Five Ways Non-Profits Can Think Like Startups

by Y Combinator3/9/2016

It’s been three years since Y Combinator backed its very first nonprofit, medical treatment funding platform Watsi.

Since then, a total of 16 nonprofit startups have graduated from YC, with several more in the current Winter 2016 batch.

Last month in San Francisco, a number of YC nonprofit alums came together to discuss their experiences building 501(c)(3) organizations with a startup mindset. Here, we’d like to share five key pieces of advice from the evening’s discussion:

Set distinct goals for growth.

Despite their 501(c)(3) status, new nonprofit organizations should not think all that much differently than their for-profit peers when it comes to growth.

A lot of nonprofits talk themselves out of having higher expectations on growth and metrics because of the longer-term nature of their missions. They think, “We are looking to cure a disease, or even out a systemic societal imbalance. It’s impossible to measure this on a monthly or quarterly growth goal.” Or, “We are working toward a grand mission. Measuring metrics will only get us into the weeds.”

These types of statements are cop-outs. No matter what you’re working on, it’s important to break down your long-term vision into its component parts, and place targets on incremental goals.

Even if you are a solving a big problem, you must find a way to measure it in real time to keep your team motivated and stay on track.

Beware of mission-creep.

Attracting donors is a crucial part of building a non-profit. But donors tend to have very specific interests. If you aren’t careful, you can easily wind up promising many different things to different people, and spreading your resources too thin.

To prevent this from happening to you, come up with your own independent plan for what’s going to move your organization forward most, before talking to anyone who may donate money. Then, commit to this plan in front of your entire team. This will hold you accountable, and make it difficult for you to be swayed by a donor who’s interested in some specific thing that may not be a priority for you.

When you do start talking to potential funders, constantly balance their priorities against the plan you are independently confident in. Don’t change your pitch and reframe your vision depending on who is sitting across the table from you. (No one sets out to do this, but it can happen scarily easily when you’re an idealistic and open-minded founder.)

Stick to your values, even when it’s not pretty or easy.

Early stage startup nonprofits like to boast about having values that differentiate them from older, established nonprofit organizations. But often, they quickly find that upholding values like “transparency” is easier said than done.

For instance: Your ideal plan may be to share data automatically with donors via a slick personalized web portal. But in the early days, when you are doing everything as scrappily as possible, that just may not be feasible: Maybe the best you can do is manually copying and pasting the data into a simple spreadsheet and making it public on your website.

Don’t let a grand vision delay you from acting on stated values like transparency from the very beginning. It’s important to adhere to the values that set you apart from other nonprofits, even if it doesn’t look as pretty or work as quickly as you’d like it to at first.

Self-impose a fundraising deadline.

The global nonprofit fundraising circuit runs year-round. It can be easy for nonprofit founders to get trapped in this treadmill, constantly going to events and taking meetings with new potential donors. One of the most insidious problems many nonprofits develop is that they spend all their time fundraising, and don’t have time to work on their actual company.

To prevent this, you should set a deadline for when you are going to stop fundraising. Think of it as a “philanthropic seed round” with a discrete beginning and end, just like for-profit startups structure their funding rounds. This way, you are focused with your time and mental energy — and you also create a sense of urgency for donors.

Remember who you are working for.

As crucial as it is for you to build relationships with donors and cultivate your own staff, it is more important to remember to give top priority to users — the beneficiaries of the nonprofit’s efforts.

An important part of this is spending physical time with users, which may not always be convenient: If it means you need to live in another country for a while, for example, you should live in another country.

Talking to your users is the only way to ensure that you are doing the right thing, and that you are actually making an impact.

A very special thanks to Jessica Livingston and to Watsi cofounder Grace Garey for helping collect and clarify these tips.


  • Y Combinator

    Y Combinator created a new model for funding early stage startups. Twice a year we invest a small amount of money ($150k) in a large number of startups (recently 200). The startups move to Silicon