
Ask HN: Is it possible to start a successful tech non-profit? - tabeth
I&#x27;ve been very curious about this.<p>There seems to be a few categories of non-profits&#x2F;social enterprise that are heavy in their tech usage that are also relatively large. The goal here is to see if it is possible to make a great social impact and be relatively unaffected by the interests of investors, which presumably will (but not always) be in conflict with the social impact interests.<p>* Direct Nonprofits:
- Wikipedia
- Khan Academy<p>* Nonprofits with for profit Subsidiary 
- Mozilla Foundation<p>* For profits with a nonprofit like governance
- Craigslist
- Kickstarter<p>I would love to hear your thoughts on more examples to flesh out the above, or perhaps a refutation of my argument that a for-profit organization cannot make a huge social impact through traditional means. (For example, would Wikipedia be as influential today if it were a for-profit? Craigslist a nonprofit?).<p>I would also love to know if there are any further articles&#x2F;books&#x2F;reading on the subject.
======
rectang
The Apache Software Foundation is a 501(c)(3) non-profit corporation.

The budget is tiny: a little over one million USD annually for ~200 projects,
or around $5-6k per project. Running an inexpensive operation is key to
avoiding being excessively dependent on sponsors.

The ASF is incredibly valuable and there's no question that there are
potential sponsors out there would would be willing to give a lot more money
in exchange for more direct influence. Being a tax-deductible 501(c)(3) -- as
opposed to a 501(c)(6) -- in fact makes it easier to avoid that influence
because it is so cumbersome for a 501(c)(3) to receive and spend direct
donations without running afoul of the IRS.

The downside is that the ASF doesn't have a zillion dollars to blow on
marketing and so people undervalue it.

------
wpietri
Other examples:

* Grameen Foundation USA: [http://www.grameenfoundation.org/](http://www.grameenfoundation.org/)

* Kiva: [http://www.kiva.org/](http://www.kiva.org/)

* Code for America: [http://codeforamerica.org/](http://codeforamerica.org/)

I've done work for all of those plus Wikipedia and Mozilla; glad to answer
questions.

It's definitely possible to start tech non-profits, but there's a big question
of how to fund them. Personally, I favor models like Kiva, where revenue is
closely tied to actual value delivered because that creates a core feedback
loop that helps keep people focused.

The more common model, though, is pursuing grants, which I think is currently
inimical to good startup practices. It's a very long, expensive fundraising
cycle and the way you get money is by promising to do very specific things.
But if you're doing anything really innovative, then those promises shackle
you to a plan that is months or years out of date.

~~~
tabeth
Thanks for the response I would love to talk to you in more （perhaps
extensive, if you're willing) detail. If you see this is there anyway you
could email me? Or would you mind if I emailed you?

~~~
wpietri
I don't see an email address in your profile, but you (or anybody interested)
should feel free to email me. If you're in SF, glad to meet for coffee.

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mrmondo
I work for a 'tech' non-profit that I would certainly call successful. We have
been around for 25 years and had many technological 'firsts' in Australia
including I believe the first search engine and service directory. But have
experienced substantial growth over the past 3-4 years and have in many ways
become leaders in many areas both what we provide (products/services) and how
we provide them (our internal platforms, build pipeline, automation,
performance etc...).

Our slogan is 'Technology for Social Justice'

Our annual report is public as we are a registered not-for-profit & charitable
organisation. When I started at Infoxchange 3 ½ years ago our financial
turnover was around $3M/yr (after 25 years), we are now looking at around
$10M. This growth is for a number of reasons but mainly through a mix of
technological improvements (paying down tech debt and technical modernisation)
and very positive feedback / recognition from clients that have spread us
through word of mouth, advocacy groups etc... We're also winning quite a
number of awards including this years 'Google Impact Challenge' amongst
others.

