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5 Lessons Nonprofits Can Learn From Startups

Nonprofits and startups may seem to operate in different worlds, but their needs, limitations, and goals aren’t as different as you’d think.

5 Lessons Nonprofits Can Learn From Startups
[Photo: Flickr user Don DeBold]

Who would think throwing ice water over one’s head for a charity could go viral?

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While the ALS Ice Bucket Challenge may have seemed outlandish at first, the campaign has raised more than $100 million so far, and the ALS Association has a startup mentality to thank.

Fundraising and increased visibility is at the heart of any successful business. Whether you’re a noble nonprofit battling poverty or a scrappy retailer peddling T-shirts, an online presence and interaction with social media is increasingly vital. Nonprofits that want to raise funds as well as awareness have a lot to learn from the startup community, an industry often at the forefront of Internet trends.

Here are five startup techniques nonprofits should pay attention to:

1. Form Partnerships With Established Organizations

In 2010, Zynga raised more than $1.5 million in five days to help the World Food Program respond to the earthquake in Haiti. How? Zynga set up a donation platform in its popular game Farmville.

Partnerships with established organizations–for distribution or for revenue–have been fruitful for many tech startups, such as Spotify, Evernote, and Whatsapp, organizations that have worked with established telecommunications companies to improve their scale.

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When outside stakeholders–customers, government agencies, or investors–see the alliance, they tend to view the new venture as legitimate and trustworthy. There’s no reason nonprofits can’t benefit from similar partnerships. Especially for a relatively new or unknown nonprofit, a partnership with a well-known company can deliver a boost to image and reputation.

2. Use Metrics To Drive And Measure Success

Your heart may be in the right place, but that’s not always enough. Results matter, and smart nonprofits know that crafting internal performance measures is critical. Despite this, 75% of nonprofits lack meaningful impact data.

A highly effective technique developed by the startup community, and used by companies such as Spotify and Google, is to track Objectives and Key Results (OKRs). The Bangladeshi nonprofit BRAC, for instance, has used rigorous performance measurement to help it reach over 100 million people across 12 countries.

The acronym OKR may make your eyes glaze over, but the technique is simple.

  1. Break down the organization’s overall mission into a few (three to five) high-level objectives that can be accomplished in the next quarter or year.
  2. For each objective, note a few key anticipated results. These should be concrete, measurable, and challenging. Research has shown that setting challenging goals tends to lead to better performance.

That’s it.

3. Design A Great User Experience

Did you know that nearly 50% of prospective donors are prevented from handing over their contribution by website usability issues? Whether you’re running a Web-based graphic-design shop or trying to bring relief to disaster victims, user experience matters.

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Startups have found that a great user experience is almost as important as the product itself. They employ user experience designers to ensure their message is cohesive across multiple technology platforms.

Nonprofits can apply the same mindset. The online micro-lending platform Milaap, for example, employs user experience designers to maximize the appeal of its campaigns. And research by Nielsen Norman Group suggests that fixing minor website usability problems can cause a 10% boost in donations. This also underscores the benefits of hiring skilled technology personnel.

4. Learn From Experimentation

Tech startups are masters at retaining customer interest through online experimentation, known as A/B testing. In online interactions, there are a number of key points at which a customer may either: 1. Stay engaged in the startup’s brand or (2) Lose interest. The trick is to learn how to retain attention at each stage–and this is where experiments with format help.

A variety of different messages or communication formats may be effective with different customers, leading to higher or lower conversion rates. For example, in the wake of the 2010 earthquake in Haiti, the Clinton-Bush Haiti Fund used experiments in the layout of its donation page–like changing the text of a “Submit” button to “Support Haiti”–to increase the total funds it raised by over $1 million.

Nonprofits can take a similar approach to attracting donors. When crafting online ads, tweets, or donation options, nonprofits should experiment with a variety of formats to see what works best.

5. Look To The Top

Effectiveness at accomplishing your goals stems from the type of people you can attract. Recruiting people and maintaining a great culture are the keys to any nonprofit’s success.

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For example, whether or not your mission is related to technology, there are many benefits to including a skilled technology officer on your senior team. Tech executives are skilled at building technology infrastructure and delivering stability to your online product, and of course strengthening the user experience.

Peter Ransom, chief information officer of Oxfam, moved IT services to the cloud, allowing the company to scale its donation capacity, which is crucial when donors rush in after a major catastrophe. A tech officer may also have established relationships with external advisors and other companies that can blossom into mutually beneficial partnerships.

On the surface, nonprofits and Silicon Valley startups appear to live in different worlds. But at the end of the day, if nonprofits want to create a meaningful, lasting impact they should take lessons from their more bottom-line-driven friends. Both face resource limitations and both want to change the world (albeit in slightly different ways).

Like startups, nonprofits need to engage key supporters, stay nimble, and keep everyday operations aligned with long-term goals, even if this means inspiring hundreds of thousands of people to pour ice water over their heads.

With contributions by David Clough and Ben Winterhalter of Hippo Reads.

Sriram Krishnan is former Head of New Markets, Asia Pacific, for Spotify, and now serves as an advisor to Teach for Malaysia, a Kuala Lumpur-based non profit organization. Reach him @sriramkri