Bootstrapping the non-profit organisation Rule 8 (part 1)

This is the eighth post in a series applying Seth Godin’s rules of bootstrapping (see also here) to building a non-profit organisation.

Rule 8: Create Boundaries for Yourself

Create boundaries for yourself.

What do you do?

What don’t you do?

This is a variation on “It’s not for you.”

Any work we do is in tension with boundaries.

There are boundaries we don’t want. Limits to:

  • The number of clients we an reach and serve
  • The number of clients who want to engage deeply with us
  • Funding
  • The number of people we can manage well
  • The number of the right sort of people to manage
  • Our time, and the time of our team
  • How hard we can work
  • Our skills
  • The speed at which we can learn
  • Our ability to spot problems
  • Our ability to fix the problems we do spot
  • How much other people care
  • How much we care
  • Attention
  • What we can get permission to do
  • Add another ten of your own

And then there are boundaries that we choose for ourselves:

  • Given that we can serve a limited number of people, who will we try to serve first?
  • That is to say, who will we serve now, and who won’t we serve now?
  • Given that there aren’t enough of the right people, will we hire any people? Who won’t we hire?
  • How hard won’t we work ourselves and our team?
  • What values won’t we compromise (integrity, quality of product, quality of relationship, health of our team, the environment)?
  • The same logic applies to all of the above

It all comes down to decisions – I like the understanding of ‘decision’ as a ‘cutting off’ of possibilities. We need to acknowledge what we can’t do and identify what we won’t do so that we can focus on what we can do and will do – and do those things.

Identifying boundaries and limits is a really helpful flipside in the process of thinking through your what’s important to you (values), the change you wish to see in the world (vision), and what’s possible now.

Backlog

We all know about the backlog:

  • The work we never quite catch up on
  • The to do list items that have fallen off the bottom of the page
  • The promises large and small we haven’t quite managed to keep
  • The dread of knowing that you could put in a hard day’s work today and still start tomorrow behind

Backlogs are horrible. They create emotional drag, a constant friction through our workdays.

There are ways to work against this – setting the bar low and just doing it now, and starting small are good places to start.

Bootstrapping the non-profit organisation Rule 7 (part 4)

This is the seventh-and-a-quarter post in a series applying Seth Godin’s rules of bootstrapping (see also here) to building a non-profit organisation.

Rule 7: Charge a lot (but be worth more than you charge)

A last argument for applying this rule in non-profit context is that if your clients pay, your resources go further, and you can serve a lot more people. We covered this principle in Rule 3 (see ‘Eager to pay and scaling the non-profit), but it’s worth repeating here.

I’ve just been listening to an interview with One Acre Fund‘s Andrew Youn on Rob Reid’s After On podcast where Andrew spoke about the importance of a revenue model in their work, where the farmers they serve receive credit, but ultimately pay for the services they receive:

Rob Reid: Some people might say that these folks are extremely poor, why don’t you deliver these services for free? Part of it is that there’s only so much money in your organisation, and that 98.5% payback means that you’ve got a lot more dollars put to work. What percentage of One Acre Fund’s annual budget comes back to it through repayments?

Andrew Youn: Most of One Acre Fund is core program delivering all these services… Within that core program, about 70% of our budget is covered by farmer payments, and 30% from donors.

RR: You’re literally serving three times as more as many people as you could if you were a purely charitable organisation.

AY: It makes us so much more cost effective… we can serve three, four times as many people by charging for our services. I think it also makes us a little more beholden, as an organisation, to the customer that we serve. So we use, for example, repayment as a customer service quality metric. [see Rule 1 for more on this idea]

After On Podcast, Episode 35

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So here’s the final reformulation of Rule 7:

Rule 7 of bootstrapping the non-profit organisation: Find the right price (and be worth more than you charge)

Bootstrapping the non-profit organisation Rule 7 (part 3)

This is the seventh-and-a-third post in a series applying Seth Godin’s rules of bootstrapping (see also here) to building a non-profit organisation.

Rule 7: Charge a lot (but be worth more than you charge)

How does this rule apply to what a charity charges its clients? Is it ethical to charge your clients a lot?

Shakespeare’s Prospero said it best:

This swift business

I must uneasy make lest too light winning

Make the prize light.

The Tempest, Act 1 Scene 2

I’m not a subscriber to the argument that free things are always un- or underappreciated, but there’s truth in the sorcerer’s words: we value what is dear.

Or perhaps we should say, we value things that cost a lot as long as long as they’re worth more than we paid.

Think about the times you’ve felt frustrated by a cheap purchase that wasn’t worth it. Or the more costly, high-quality item that brought you satisfaction each and every time you used it. Rule 7 follows this logic – just as it’s possible to be cheap and still rip people off, it’s possible to charge a lot and still be generous.