I do apologise for our awfully dated website which is shortly to be replaced
early next month, while it may look like we perhaps do not practise what we
preach so to speak I can assure you that it is, by quite some considerable
distance the most neglected part of the org and as you can probably guess I'm
quite embarrassed of it: [https://www.infoxchange.net.au/resources/annual-
reports](https://www.infoxchange.net.au/resources/annual-reports)

Around a year ago I gave a brief talk around my/our journey there over the
past few years, while a lot of the content was spoken you can find the slides
on my blog here:
[https://smcleod.net/talk-24-months/](https://smcleod.net/talk-24-months/)

If you have any questions I'll do my best to answer them for you.

~~~
nfc
I'm in the process of bootstrapping a tech company whose goals are "non-
profit". The product is finished although in the webpage
[http://www.alfiv.com](http://www.alfiv.com) the model and description of the
product are outdated and incomplete since I've been too busy with the
technical development.

I'm thinking about the possibility of looking for investments. It seems that
accepting an investment would force me to give up on the kind of things I want
my company to do, what are your thoughts about accepting external investments,
was your company bootstrapped or it took investors money?

In my case I want the company to give all its profits to other non-profit
organisations, so quite a hard sell for a possible investor.

~~~
mrmondo
We have no investors and are funded by ad-hoc and long running projects that
customers pay (at cost) licensing to have access to and support from us for. I
believe this started out as a mix of 'in our spare time' development and then
customer (perhaps local government?) that required a service to be built and
hosted, at that time the organisation was just one or two people so it was
able to move fast without costing much. Since then we've obviously grown a lot
(120~ people and many external relationships) and we try to balance what
customers want and we can provide so that the smaller customers can use
systems that otherwise would need the kind of funding to developer that only
he big players can afford to spend. We try to open source as much of our
underlying systems as possible as we have benefited greatly from the open
source communities over the years.

------
mlinksva
Trade associations (501(c)(6) in the US; Eclipse and Linux Foundations are
examples) are another category that may or may not fit your schema, roughly
nonprofits governed by (usually) for profit stakeholders.

plos.org archive.org and eff.org are additional direct nonprofit (charities,
501(c)(3) in the US) examples. EFF is an advocacy org but they do more
interesting tech work than the vast majority of startups.

Another interesting category maybe worth considering are for profits with
normal for profit governance but some non-fuzzy public benefit aspect at the
core of their business. In the context of tech a free-software-only for-profit
like Red Hat maybe.

You probably want to put a finer point on "social impact".

------
worldadventurer
We're another example of a non-profit tech startup:
[https://www.engageSPARK.com](https://www.engageSPARK.com) . We're a slightly
different model in that while we focus on selling our engagement platform
(think "Twilio for non-techies") to non-profit customers globally, we have
lots of commercial customers who use our platform for marketing purposes.
Having a diversified revenue stream helps greatly with sustainability.

Check out Fast Forward, an accelerator focusing exclusively on non-profit tech
startups: [https://www.ffwd.org](https://www.ffwd.org) . Y Combinator now also
has a track for non-profits -
[https://www.ycombinator.com/nonprofits/](https://www.ycombinator.com/nonprofits/)
and for example funded [https://watsi.org/](https://watsi.org/) .

Feel free to ask questions. I volunteered at Grameen Foundation and have been
exploring this space for a while.

~~~
cdcarter
Awesome looking product. I'm a non-profit tech consultant, and I definitely
will be keeping you guys in mind for a certain type of client. Have you
considered Salesforce integration? The donated licenses and the growing NPO
ecosystem is causing me to see a lot of orgs moving to SFDC for core database
needs.

