The Flipside: What One Startup Is Learning From Successful Nonprofits

In 2010, I co-founded my startup, DonationPay, with my closest friend, Noah Sochet, and we’ve been providing online fundraising tools to an ever-expanding roster of nonprofit clients ever since. In my experience as both the manager of a (very) lean startup and a provider of online fundraising tools for nonprofits, I’ve thought a lot about the intersection of nonprofit operating principles and startup strategy, particularly when it comes to staying lean and agile.

4 Smart Nonprofit Lessons We’ve Adapted For Our Startup

1.  They treat their donors with respect, care, gratitude and responsibility.

We’ve learned a lot from how our clients treat their donors and funders- they know that their donors are not only their biggest financial supporters, but are also most likely to be ‘evangelists’ for their mission. To achieve this, our clients think a lot about how to engage their donors beyond financial contribution, with social media, newsletters, events, interactive apps and features on their sites- and, as ever, we try to copy them as much as possible.

Seeing the regard our client’s donors our treated with has also deeply informed the way we interact with our investors. While the value proposition between investor and entrepreneur is, obviously, quite different than the organization/donor relationship, there are similarities. There’s still one party that has an idea that the other party finds fundable, and there’s the same inherent risk on the investor/donor end that their financial support will not contribute to a profitable/productive end product or outcome. As such, the question of trust between donor and organization has a direct parallel with the foundation of respect and confidence between investor and entrepreneur. We do our best to work with our investors like we would our biggest donors if we were running a nonprofit organization: with respect, attentiveness, honesty, and gratitude. It’s made our experience as first-time entrepreneurs running a funded, mission-driven business a mostly harmonious and edifying one, and that sense of collaboration and trust with our investors comes from directly emulating the great relationships our clients have with their donors.

Coming back to our clients, there’s an even more direct analogy to be made, but while we definitely built our service structure and customer service philosophy around making our clients happy, there’s less common ground. Our clients have a much greater degree of influence over our product than donors generally have over organizational direction (which is typically defined by the needs of constituents, not funders), and we try our best to engage and accommodate them. Like our nonprofit clients with their donors, we want our clients to feel that our team and product is a valuable ally, that they are appreciated, that their feedback is likely to become an actionable item on our development or service agenda. Donors need to feel this way too – that what they’re supporting has a strong leadership team, a direction and vision they believe in, and that their voice as a supporter is heard and appreciated.

2.  They measure success by program outcome and by pre-defined metrics specific to their organization.

DonationPay operates under all the normal constraints and financial goals of an investment-funded business: we have a responsibility to grow our revenue, develop our product and sell it, and to have a clear plan to bring the company to a stable, then profitable, then sellable place. These are the base company responsibilities (rather, a radically simplified version of them). But, taking a cue from our clients, we’ve spent a fair amount of time developing the specific metrics that matter to us and that signify either growth or problematic areas, particularly from a product standpoint. For instance, we’ve decided that the most important internal metric we measure our product by is whether our clients are raising more money online than they did the year before, whether with us or with their previous provider. If they’re seeing a measurable improvement in their online fundraising- through their donation page, event ticketing, memberships, whatever- it means our tools are working. If a large segment of our clients’ online progress is stalled in a particular area- for instance, if many are seeing a lame return on their membership dues page- it usually means there’s a bug or usability issue, or we need to take a deeper look. Smart nonprofits are focused on outcome measurement, and we follow their lead.

3.  They’re agile and they build programs based on the needs of their constituents.

Smart nonprofits adapt and shift to make sure they’re delivering their service and mission to the largest volume or most targeted group of constituents they can. We operate with similar principles- we start out with an idea for a new feature or next iteration of our service offering, which has been developed internally. Since our whole staff are former nonprofit staffers and leaders, we do tend to come up with fantastic ideas (if I do say so myself), but the reality is that none of us have that ‘on the ground’ perspective anymore. We rely on the feedback of our clients to help us develop our product into something that they can actually use to advance their goals and stay ahead of the technology curve. We designed our product development process to be responsive according to the needs of our clients- to put our energy and efforts where they’re most needed, rather than where we think the greatest value (to us) actually is. Our clients are our constituents and we trust their voice, en masse, to guide us toward building out components of our service they really need and want to use. We have a system for tracking client feedback and when that feedback pools around a couple features that lots of clients feel are missing, we immediately divert resources to address the need, if at all possible.

4.  They care about relationships with other organizations.

Many of our clients have exemplary relationships with other organizations working in their space- strategic partnerships in the nonprofit space can strengthen and expand the reach of both organizations and can often represent a necessary pooling of resources to accomplish a common goal. Working in a lean startup can feel isolating- there’s an endless amount of day-to-day operational work that must be done and a limited amount of funding, so doing strategic outreach can be de-prioritized, even when it shouldn’t be. The way our nonprofit clients connect with partner organizations, corporate sponsors and other supportive resources inspires us to stay present in the business community, reach out for help and advice when we need it, and form alliances based on common values. Accordingly, we’ve benefited profoundly from our relationships with other businesses in our Astia cohort, from our work with the Small Business Development Center of Oakland, and from the great relationships we’ve built with our clients. Building a company that is values and mission driven is a complicated proposition in tech, but our clients remind us that it can be done, particularly when there is strength in numbers.

There are so many other ways that our business strategy, company vision and operating policy has been influenced by the amazing work of our client organizations – we’ve been really lucky to work with all the incredible organizations in our client roster and I look forward to continuing to learn from them, every day.

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