Social Startup Success | Kathleen Kelly Janus

Summary of: Social Startup Success: How the Best Nonprofits Launch, Scale Up, and Make a Difference
By: Kathleen Kelly Janus

Introduction

In ‘Social Startup Success: How the Best Nonprofits Launch, Scale Up, and Make a Difference’, Kathleen Kelly Janus reveals the techniques and strategies that successful nonprofits use to maximize their reach and make a tangible impact. The book highlights the importance of strategically developing prototypes, embracing failure, evaluating success through measurable outcomes, and utilizing data for growth. For nonprofits to scale up, they must cleverly navigate funding while keeping their core values in focus. Janus also explores necessary processes for building a strong organizational structure, workforce, and board to attain and hold on to success.

Maximizing Funding for Nonprofits

Nonprofits can’t access angel investors and must rely on stakeholders. To expand, they must use “human-centered design” – a methodology that involves researching, prototyping, and testing. Aspire Public Schools used this approach to create a low-cost prototype for its Preschool Bus Project, using only a carpet, some tape, and cheap Ikea furniture.

Embracing Failure in Nonprofits

Innovation in nonprofits requires taking risks, admitting failures, and trying again. However, when nonprofit leaders are too committed to their ideas and fear losing funding, their organizations suffer, and beneficiaries are ultimately harmed. Learning from failures is crucial for nonprofit success. Silicon Valley’s embrace of failure offers a model for nonprofits. Testing services in the field and openly sharing missteps within the organization can spark innovation and growth. Organizations like GiveWell share their failures to help others learn from their mistakes. To achieve success, nonprofits must be willing to take risks and learn from their failures.

Data-Driven Approach to Nonprofit Success

Nonprofits should focus on SMART indicators, outcomes, and hard-data metrics combined with qualitative assessments to determine their impact on beneficiaries. The “theory of change” model sets goals and defines metrics to track progress. Strong data is essential to prove impact for funders.

With the increasing demand for nonprofit transparency, funders expect organizations to gather sound data to prove their impact. ROI models are not appropriate for nonprofits; instead, they should develop SMART success indicators that focus on solving problems. Determining impact requires using a combination of hard-data metrics and qualitative assessments, such as surveys. Nonprofits should rely on outcomes, such as how many beneficiaries got better-paying jobs, rather than outputs, such as the number of attendees at a training program. The “theory of change” model sets goals and tracks progress over time on a dashboard. A case in point is The Coalition for Queens (C4Q), aimed at creating a more robust tech ecosystem in Queens, New York, by helping underserved people gain access to training to become programmers. With sound metrics in place, C4Q could claim that 85% of its participants will graduate, and 70% will earn a minimum of $85,000 per year in tech. Strong data is vital to prove the impact of the nonprofit’s efforts and support the journey of social change.

Improving Social Impact through Beneficiary Feedback

Nonprofit organizations can improve their social impact by incorporating feedback from beneficiaries. Braven, a nonprofit, surveyed non-participant students to identify the best intervention strategy. Maintaining relationships with beneficiaries through mentoring, events, and ongoing services is critical to tracking outcomes. Creating a plan for senior leadership and using a dashboard with key metrics can streamline data and provide meaningful comparisons. Room to Read has a literacy dashboard with only eight metrics that it distributes to funders. Google Sheets and Salesforce.com offer free versions of dashboards for nonprofit organizations.

Earned Income Strategy

Developing an earned-income strategy can help overcome the biggest barrier to scaling up – funding. Earnings can make up to 30% of the budget, but philanthropic funding should be the main source of income for at least two years. A diversity of income sources is pivotal, and nonprofits should look for “natural” matches among potential funders. With an earned-income strategy, not all nonprofits may find business ventures suitable as their core funding stream. Nonprofits in human rights, criminal justice, and environmental protection have less access to earned income for ethical reasons. The strongest sectors for testing earned-income strategies are education, global development, and youth development. To prevent exhaustion and allow staff to take more ownership over the mission of the organization, leading from behind is important. Wise CEOs recognize the need to share power to have a greater impact. The Sierra Club, for example, charges membership fees, while the Hot Bread Kitchen incorporated 35% of funding from philanthropic sources. A balance between philanthropic and earned income is critical for long-term sustainability.

The Hybrid Model for Nonprofits

Nonprofits can create a 501(c)(3) organization with a for-profit element to receive investment capital and tax exemptions. This hybrid model allows for unlimited income potential while still supporting the social impact mission. However, managing the legal aspects can be challenging, and focusing too much on profit can detract from the core mission. The ideal hybrid model links the business venture directly to the mission, such as Hot Bread Kitchen.

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