~~~
vijayr
_non profit tech consultant_

Could you explain what type of tasks you do? How does one get a job like
yours?

~~~
cdcarter
I work for a firm that builds databases primarily for health and human service
organizations. We usually work on the Salesforce platform (because of the
aforementioned donated licenses), and develop client and program tracking
systems that are closely aligned with the organization's business practices.
We also do some work helping them implement donor and/or volunteer management
systems. My portfolio is primarily supportive housing organizations, so I help
develop outcomes tracking, client enrollment and withdrawal tracking, and case
management.

I got here by working in non-profits for many years as an operations person,
learning database technology, and then finding a firm that combined those two!

------
caseysoftware
What does "success" in this context mean?

\- An entity that drives resources towards solving a particular problem?

\- An entity that does the above _and_ is self-sustaining?

\- An entity which reduces the size/scope/people impacted by a particular
problem?

\- An entity which solves the particular problem once and for all? (And then
dissolves after, I assume.)

------
jeffmould
I believe that social impact investing is on the rise in the last few years.
In particular you have accelerator programs like Tumml for example that are
seeing growing success. There is growing trend in social impact for companies
to form as Public Benefit Corporations. While there is a bit of skepticism
around the basis for forming companies in this manner, I think that many are
truly in it to make an impact. From a traditional investor perspective it is
tough. The goals are not entirely aligned. Traditional investors expect to
make monetary returns, while a social impact investment may not have a huge
cash payday, their impact on the other hand could be significant.

For more research you could check out groups like the Case Foundation, Tumml
(Julie and Clara that run the accelerator are super nice and I think have a
great grasp/direction on social impact investing), Wharton Social Impact
Initiative
([https://socialimpact.wharton.upenn.edu/](https://socialimpact.wharton.upenn.edu/))
is part of the Wharton School of Business and has done some great research in
this area, and while he has not written much about social impact investing
even Jason Calacanis has been involved in investing in social impact companies
(i.e. HandUp).

------
ShakataGaNai
The last category, specifically Kickstarter is actually a "Public Benefit
Company" [1] which is fairly new in most areas and an interesting concept.
It's basically "make money but do good things" legalized. Sounds like what
you're talking about.

[1] [https://en.wikipedia.org/wiki/Public-
benefit_corporation#Uni...](https://en.wikipedia.org/wiki/Public-
benefit_corporation#United_States)

------
daniel-levin
Yes, I say so by way of example: Sama Group [1]. They run several non-profit
businesses.

>> Established in 2008, Samasource is a non-profit business that connects
marginalized women and youth to dignified work via the Internet

>> Launched in 2012, Samahope is the first crowdfunding platform for medical
treatments.

>> Samaschool (previously SamaUSA) prepares people for success in the digital
economy.

[1] [http://samagroup.co/](http://samagroup.co/)

------
anuj_nm
Change Heroes isn't a non-profit, but a technology social enterprise for sure.
We help charities fundraise better through video outreach + microgifts. So far
we've helped fundraise over $2.86m, and we're just getting started.

Our charity partners love us since we give them an immediate ROI that's way
better than traditional channels. Our users love us since we help them create
real world impact that they can be immensely proud of.

Our team is made of devs, designers, PMs and non-profit veterans. I'd feel
incomplete if I didn't shamelessly mention that we're hiring:
[https://boards.greenhouse.io/changeheroes/jobs/125117](https://boards.greenhouse.io/changeheroes/jobs/125117)

------
anton_tarasenko
It's better to start with a problem and understand how to address it. For-
profit companies would be an optimal solution for most human problems. Strong
funding and control over business leave you with more resources.

If only non-profits work with your problem, then ask them what tech solutions
they need. In some cases, they don't need technology at all, but rather
funding or government support.

I would avoid "feeling good" non-profits that spend grands on noble but futile
activities. Most useful solutions are those that people buy, instead of
getting for free.

I'd be glad to point at non-profits in the area you're interested in.

~~~
worldadventurer
A non-profit doesn't necessarily mean that they give stuff away for free. A
non-profit can (and there are many that do, for example, ours -
[https://www.engageSPARK.com](https://www.engageSPARK.com) ) sell stuff to
customers to generate revenue and have profits. The difference is that instead
of shareholders extracting the profits, all profits are used to have more
impact.

Hospitals, universities, credit unions, financial companies (e.g,. Vanguard),
and insurance companies (e.g,. Blue Cross and Blue Shield) are often revenue-
generating non-profits or mutual companies (where all profits are shared by
the customers).