In fact, charging a lot might be what gives you the space to be generous. It’s hard to give people the time and attention they require if you’re cutting corners and pinching pennies. Rule 7 asserts that it’s fine for a charity to charge its clients for its services – even to charge ‘a lot’ – as long as the client makes the most profit from the transaction.

And the fact is, even if the service that you provide to your clients costs them nothing in financial terms, they always pay something – time, attention, the effort of showing up.

When your clients pay a bit more of those things for what you provide, they think more about whether they really want it, and take it a bit more seriously. And just as if you’d charged more money for something, when people have bought in to what you’re doing, there’s a lot more that you can do, so you open up a lot of extra ways to create value for and with them.

As another poet put it,

Where your treasure is, there your heart will be also.

Bootstrapping the non-profit organisation Rule 7 (part 2)

This is the seventh-and-a-half post in a series applying Seth Godin’s rules of bootstrapping (see also here) to building a non-profit organisation.

Rule 7: Charge a lot (but be worth more than you charge)

The point here is that your organisation’s selling point – we’re still looking at things from the perspective of donors and supporters – should never be how cheap you are (your price), but how much value you create for your clients.

It doesn’t matter what your price is, as long as you’re worth it – or Seth would say, worth as long as you’re worth more.

This might be about how many people you serve and how many things you do.

Or it might just as well be about how you do what you do – the values that you bring to the table that make you special. The things that would:

Make peoplemiss youif you were gone.

Bootstrapping the non-profit organisation Rule 7 (part 1)

This is the seventh post in a series applying Seth Godin’s rules of bootstrapping (see also here) to building a non-profit organisation.

Rule 7: Charge a lot (but be worth more than you charge)

This is a counter-intuitive but powerful lens for thinking about non-profit work. For now, let’s understand what you ‘charge’ as being how much your program costs.

All other things being equal, being low cost – getting things done for as little as possible – is a virtue.

All other things being equal, using resources well (efficiency) is a Good Thing.

But the thing is, all other things aren’t equal. It doesn’t matter if you run a tight ship (are efficient), serve a huge number of people for little money (are low-cost) if you don’t make an impact – the biggest impact that you can make.

This is definitively not to say that you need to ‘go big or go home’ – scale is only one way to measure impact, and as we saw in Rule 6, it isn’t a reward in itself.

It is to say that you should be aiming to make the biggest impact you can for the people you seek to serve, and according to what’s important to you.

Effective is different from efficient, and definitely not the same as cheap. Doing the wrong thing efficiently and at low cost is still the wrong thing.

If charging a lot, if being expensive, helps you to make a bigger impact, find a way to make it work, and be expensive.

Bootstrapping the non-profit organisation Rule 6: Scale is not a Reward (3)

This is the sixth-and-third post in a series applying Seth Godin’s rules of bootstrapping (see also here) to building a non-profit organisation.

So what do finding the right size for your organisation and the Free Prize Inside approach to scale look like in practice?

Here are two examples from the charity I work for.

Scale and the right size

At the charity I work for, we produce graded reading books to support our literacy curriculum. These aren’t available elsewhere in Indonesia – especially not ones that can be tightly integrated with the curriculum – so we need to make them ourselves.

The catch is, that there’s an economy of scale to printing books. The cost-per-book of printing small runs of books costs more than three times as much as if you bulk print a thousand copies. In fact, a bulk-printed colour copy of a book costs less to print than a black and white photocopied version.

If we want to bring price down and quality up, we clearly need to print in bulk. The catch is, this takes a significant investment, and the only way to make it worth it is if we have thousands of teachers using our books – at which point they pay for themselves.

So a few years ago it became clear that if we wanted to serve more groups at a lower cost (which is a key factor in more groups being able to afford our program in the first place), we need to be big enough to make bulk-printing and storing thousands of reading books a realistic proposition.

Scale and the free prize

The best example of this that I’ve come across is how Amazon moved into web services and cloud computing with Amazon Web Services. In short, they built a huge amount of electronic infrastructure for their own use, then realise that they could share it with others.

Amazon gained a new revenue stream, and companies could run their online infrastructure on Amazon’s servers for a fraction of the cost of making their own. This created huge value for everyone (prizes all round!) – Amazon got richer, and a whole generation of companies (netflix, godaddy, airtable, hubspot, airbnb, coinbase,wetransfer, dropbox*) was able to offer services as if they were already big companies, and grow with their customer base, rather than needing a huge capital investment up front.

And look what it’s done for them:

(source: geekwire) – supposed to be an embed

*This is not to say that AWS is the most efficient way to do this – apparently dropbox is saving a fortune by migrating off AWS. But AWS allowed them to test and validate their business model before they spent huge amounts on hardware.

