpaid counselors who volunteer 200+ hours a year to the service. The product remains free to users, thanks to product integrations with Verizon, Sprint, T-Mobile, and AT&T, which waive charges for messages sent to the text line.

This arrangement would never be possible as a for-profit. The mobile carriers also omit texts to the hotline from billing records, protecting hotline users from alerting family members (who might be causing the trauma). The volunteer counselors and corporate product contributions are part of Crisis Text Line’s nonprofit judo, a nonprofit strategy that saves hundreds of thousands of dollars in costs and has enabled the exchange of more than 150 million messages with people in crises.

Let’s consider some of the advantages tech nonprofits have when it comes to product outputs. Compared to for-profit products and services, which are often proprietary, created and protected with secrecy, nonprofits frequently share data, processes, and ideas in ways that spark multiplier effects for greater good. Sounds awesome, right? Successful tech nonprofit strategies implement these unique input and output features to their advantage.

Forge Aligned Marketing Partnerships

Nonprofits are often viewed favorably by the public because they are obligated to invest profits to further the organization’s mission, rather than accrue private value for shareholders. This means nonprofits have the unique ability (and necessity) to get creative about marketing (more in Chapter 10: Tech Nonprofit Marketing). In the most successful cases, tech nonprofits leverage their brand and create partnerships to build awareness, acquire users, and create social value. 

Let’s look at a few examples to understand how this plays out in practice.

Tech Nonprofit

Winning Partnership Strategy

Khan Academy

Problem: Years ago, the College Board, the nonprofit that administers the SAT, became concerned that costly SAT prep classes favored students from wealthier families. The College Board had been approached by for-profit test prep providers, but knew those alliances could exacerbate the issue.

Solution: The College Board partnered with Khan Academy, the nonprofit committed to providing a free, world-class education to anyone, anywhere. Together they launched Official SAT Practice, a personalized practice program that allows any student to prepare for the SAT for free.

Impact: Today almost half of SAT test takers in the United States, across income levels and backgrounds, use Official SAT Practice to prepare for the exam for free. Together The College Board and Khan Academy are working to level the playing field and help more students achieve their college dreams.

CommonLit

Problem: CommonLit is a free online reading program for students. As a nonprofit, CommonLit didn’t have a large budget for marketing, so it needed a robust distribution path to reach teachers, and ultimately reach students in underserved rural and urban areas.

Solution: CommonLit found its distribution path through a combination of partnering with large distribution networks like Teach for America, large school districts, state departments of education, and igniting teacher to teacher word-of-mouth campaigns through education influencers and bloggers.

Impact: Over 36M students, teachers, and administrators have used CommonLit’s digital literacy tools.

Empower Work

Problem: Empower Work, a confidential text line for workplace issues, needs to be top of mind for underrepresented workers who need support, but may not have – or trust – resources like HR or mentor networks. Empower Work knew it needed to meet people where they already were and be introduced as a trustworthy resource.

Solution: Empower Work partnered with nonprofit and community groups like Tech Ladies, Upwardly Global, and YearUp. These organizations were already supporting Empower Work’s target market in a different capacity and had established trust.   

Impact: Empower Work solved a huge pain point for its partners – capacity to provide scaleable one-on-one support for their communities to thrive – while the partners provided a seal of trust and a pipeline to over 600,000 individuals who might be facing workplace issues.

You probably noticed a few things:

  • These partnerships solve a distribution challenge for the tech nonprofit, and a content or service challenge for the company or organization it partners with.
  • These partnerships are mission aligned, which means that both parties share the same end-goal.
  • Unlike most marketing strategies, these partnerships form at no cost to the tech nonprofit and result in a strong user pipeline (or, group of people who might use your product).

Your nonprofit mission can catalyze powerful partnerships that drive measurable value on both sides. Make sure you consider how your user acquisition strategy might benefit from aligned partnerships – a keystone to great nonprofit strategy. We share plenty more on partnerships in Chapter 14: Sustainability: Partnerships and Revenue

Embrace a Unique Path to Financial Sustainability

For-profits embrace selling as a critical aspect of financial sustainability. Nonprofits often view fundraising with dread, wanting instead to focus on fulfilling their mission. Guess what? It’s not that different. All tech nonprofits should be thinking of fundraising like sales. If you are engaging in nonprofit judo, who you fundraise from will help you achieve your mission. CareerVillage.org – who you’ll learn about shortly – fundraises from companies, which give the organization volunteers it needs to achieve its emission. TalkingPoints sells to school districts, which help deploy the tech to impact families. Win/win. Nonprofit strategy at its finest.

To excel at this nonprofit strategy, you need to equally weigh the benefits to the funder with those to the beneficiaries you serve. In an ideal world, you’re able to create mission-aligned products or services that also fit a bucket for a specific type of funder. This is hard to do. Most for-profits are lucky if they find product-market fit once, and nonprofits need to find that fit for every new source of capital, without drifting from their mission. We know what you’re thinking…but remember, we never said this was easy! When done well, this can be trajectory-changing for your organization. Seek to find a sustainable funding source that brings your fundraising efforts and direct service into alignment. 

CareerVillage.org’s Nonprofit Judo

CareerVillage.org crowdsources career advice for millions of underserved youth. For the first few years, recruiting volunteers and fundraising each took a lot of the founding team’s time and were difficult to manage and grow. When the CareerVillage.org team learned that employee volunteering managers at Fortune 500 companies were looking for easy and scalable volunteering programs for their employees, they built a sustainable “earned income” revenue model around it. 

This brought its volunteer recruiting and fundraising efforts into alignment and led to a big acceleration in the growth of the volunteer pool able to provide high-quality answers to students’ career questions. By offering Fortune 500 companies an accessible digital volunteering program, CareerVillage.org found a sustainable revenue model. This nonprofit judo has become a major driver of the organization’s rapid growth and provides more benefit to the organization than would be possible in a for-profit model that sells only to schools.

Nonprofit Judo

Remember, as a nonprofit, your customer and your user/beneficiary are going to be different. This is exactly how ad revenue-driven tech companies work. Here’s how it maps out in the tech nonprofit space:

Tech Nonprofit

Customer(s)

Beneficiary 

CareerVillage.org

  • Corporate philanthropists

  • Low-income high school students in need of career advice

DonorsChoose

  • Philanthropists: Foundations & Corporations

  • Individual donors via crowdfunding

  • Teachers & students in the U.S.

Watsi

  • Foundations

  • Individual philanthropists

  • Individual donors via crowdfunding

  • Patients in need of life-changing surgeries around the world

Wait, How Do I Figure Out My Earned Revenue Model?

We dive deeper into building an earned revenue model in Chapter 14: Sustainability: Partnerships and Revenue, but for now, ask yourself these questions: 

  • Am I providing a product or service that serves a purpose for funders beyond impact?
  • Are there companies or organizations that want to buy my product and distribute it to end users?
  • Does the product I’m building fill a government need, and could I leverage government contracts?

Remember, the nonprofit model has a strategic edge beyond tax exemption, and the best nonprofit leaders learn to leverage it.

*Kevin’s original article on nonprofit judo appeared in Harvard Business Review.

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