As @oneJob points out in another comment here - All that "non-profit" means
is, from Wikipedia, : "A non-profit organization is an organization that uses
its surplus revenues to further achieve its purpose or mission, rather than
distributing its surplus income to the organization's shareholders (or
equivalents) as profit or dividends."

~~~
anton_tarasenko
Being a nonprofit cuts you off capital. Investors are reluctant to fund
nonprofits, which aren't going to generate value for them.

It's okay if a company doesn't need capital, but even tech firms take $50-100M
a year to grow.

Again, if your sector consists of nonprofits, you may do fine. But IT and
finance are for profit industries, with rare exceptions.

------
sharp11
This is a huge and growing space. Random NYT article from today:
[http://www.nytimes.com/2015/11/20/business/dealbook/buffetts...](http://www.nytimes.com/2015/11/20/business/dealbook/buffetts-
grandson-seeks-own-investment-route-social-change.html?_r=0)

Check out B-Corps (For benefit corporations). Read Amory Lovins' Natural
Capitalism.

------
drallison
Take a look at Benetech ([http://www.benetech.org](http://www.benetech.org))
in Palo Alto. They have been at it since 1989. The CEO, Jim Fruchterman, is
approachable and helpful. Their Wikipedia page is also worth reading:
[https://en.wikipedia.org/wiki/Benetech](https://en.wikipedia.org/wiki/Benetech).

------
LyndsySimon
I was the first dev hire at the Center for Open Science, and only recently
moved to a for-profit startup. COS has been quite successful, and I expect it
to continue to be so for the foreseeable future.

[http://cos.io/](http://cos.io/)

I'll ping their cofounders, I'm sure one of them will jump in to answer
questions if you'd like.

~~~
jeffspies
Thanks, Lyndsy. I'd be happy to answer any questions.

------
corysama
There is also Kickstarter - a Public Benefit Corporation

[https://www.kickstarter.com/blog/kickstarter-is-now-a-
benefi...](https://www.kickstarter.com/blog/kickstarter-is-now-a-benefit-
corporation)

[https://www.kickstarter.com/charter](https://www.kickstarter.com/charter)

------
huac
Maybe [http://www.bayesimpact.org/](http://www.bayesimpact.org/) (one of the
nonprofits supported by YC)

------
oneJob
All that "non-profit" means is, from Wikipedia, :

"A non-profit organization is an organization that uses its surplus revenues
to further achieve its purpose or mission, rather than distributing its
surplus income to the organization's shareholders (or equivalents) as profit
or dividends."

There are plenty of ways to raise capital that allow an organization to abide
by such restrictions. A nonprofit is not strictly restricted on who it can
hire or what products it can make or services it can offer. So, unless your
definition of "successful" requires that you distribute surplus revenues to
shareholders, then yes, it is possible to start a successful tech non-profit.

You can pay your employees massive salaries. You can raise massive amounts of
debt to fund your expansion. You can employ ruthless business practices.

Many businesses do not distribute capital to shareholders until well after the
business has matured, reasoning that the capital is better used growing the
business. Meaning, the investors have a long investment horizon. Meaning,
their initial smaller amount, often accompanied by additional rounds of
funding, was enough to get a successful business going. Capital sources can
include endowments, public and private grants, or payment for goods and
services.

Personally, I believe that non-profits have gotten a bad wrap. There are some
amazing companies out there that do not aim to return money to shareholders,
that prioritize their product, their cause, or their customers. I'd highly,
highly recommend checking out YouTube videos about Patagonia and it's founder,
along these lines. You can even mis-use non-profit status. Many people don't
realize that IKEA is a non-profit, and that the profits are extracted from its
activities through some tax and legal loopholes.

Typically, the relevant issues are related to the raising of capital. But
think about how that often turns out. Many founders raising outside capital
lose control of their company or see their share diluted, that is if the
company is even successful. And if it is, and they maintain control and their
share of ownership, it could be a long time before there is any surplus
revenue.

On the flip side, you can start a private company and be help accountable to
no one but yourself. You can raise all different sorts of capital. And you can
determine what social / environmental impact you make. You pretty much only
lose the tax breaks.

So you see, it's really a matter of capital management, not of business
management. You can reduce your options for raising capital from the get go,
or you can choose to deal with taxes and possibly even make those go away,
like GE magically does. But there are no impediments to you delivering a
product or service to make the sort of impact you are hoping to make.

~~~
cdcarter
I'm guessing the GP was specifically referring to the US categorization of
non-profits known as a public charity, formed under section 501(c) of the
Internal Revenue Code. There are specific limitations of the types of
organizations that can or cannot be 501(c)3 (the most common type of non-
profit in the US), and there are restrictions on how revenue streams are
balanced.

That said, "So, unless your definition of "successful" requires that you
distribute surplus revenues to shareholders, then yes, it is possible to start
a successful tech non-profit." is very salient and I agree wholeheartedly.

