Part 2: An Interview with Lauren Crichton
Applying tech-style funding to nonprofits
Last week, I shared the first part of an interview with Lauren Crichton of Pass It On and Sana Labs. This week, Lauren shares strategies for her goals of bringing profit and purpose closer together. Picking up where we left off…
If you could change one thing about the process for social impact, what would it be?
I would change how we fund it.
Today’s nonprofit funding model is simply too rigid for the complex, fast-moving world in which we find ourselves. As my former guest Teresa Torres has pointed out, the typical nonprofit funding model requires you to specify the solution you are going to build before you’ve even fully understood the problem you are trying to solve. That means millions, if not billions, of nonprofit funding dollars are being allocated on the basis of untested assumptions.
Imagine you’re a San Francisco-based nonprofit working on homelessness. Your mission is to reduce the number of people sleeping on the street. How do you do that? You could:
Increase affordable housing.
Expand supportive services in areas like mental health care, substance abuse treatment, and job training programs.
Improve access to emergency shelters.
Form partnerships with local businesses and other community groups.
Establish prevention programs and intervention strategies like rental assistance, utility assistance, and eviction prevention programs.
And so many other things.
How do you know which of these solutions will be the most effective? The short answer is: you don’t. You might have as assumption, but unless you’ve actually spent time exploring the problem in depth—talking to beneficiaries and stakeholders, and running low cost experiments to test your hypotheses—it’s an educated guess. So why not “de-risk” the investment? It’s in everybody’s interest.
Consider how venture capital (VC) funding works in the tech world. Instead of investing all the big bucks upfront in a new unproven venture, VCs will first invest more modest sums of cash so that the startup can experiment and figure out the best solution to the problem it has identified. As long as the problem is unaddressed, has a large addressable market, and the team is fantastic, there’s a case for funding. This model—while obviously dangerous when exploited—is a catalyst for innovation.
I’d like to see more openness to this approach in the nonprofit world. Funders allocating money so that nonprofit teams can explore, experiment (at a low cost), and share results and findings before requesting additional funding.
There are stories out there. My former Q&A guest Scott Colfer’s being one of them:
The Esmée Fairbairn Foundation ... agreed to fund 12 months' worth of Discovery so that we could understand a range of problems in depth before submitting a single bid. I can remember the first five opportunities we had to submit bids for that year. Ordinarily, we'd have applied for all five of them without hesitation and asked for around £50k each. But having carried out Discovery, we knew three of the bids weren't right for us: either we didn’t understand the problem well enough, or we were the wrong people to create a solution. The remaining two bids, however, were a great fit. We were so confident about our ability to deliver the right solutions that we submitted much larger bids at £150-200k each, and we won both. Over ten years later, one of those solutions still exists. It's changed hands and changed shape, but the solution is still helping people today because it solves the core underlying problem so well.
There you have it.
What are two good reads or listens (fiction, nonfiction, podcast) that inspire you in this work?
I’m cheating and sharing four!
Vu Le’s nonprofit AF blog — for his generous insights and sharp wit.
Kai Brach’s Dense Discovery newsletter — for keeping the tech industry honest.
Ettie Bailey-King’s Fighting Talk Substack — for making me a more inclusive writer.
bell hooks’ essay collection all about love — for too many reasons to write.
Lauren’s story and suggestions are hard to beat. If you are game to try, I’d love to interview you. And please …