Scale, the free prize and the non-profit (1)

The free prize here came when at the same time as we were working out the above, we used the Business Model Canvas to study our (charitable) business model. It became clear that the books were an asset not just to us and our users, but to many other groups doing education work across Indonesia. They wanted books. We sorely needed an income stream.

By selling our books, our partners gained a useful resource to add value to their work, and we gained extra income for little additional effort. Prizes all round!


Scale, the free prize and the non-profit (2)

The other example of this is a work in process – we’re looking at sharing our curriculum and training materials online under a creative commons (open source) license.

This supports our core activity – equipping teachers to teach reading effectively – by allowing our users to review training sessions and check their technique. It might also come in handy for training future partners.

But it will also be a resource for anyone working in the same field as us – something that helps others that we can make available at no cost to ourselves. Free prize!

And of course, the free resources also help potential clients to hear about what we do, and perhaps makes them more likely to use or recommend our other services too.

Bootstrapping the non-profit organisation Rule 6: Scale is not a Reward (2)

This is the sixth-and-half post in a series applying Seth Godin’s rules of bootstrapping (see also here) to building a non-profit organisation.

Scale and the Free Prize Inside

We left Rule 6 a little watered down: “Scale carefully and find the size that works for your organisation”.

There’s a type of scaling, though, that is a reward: when scaling in a particular way means that you make a free prize for someone (see also here).

There might be a scale at which you are able to give something to your customers (or to people who are not yet your customers – maybe even people who never will be your customers) at no real cost to you. Is there something you own that you can sell cheaply and easily – or give away – that adds tremendous value to them? Could you:

  • Share a resource or planning tool?
  • Grow big enough that you can offer a useful physical space to the community?
  • Thicken the network by connecting different groups of your users so that they can create value for each other – or for someone else entirely? How big does your network need to be to be useful?

If you’re working more in service of a vision (that is, in service of people) than profit, there is more than likely an asset of some kind that you already own that you can share with others.

You might also create a free-prize for your organisation by selling the asset in some way. This isn’t free, but if it allows you to serve more people in a way that creates value for everyone and pays for itself then it’s prizes all round. 

Or you might charge a litlte more, covering some of your overheads at no cost to yourself (prize for you) and allow you to serve more effectively and sustainably elsewhere (prize for the community).

The Business Model Canvas is a great tool for identifying assets that you could turn into prizes…

Business Model Canvas

This is one of the most useful tools I’ve come across for understanding how your business works (or might works).

It designed for lean-startup style customer discovery and validation, but I found it a fantastic lens for actually seeing different parts of our organisation for the first time, as well as how they fit together to make a whole.

I’ll do a series on this before long. For now, here’s a set of links to a video series from Strategyzer to give you the main ideas (youtube playlist here):

Check at Alex Osterwalder‘s excellent book Business Model Generation for a lot more detail.

Bootstrapping the non-profit organisation Rule 6: Scale is not a Reward

This is the sixth post in a series applying Seth Godin’s rules of bootstrapping (see also here) to building a non-profit organisation.

Seth says:

Scale is not its own reward. Grow when it helps you serve the people you seek to serve. That’s the only time you should grow.

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This is another rule that follows from Rule 1: Real Work for Clients First.

Work out who you seek to serve, and serve them as well as you can in an impactful and sustainable way. In any business or non-profit, the word “sustainable” here carries a lot of baggage.

Depending on your business model, there is likely to be a sweet spot that allows you to serve enough clients (decide early how many is enough, and always start small) and to generate the income you need to be around and keep on having an impact for the long haul.

In a small business this might simply mean having enough clients to earn what you need to earn once you’ve paid yourself and covered all your costs (see, for example Profit First – this episode of Read to Lead is a good introduction – or if you’re a freelancer, this excellent podcast on the bare minimum you should be charging clients).

In a non-profit, finding the right scale can be more complicated. All other things being equal, you probably want to serve as many clients as possible, but you’ll need to grow carefully to make sure that you continue to serve your clients well.

Another complication is that your clients may pay for themselves in the same way that they should in a business. You likely depend on other income streams, and particularly donation income, and finding the right size for your organisation with respect to your donors (two-sided markets again) will depend on your particular circumstances.

If your charity implements for a particular trust or company, they may largely dictate your budget and the scale of operations.

But if you’re funded by general donations, you need to demonstrate sufficient impact in terms of both quality and quantity for people to think you’re worth supporting. You might need to reach a certain size to justify overheads and capital investment – that is, you need to spread your overheads over enough clients to be seen as good value for money. Or it might be that you need to serve clients nation-wide in order to access particular funding opportunities.

Rule 6 of bootstrapping the non-profit

Scale carefully and find the right size for you.