We were excited to see the news that Silicon Valley accelerator Y Combinator offered foundation funding to Watsi, a new social enterprise in which donors can fund medical treatments for people in need. Since launching, Watsi has enabled funding 70 treatments, based on $55,000 in donations from 1,300 donors. Founder Adam Chase says donations are currently growing 28 percent per week.

Watsi Image - Foundation Funding
Source: Watsi.org

Y Combinator is one of the most prestigious accelerators in Silicon Valley, funding and growing 460 companies including well-known names like Airbnb, Dropbox and Wufoo. Y Combinator typically takes an equity stake in the companies they fund, but since Watsi is a nonprofit, they made a significant donation to catapult them to the next level. Sound sexy? It is.

Follow Watsi’s lead to get foundation funding from tech companies:

1. Speak Their Language: Use Lean Startup Methodology to Build Your Organization

Like other forward-thinking nonprofits like Benevolent and Change.org, Watsi is using Lean Startup methodologies to inform the way they build their organization: focusing on shortening the build/measure/learn cycle, continually validating ideas, and starting with a minimum viable product. The Lean Startup methodology was first used in the tech world, but has quickly spread to other industries.

As Liz Gannes writes in All Things D:

“In most ways, Watsi has more in common with Web startups than with nonprofits, Adam argued. It’s not like Watsi is the first nonprofit to put a picture of a person in need next to their request. But rather, “We’re structured like a startup, and we take lean startup methodology,” Adam said. “We focus on transparency, which is really important to donors. And user experience is really important to us, something a lot of nonprofits don’t invest in.”

 2. Use Technology to Solve the World’s Problems

When it comes to the next phase of solving critical problems, it’s all about scale: creating something that allows you to impact a big audience. The best way to achieve scale is with technology. To solve the challenge of providing life-changing surgeries to people in need, Watsi created a technology platform based on Crowdfunding.

Crowdfunding is a technology trend that’s exploded in the past few years. Crowdfunding enables groups of individuals to pool their resources to fund projects initiated by other people or organizations. Companies like Indiegogo, Kickstarter and others are built on crowdfunding. In 2011, Crowdfunding delivered more than $1B directly to people in need, funding over 1 million crowdfunding campaigns.

3. Validate Your Concept

Even if your organization isn’t built on crowdfunding, you can use crowdfunding to rapidly validate ideas and concepts. Start a crowdfunding campaign for a new program or idea, do a big push to fund it, and see if there’s significant traction to continue. If the campaign is fully funded, great! That’s a big thumbs up to keep building out the idea. If the campaign doesn’t get traction or foundation funding, that’s a sign to move onto something else, and you’ve learned faster (and with much less expense) than if you had tried the normal way.

Ideo.org, Samasource and Project 4 Awesome all used crowdfunding to raise money and validate their idea. You can check out more awesome nonprofit crowdfunding campaigns on Indiegogo.com.

4. Directly Connect Donors to the Problem You’re Solving

Watsi directly connects people and organizations who have needs, with contributors who provide foundation funding. It puts a face to a need, and enables contributors from anywhere to contribute to that need. And it’s enabled by technology, which means that it can scale: it can spread exponentially and impact more people, but use the same amount of resources.

5. Reach a New Audience

Crowdfunding companies like Watsi are successful because they engage people who are interested in the cause, but who aren’t being reached by traditional methods. Watsi focuses on life-saving medical treatments in developing countries. It has no geographic boundaries, and can become viral very quickly through social sharing.

6. Transparency is Key

Watsi brings transparency to foundation funding. In a typical nonprofit, when you make a donation, there’s little visibility as to how it’s being used or what impact it has. Watsi and other Crowdfunding providers allow people and organizations to define a need, and donors can contribute specifically to that need. Additionally, most nonprofits solicit donations for program work, and have a hard time funding operations, salaries and infrastructure. Watsi’s model pursues both: at Watsi, 100% of donations directly fund medical treatments. Watsi.org is separately funded. They pay all their operational costs from their own funding, and none from donations. They even absorb the credit card processing fees.

Watsi founder Adam Chase writes in a comment on TechCrunch:

We’ve gone to great lengths to make our financials public, and we even go so far as to show screenshots of funds transfers, proving that every dollar goes directly to the partner hospital to pay for the cost of treatment.

7. Look To Non-Traditional Sources of Funding

Nonprofits typically look to grants and foundations for institutional funding, but those sources of foundation funding come with restrictions on usage, scope and metrics. Looking within the tech industry opens you up to additional sources of funding, from people with experience building companies and organizations, who can leverage that knowledge to help you grow your organization.

People want to give back, but they want to give to things they understand. A nonprofit built on Lean Startup principles and technology-enabled solutions to the world’s problems – these are things to begin the conversation with tech donors.

8. Live Where Tech Folks Live Online

Y Combinator learned about Watsi when the founders posted on Hacker News, the Y Combinator blog.

Y Combinator founder Paul Graham writes:

“After about 30 seconds of looking at the site, I realized I was looking at one of the more revolutionary things I’d seen the Internet used for. Technology can now put a face on need. The people who need help around the world are individuals, not news photos, and when you see them as individuals it’s hard to ignore them.

I’ve seen what happens—at Airbnb for example—when the Internet’s ability to connect people peer to peer enters a domain that had previously been dominated by narrow channels. Historians will probably identify this as one of the most powerful forces at work in our time. And Watsi is this force applied to a big lever.”

9. Create A Ripple Effect

I’ve worked in nonprofits for over a decade now, and I’ve had so many conversations with organizations about how to get younger people interested in philanthropy, how to build a bigger list and diversify their funding streams. Crowdfunding providers like Watsi and others go a long way in achieving this goal. It’s really changing the model of giving. Historically, the process has been to get rich and then give. Crowdfunding brings giving to lower price points, enabling more people to give, and create a habit of giving throughout our careers and our lives. It lets people realize the importance their dollars can have on solving the world’s problems, which leads to additional giving. Hopefully it will educate our future generation of philanthropists.

Your Turn: How does your nonprofit organization receive foundation funding? What strategies and tips do you have for other nonprofits? Please share with us in the Comments! 

Image Source: Nyaya Health

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