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
So here’s the final reformulation of Rule 7: