The Playbook on Nonprofit Judo

Would you believe it if we told you that being a tech nonprofit can be a strategic advantage? That for all the things we’ve told you about the tech nonprofit path being tricky, there are some powerful secret weapons that only a tech nonprofit can capitalize on?

After years of accelerating tech nonprofits, we can confidently confirm this as true. Our Co-Founder and President, Kevin Barenblat, likes to call this “nonprofit judo” – which he defines as, “a reference to the martial art that emphasizes how an apparently disadvantaged player can succeed through a strategy that turns weaknesses into strengths.”

Sounds awesome, right? Nonprofit judo is a powerful tool to have in your tech nonprofit toolbelt, and it’s important to use nonprofit status to your advantage from the beginning. Rather than going into your tech nonprofit journey imagining an uphill battle, turn the scenario around by tapping into the unique opportunities it presents.

We break down nonprofit judo into four distinct categories:

1. Customer Segmentation
2. Marketing
3. Product
4. Sustainability

Segment Customers Differently

For-profit companies target customers based on their potential to generate revenue, prioritizing customers with higher lifetime value and lower acquisition costs. An obvious example is a food delivery startup like DoorDash, which targets a customer who doesn’t mind surge pricing on that midnight pizza. In many cases, nonprofits do the opposite, focusing on customers currently ignored by existing solutions.

Let’s compare DoorDash to a food recovery app like Replate, which is also a food delivery SaaS platform. Replate has a nonprofit twist. With a mission of rescuing leftover food and distributing it to those experiencing food insecurity, its platform enables paid contractors to take unused, unspoiled food from restaurants, cafeterias, and event venues and deliver the food to soup kitchens. Although Replate’s users are hard to reach and less able to pay, with higher customer acquisition costs and lower lifetime value, serving the food insecure is the whole point.

This unwavering focus on an underserved market segment should drive your tech nonprofit strategy, pushing you to design the best solutions for your unique customer’s situation. This strategy sharply deviates from that of for-profits, which often start with a product or service and then work to find the most profitable customer.

Build on Openness, Goodwill, and the Wisdom of Crowds

Who doesn’t love free stuff?! Tech nonprofits have it good when it comes to the inputs and outputs of product strategy. Nonprofits have always made use of volunteers and donations, but such resources increasingly transcend geographic limitations as nonprofits engage expertise from around the world and leverage tools like Google Suite, Facebook Ads, and Salesforce CRM for free. Plenty of other tools like these, including Twilio, Okta, PagerDuty, Asana, and more, have significant discounts for nonprofits.

Let’s consider some of the advantages tech nonprofits have when it comes to product outputs. Compared to for-profit products and services, which are often proprietary, created and protected with secrecy, nonprofits frequently share data, processes, and ideas in ways that spark multiplier effects for greater good. Sounds awesome, right? Successful tech nonprofit strategies implement these unique input and output features to their advantage.

Forge Aligned Marketing Partnerships

Nonprofits are often viewed favorably by the public because they are obligated to invest profits to further the organization’s mission, rather than accrue private value for shareholders. This means nonprofits have the unique ability (and necessity) to get creative about marketing (more in The Playbook on Tech Nonprofit Marketing). In the most successful cases, tech nonprofits leverage their brand and create partnerships to build awareness, acquire users, and create social value.

Let’s look at a few examples to understand how this plays out in practice. From the table below, you will probably notice a few things:

• These partnerships solve a distribution challenge for the tech nonprofit, and a content or service challenge for the company or organization it partners with.

• These partnerships are mission aligned, which means that both parties share the same end-goal.

• Unlike most marketing strategies, these partnerships form at no cost to the tech nonprofit and result in a strong user pipeline (or, group of people who might use your product).

Your nonprofit mission can catalyze powerful partnerships that drive measurable value on both sides. Make sure you consider how your user acquisition strategy might benefit from aligned partnerships – a keystone to great nonprofit strategy. We share plenty more on partnerships in The Playbook on Sustainability: Partnerships and Revenue.

Embrace a Unique Path to Financial Sustainability

For-profits embrace selling as a critical aspect of financial sustainability. Nonprofits often view fundraising with dread, wanting instead to focus on fulfilling their mission. Guess what? It’s not that different. All tech nonprofits should be thinking of fundraising like sales. If you are engaging in nonprofit judo, who you fundraise from will help you achieve your mission. CareerVillage.org – who you’ll learn about shortly – fundraises from companies, which give the organization volunteers it needs to achieve its emission. TalkingPoints sells to school districts, which help deploy the tech to impact families. Win/win. Nonprofit strategy at its finest.

To excel at this nonprofit strategy, you need to equally weigh the benefits to the funder with those to the beneficiaries you serve. In an ideal world, you’re able to create mission-aligned products or services that also fit a bucket for a specific type of funder. This is hard to do. Most for-profits are lucky if they find product-market fit once, and nonprofits need to find that fit for every new source of capital, without drifting from their mission. We know what you’re thinking…but remember, we never said this was easy! When done well, this can be trajectory-changing for your organization. Seek to find a sustainable funding source that brings your fundraising efforts and direct service into alignment.

Remember, as a nonprofit, your customer and your user/beneficiary are going to be different. This is exactly how ad revenue-driven tech companies work. Here’s how it maps out in the tech nonprofit space:

Wait, How Do I Figure Out My Earned Revenue Model?

We dive deeper into building an earned revenue model in The Playbook on Sustainability: Partnerships and Revenue, but for now, ask yourself these questions:

• Am I providing a product or service that serves a purpose for funders beyond impact?

• Are there companies or organizations that want to buy my product and distribute it to end users?

• Does the product I’m building fill a government need, and could I leverage government contracts?

Remember, the nonprofit model has a strategic edge beyond tax exemption, and the best nonprofit leaders learn to leverage it.