The microeconomics of good
Posted April 5, 2022 ‐ 3 min read
Nonprofits need to make the most of every dollar, which often keeps them from being able to invest in the efficiencies that technology can bring - we're here to try to change that.
Nonprofits have a scaling problem
Every nonprofit has to be scrappy in the beginning. Intense financial pressure and expectations of short-term efficacy encourage the use of manual processes to minimize expense and prove out impact. This approach makes nonprofits nimble, but by using labor as a stopgap for capital, their ability to grow is constrained by their ability to fundraise, since delivering double the impact requires double the employees and double the salaries.
By contrast, industry can focus on scale as the primary objective, enabled by venture funding and other forms of long-term financing. Corporations minimize their long-term marginal costs through strategic capital investment, which increasingly comes in the form of software. Money seeking financial returns flows to corporations minimizing marginals costs.
But what if that money (and the person behind it) is looking for an environmental return? A humanitarian one? Today, too few nonprofits have the tools and financial resources to invest in the technologies that would allow them to lower their marginal costs. This isn’t surprising for organizations that operate under constrained budgets and need to make the best use of every marginal donor dollar.
That’s where we come in. We’re software engineers with a simple goal: to lower the marginal cost of doing good.
They bring the ideas, we bring the scale
We build software, that’s what we’re good at. Nonprofits know how to impact their focus area, that’s what they’re good at. Our model is to help clients think about their impediments to growth - what would need to change to 10x your current impact - and see if there is anything we can do to address those bottlenecks.
This separation of expertise is important: the people best suited to design solutions to a problem are the ones with proximity to it and deep knowledge of it. That’s why we work with nonprofits that have already proven their ability to solve their problem in small populations. These organizations already see the pitfalls and the benefits of scale; we help them find a workable path.
We’re also a nonprofit, and our mission is to help our clients succeed. Most nonprofits’ technological needs can be met with existing software. This means that most of our potential clients only need us to advise, configure, or connect their software together, and don’t need anything large or custom. We don’t charge nonprofits for their first 40 hours of our time and charge at ~¼ the industry average after that. Most of our clients will never need to pay us a cent.
How we will scale
Software is cheap to run and expensive to write. Even though we will primarily use existing software, a technology-centered nonprofit is an expensive operation and one that isn’t certain to be able to grow.
Though we’ve got a stable year of funding ahead of us, we have already begun thinking about our own scaling bottlenecks and opportunities. In the first set of projects we’re tackling, we’ve invested heavily in common solutions to common problems, best-in-class testing and tooling, and an open-source ethos. As we begin to bring on additional engineers, we’ll continue to think through the question of scale and to invest in our own.
After all, it’s what we do.