Ten years ago the startup landscape was very different. There were no accelerators, investor platforms, or founder communities. Since 2005, ecosystem players like Y Combinator and AngelList have changed how startups start. Today, the tech nonprofit landscape looks a lot like it did for startups back then. Founders are isolated, funders are ill-equipped to evaluate tech nonprofit business models, and motivated donors struggle to find good investment opportunities.
Early sector leaders like Khan Academy and Kiva demonstrate the need and models for some tech companies to adopt nonprofit business models. First, there are some problems markets can’t solve like universal education or access to financial markets for the poor. Second, while tech is capable of bringing about radical transformation, at the moment, it is exacerbating the income inequality divide. UBER, TaskRabbit, and a host of other tech services are designed for the privileged. Innovation can and should benefit more than the haves. By investing in nonprofit tech, philanthropy can level the playing field.
There are a few values-aligned funders testing models to do just that like Vodafone Americas Foundation’s Wireless Innovation Project and Google.org’s Impact Challenge. Fast Forward—the organization I co-founded—is the first accelerator exclusively for tech nonprofits. We identify nonprofit tech leaders, provide their organizations with funding, training, and mentorship. There is a huge opportunity for philanthropic institutions—foundations, corporations, and individuals—to build this sector. Philanthropy is poised for it. Why? Because the three things needed to build and support ecosystem also happen to be three things philanthropy does well: 1) deploy capital, 2) identify leaders, and 3) create new categories.
Philanthropy is the ultimate risk capital; foundations invest—by mandate and vision—with no hope for financial return. Philanthropic risk is the reason we have vaccines and universities. Foundations are already versed in identifying opportunities for disruption. As such, foundations can be be the angel investors for nonprofit tech.
Foundations excel at identifying visionary founders. Venture philanthropists like the Skoll Foundation and Draper Richards Kaplan model how investing in high potential, social entrepreneurs results in leveraged impact. A cadre of nonprofit tech entrepreneurs is already emerging. At the moment they struggle to find mentorship and investment. Their potential will be best realized with the backing of foundations—those already versed in cultivating and supporting the type of talent required to build a socially focused organization. Philanthropists could easily take on the challenge of investing in the next generation of nonprofit tech founders.
Create New Categories
Jane Addams’ Hull House ushered a standard of child welfare. Ewig Kauffman’s foundation ignited inquiry into the science of entrepreneurship. These philanthropists used their risk capital to create entirely new categories of impact. This generation of foundations should be at the forefront of social impact innovation—nonprofit tech.