Over the weekend I listened to a great interview on the TWIST Podcast with Scott Harrison, the founder of Charity: Water. I’ve admired the work Charity: Water has been doing for a long time, but after listening to Scott’s interview I was inspired by how they have evolved a new model for non-profits.
In today’s blog, I want to share what I think are the key components of the Charity: Water approach. I hope it will inspire you, as it did me.
When starting Charity: Water Scott realised that people had lost trust with charity. It wasn’t clear where the money they donated went and a lot of charities had suspiciously high overheads.
To try and rebuild trust with donors Charity: Water decided to operate a 100% model. They pledged 100% of the money donated would go directly to providing clean drinking water to those that needed it, they even donated the credit card transaction fee!
The 100% model has become central to how Charity: Water operates, but it leaves them with a problem. How do you fund the organisation?
This is where ‘The Well’ comes in. Charity: Water has a number of investors who commit to donating $100,000 a year to fund the organisation, which, enables others to donate directly to the cause. They treat these investors just like a startup would, regularly meeting with them, sending investor updates on key metrics and publishing all their accounts so they can see exactly how their money is being spent.
As Charity: Water operates more like a startup, they have aggressive growth goals to help achieve their mission faster. They quickly found that the traditional model for charity giving made reaching these goals difficult.
Every year a charity starts with zero money raised and a target to try to raise more money than the previous year. This is draining and not sustainable so Charity: Water created The Spring a monthly subscription service that enables people to give regularly. Building a charity using a subscription model increases donation retention and enables sustainable work to happen in the field because you have a predictable revenue stream.
But not everybody wants to donate through a subscription. As it turned out there are a lot of entrepreneurs that wanted to give to Charity: Water but don’t have the liquidity to donate large sums as some investors do.
To provide a different way to give Charity: Water set up The Pool, a VC fund that enables founders to gift a percentage of equity in their company to Charity: Water. The idea is that Charity: Water can hold the shares in these companies and then if the companies become successful they will raise much more money than those entrepreneurs could have given as a cash donation.
What is particularly interesting about The Pool is that Charity: Water intends to give 20% of the shares to its employees. The idea is this equity will act as a benefit to retain and attract talent from private sector companies. Most employees at Charity: Water take a 50% pay cut compared to the market rate, so The Pool gives them a chance to make some of that money back and is a potential way to avoid paying the huge salaries some charities offer to attract talent away from the private sector.
What I admire about Charity: Water is how they have looked outside the non-profit space to find unique solutions to challenges in the charitable sector. Scott built a lot of his ideas on how to run a charity from startups and says he doesn’t spend much time looking at how other charities operate.
I believe it is this cross-pollination of ideas and approaches from different sectors that has led to much of Charity: Water’s success. In 2019 Fast Company named them as one of the 50 most innovative companies in the world, the only non-profit on the list, and since 2006 they have given almost 10 million people access to clean drinking water.
I think we could all learn from the Charity: Water story and I for one am inspired by a different approach to help make a necessary change in the world for those who need it most!
If you’re interested in finding out more about Charity: Water or donating to their cause, check out charitywater.org.