Adopting failure and risk in the non-profit world

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For-profit businesses publicly fail all the time. When they do, it’s not the end of the world – learning from one’s mistakes (and those of others) can be an enormous factor in long-term success. In the non-profit world, though, failures are often swept under the rug. But since non-profits deal with lives, not dollars, why isn’t “learning from failure” a more widely adopted practice?

A new service called Admitting Failure wants to change that. In this post, we’ll look at why the for-profit world is able to learn from failure, and examine what Admitting Failure is doing to help the non-profit world achieve the same thing.

Failure is natural in business

Failure never tasted so good.

When Apple came out with the $700 Newton PDA in 1993, it didn’t exactly vault the company to success. In fact, it was one of the company’s most ridiculed products. And when Pepsi launched a massive marketing campaign to convince us to drink Crystal Pepsi, the clear cola didn’t live long. But even successful companies prepare to fail from time to time. What makes failure such a natural part of the business world?

Reward for taking risk. Trying something new is often what allows companies to achieve breakthrough success, and that requires risk and the occasional failure. Sometimes “playing it safe” by not taking any risks is a sure way to slowly kill a company.

Investors tolerate failure. A good investor diversifies his portfolio, knowing that some companies will yield negative returns. It’s an expected outcome that factors into any good investor’s calculations.

Failures are made public. Talk show hosts and business blogs alike love to poke fun at “game changing” products that no one bought. Business schools thrive on doing case studies on corporate mistakes. Since everyone is exposed to failures in business, they’re not always a surprise. And even better, there’s a wealth of information out there for anyone who wants to learn from the past.

Non-Profits aren’t allowed to fail

Warfare might be a bit too risky for non-profits, but you get the idea.

If the world’s most successful companies fail from time to time, it goes without saying the even the world’s best non-profits are going to make mistakes too. But unfortunately, non-profits aren’t allowed to fail publicly the way businesses are. For one, there isn’t a massive reward for taking massive risk, so non-profits aren’t as encouraged to experiment.

Secondly, donors aren’t yet comfortable with their dollars being used for experiments, which means non-profits are less likely to try unproven ideas. And there’s no forum for failures to be widely publicized, so logistically, sharing failures in the non-profit community would be hard to pull off anyway.

Can Admitting Failure change the status quo?

Admitting Failure addresses the problem of “private failures” in the non-profit community primarily by addressing the logistical issue – no common forum for non-profit failures to be disclosed and discussed. The platform is a good start; take a look at this post from charity: water about the failure of one of their metrics:

…you have probably heard us say, Tweet or write: $20 can provide clean and safe drinking water to one person for 20 years. But earlier this year, we removed the “20 years” part from that messaging.

As with any retraction, this sparked a discussion with our staff about how we deal with failure… we knew that if we continued to promise that each $20 donation would provide one person access to water for two decades, we’d be using a number we’re not certain about. In effect, we’d be failing the faith of the public and our mission to “reinvent charity”—to restore peoples’ trust in charitable work…

In a way, showing the public where we’ve messed up or why we want to suddenly move in a new direction is like taking a deep sigh of relief. We’ve given ourselves the chance to share the hard stuff. We’re sparking important conversations and welcoming scrutiny because we really have nothing to hide.

Donors need to think like investors

Donors should be more like this guy.

charity: water deserves praise for taking the lead on admitting their own mistakes. But while Admitting Failure solves an important part of the problem, real change won’t happen until donors begin to act differently. In the business world, successes and failures are disclosed so readily because consumers experience and discuss them, and because investors demand disclosure.

So while example like charity:water are fine, non-profits won’t ever widely disclose failures until donors begin taking the approach of an investor. Donors need to encourage the non-profits they support to experiment, make mistakes, and share their learnings. They need to diversify their donations, to improve the odds of them supporting a truly successful project. And most of all, they need to let non-profits know that it’s OK to fail once in a while. Here are three ways Admitting Failure could help them do this:

  1. Give donors tools to encourage their favorite non-profits to participate on the site. They could even take a page from Invisible Children‘s playbook and give users a one-click method to target high-profile non-profits on Twitter.
  2. Rate charities, in the fashion of Charity Navigator, based on the knowledge they’ve contributed to the non-profit community. Messaged correctly, charities who developed a reputation for being honest could benefit from additional donor support.
  3. Allow aid recipients themselves to share their perspective on a non-profit’s work. Nothing’s more authentic than the experience of a person who was targeted by an aid program, so this would be a great way to build a 360-degree perspective of a non-profit.

What do you think – are non-profits likely to admit more mistakes, if only given the right tools? Or do donors need to become more involved before any real change can take place?

