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Giving Compass' Take:
• Nancy Lublin, founder of Crisis Text Line, a mental health texting service, sought unrestricted funding mechanisms to turn this idea into a reality.
• What is challenging about traditional fundraising for nonprofits? How would taking a start-up approach to funding better serve the needs of nonprofit organizations?
• Read more about early-stage funding as a nonprofit start-up.
In 2011, Nancy Lublin, founder of Crisis Text Line, had an idea that would fill a hole in crisis mental health services: Build a highly scalable platform to reach people in crisis, 24/7, via a medium people already use and trust—texting. At the time, most crisis mental health support organizations—mired in the day-to-day of providing crisis telephone service—operated with restricted funding and lacked a profit motivation to add texting service. These conditions made innovation tough.
It was a great idea, and Lublin was an experienced entrepreneur with two successful ventures under her belt, but funders were slow to buy the relevance and value of an untested service that broke the mold.
Indeed, traditional early-stage funding for nonprofits and social enterprises is often small and incremental. Undercapitalized start-ups are left to demonstrate the effectiveness of their game-changing ideas with capital that allows them only to cobble together a skeleton of what the idea could be.
Taking a For Profit Startup Approach to Nonprofit Fundraising
Traditional nonprofit fundraising often requires a traditional business plan and a slow raise of dollars over several years — a funding model that forces organizations to hire piecemeal and underinvest in systems. Meanwhile, Lublin was watching other for-profit technology companies go out and raise start-up capital in funding rounds.
In early 2015, she lined up a series of tightly coordinated conversations that took place over a week, and hit the road to raise her first round of funding. By the end of the week, she had her “angel” round of philanthropic capital, $5 million, mostly from tech entrepreneurs.
Putting Dollars Toward Data
While traditional funding mechanisms tie start-up organizations to metrics that funders either design and/or must approve, unrestricted funding helps organizations invest in collecting and learning from data, and iterating their product in real time. Data is the only way to humanize because it’s the only way for an organization to know the experience of all people in the organization in real time, and to quickly respond and adjust accordingly.
Read the full article about funding for a crisis text line by Stephanie Dodson at Stanford Social Innovation Review