Being Humble when you’ve raised $12.6 million

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What would your reaction be if you walked into Starbucks and the barista told you that you could pay whatever you wanted for your coffee? Oh, and if you wanted all the money to go to charity instead, that’d be cool, too? In addition to buying 17 carmel macchiatos with the 13 cents you found in your pocket, you’d also probably wonder who in Seattle lost their sanity.

Well, that’s exactly the pricing model Humble Bundle offers. They provide limited-time offers on bundles of video games, in which buyers set their own price, and then choose how much goes to charity. The latest bundle, simply called “The Humble Bundle for Android 2″, was released just this week. How does it work? Instead of being one of those blogs that just regurgitates content found elsewhere, I’ll just point you to their video:

Here are some stats on their success: 2 years old, 2 million transactions, and $12.6 million raised for developers, charity, and themselves (the exact breakdown to each party isn’t made available). It’s an interesting pricing model that’s likely raised a handsome sum for charity, but could it be applied to other types of products as well? Let’s take a look at what makes the Humble pricing system tick and see where that leaves us:

Acting like the boss

When you learn that your boss at your new job doesn’t come into the office until 10:00 AM, you learn that’s OK if you don’t want to arrive until after 9:00. When he shows up in jeans, you can confidently come back to work the next day in that acid washed denim that’s been in your closet for 26 years (right?). He sets the norm; you feel better because you know what’s expected. Humble Bundle does the same thing. They start buyers off with a default split of 55% to developers, 30% to charity, and 15% to Humble Bundle. Hard to feel anxious about getting the allocation wrong, when a strong suggestion is made for you.

A gentle guilt trip

Humble Bundle does a couple smart things to encourage you to pay a legit price. First, they show real-time data for the average purchase amount. If you decide to pay less then that, they’ll remind you with a nice blue warning banner before you pay. Secondly, if you pay more than average, you actually get an extra game. It’s a slick combination of guilt and rewards to keep buyers honest.

Freeloaders don’t (really) count

Some users are going to pay only a few cents for these games. But in addition to not being cool, they’ll also be negated out by the thousands of buyers who do pay a reasonable price. A high transaction volume (over 70,000 just three days in) keeps the moochers at bay.

Standard fare

Downloading video games is becoming pretty standard. You do have Angry Birds, yes? Even though the pricing model is strange and new, everything other aspect of the promotion is standard fare. That’s important, because if potential buyers are asked to digest too many unfamiliar pieces, they’ll leave.

$0 marginal cost of distribution

This one’s pretty boring, but it’s one of the most important. Downloadable digital goods cost next to nothing to distribute. Each copy sold costs about $0.00 to make and deliver. So if a user pays a mere penny, no one is any poorer for it.

Obscure quality

It’s indie developers who submit games to these bundles – newer companies who are relatively unknown. Even if these developers don’t make much per copy sold, they still benefit from the increased exposure and gross sales. Gamers benefit, too, by being exposed to quality games they may not have discovered otherwise.

Limited time

If “set your own pricing” were available all the time, then that would customers to expect such treatment all of the time. That’s not sustainable, and it certainly won’t make developers happy. (Is there any reason why an “add your own donation” piece couldn’t stick around forever, though?)

That’s a long list of things that contribute to the success of the model. Could this work elsewhere? Not at Starbucks, but I think there’s plenty of ideas here that could be applied to online retail, for one. Where else do you think a Hunble-esque offering would do well? Let’s hope that Humble Bundle continues to be successful, raise gobs of money for charity, and encourages others to follow suit.

Is the criticism of KONY 2012 legit?

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 It’s been a full week since Invisible Children launched their now-famous “KONY 2012″ film, which seeks to raise awareness of Joseph Kony, an African war criminal who’s responsible for the death and abduction of thousands of children. Seven days old, and KONY 2012 has garnered nearly 100 million views. With all this attention, both the film and Invisible Children itself have received their fair share of critics. Are the attacks warranted? In this post, we’ll deconstruct the criticism and find out.

But first, if you haven’t seen the film, watch it now:

Here’s a short list of what the critics have been saying:

There are several issues raised, but we’ll examine three of them here: (1) the way in which Invisible Children allocates its funding; (2) a critique of the film’s message and it’s “truthiness”; and (3) that the film and Invisible Children promote “slacktivism” instead of real action. Let’s tackle each of these directly:

Finances

Invisible Children has been called out an apparent lack of funding that is used on “direct” programs, i.e. work on the ground. Things like building schools and building radio towers. A cursory glance at their finances reveals that “only” 37% goes towards African programs. Typically, non-profits that primarily engage in “on the ground” work will allocate 80-90% of their expenses to those programs, and the rest towards overhead and fundraising. If Invisible Children were a traditional non-profit, then that number would be appalling. But Invisible Children isn’t a typical charity; instead; filmmaking and advocacy are also core parts of their mission. Making documentaries and educating people about Joseph Kony is what they do. If you look at their expenses used on all three of these programs, you’ll find that they’re just about as financial efficient as any non-profit. So as long as Invisible Children makes it clear that direct work is just one of their focuses, along with film-making and advocacy, this shouldn’t be an issue. And for someone who wants to educate others about Joseph Kony, supporting Invisible Children would be a great way to do that.

The Film

How many documentaries are you aware of that have universal appeal, and were made without bias? I can’t think of many either. Much of the criticism of the film itself has to do with it delivering an over-simplified message. Other critics point out that the film promotes that idea that Americans (and white people) are the “saviors” and that Africans aren’t capable of helping themselves. Those are valid points, and the film isn’t without its faults. But let’s also consider a few other factors. Who is the film intended for? Invisible Children focuses mainly on educating high-school kids, college students, and young adults, many of who are unlikely to know very much about foreign issues. And their audience isn’t as interested in sitting through a lengthy, comprehensive documentary as a foreign policy expert would be. So the fact that the film focuses on delivering a simple, easily understood message makes sense, considering its target audience. If the goal of the film is to engage a young generation around a pressing issue halfway around the world, then KONY 2012 is an astounding success. If it were to educate viewers on the long and nuanced history of war crimes in central Africa, then it would a failure, but that was never its intention.

Slacktivism

“Slacktivism” is a disparaging term used to describe feel-good actions that don’t have any real impact. When someone merely tweets about a cause and says “I’ve done my part”, that’s slacktivism. You’ll find Invisible Children accused of promoting slacktivism in more than one critique. If KONY 2012 campaign merely engaged 100 million people for 30 minutes and nothing else resulted, then yes, Invisible Children’s efforts would be pretty meaningless. But let’s not forget that no real action can start until people are aware of an issue. Sure, merely watching or sharing a video won’t do anything to directly change anything in the world. But that’s just as true for a film about Joseph Kony as it is for an IMAX movie about rescuing orangutans and elephants. But I don’t hear many people cracking down on IMAX movies, do you? Educating people about a cause is a first, and necessary, step to get people involved. In fact, Americans already suffer from a pretty severe lack of global awareness, so films like these are a great way to prevent future generations from becoming ignorant and passive about the rest of the world. Efforts to enlighten others about issues that cause human suffering in the world shouldn’t be criticized, they should be championed.

Invisible Children’s Response

This post wouldn’t be complete without including Invisible Children’s own response to criticisms KONY 2012, which they’ve done here. Their CEO also did a decent job of addressed detractors in this video, which he posted today:

Whether you agree with Invisible Children’s KONY 2012 campaign or not, the important thing to watch is the results. What will happen now that nearly 100 million people have seen their latest film? Will our government change its support African troops in arresting Kony? Will children in central Africa be any safer? These questions are the ones that matter. If Joseph Kony is brought down and kids in central Africa can begin live without fear, then Invisible Children should be applauded for their efforts. Share your own thoughts in the comments below.

Does Giving Get Any Easier?

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Concepts that turn people into first time givers are always interesting. Converting a “non-giver” into a “giver” isn’t an easy hurdle, but it’s a crucial one: no one will ever be a lifelong donor until that first dollar has been given. So while it’s not uncommon for non-profits to ask for $5, $10, or even $25 for a first time ask, a new site called Philanthroper rachets that number all the way down to a buck. It’s as easy a donation experience as I’ve found anywhere.

Here’s how it works. Each day, Philanthroper features a new giving opportunity. One day might offer the chance to send a child to school for a week, another, a way to support bone marrow transplants. All users are asked for is a dollar, and it takes only three clicks to donate via PayPal. Users can even give more if they’re so inclined. Philanthroper delivers a clear, straightforward way to get involved each day, and it boils down the decision to give to merely a few clicks. For someone who just wants to help out a bit, this is about as painless as it gets.

In addition to creating very low barriers to giving, Philanthroper also promotes the idea that the small actions of many combine to make meaningful results. They’ve done a great job of quantifying the impact its users have had, as this iconograph illustrates. Instead of talking about only the dollars donated, Philanthroper celebrates what those dollars meant, by counting things like the “days of education”, and “number of immunizations” provided. Donors who’ve only given a dollar don’t feel like they’re being cheap; they’re made to feel like they’ve actually made a difference. Powerful stuff.

Is the “dollar a day” model enough to keep users around, though? There’s not much to keep donors engaged beyond the opportunity to give more money, so Philanthoper will likely need some “power user” features for users who want to step things up a notch. They have started a stats page (here’s mine), but there’s not a whole lot there that’s worth revisiting. But altogether, Philanthroper is great “gateway” into causes – it’s low friction, very easy to use, and with wide variety of causes featured, there’s something that’s likely to nearly anyone into a first time donor.

Give it try (come on, you can at least give a buck!) and share your thoughts.