How Charity:Water is Changing The Model For Giving

Image from Charity:Water

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.

100% Model
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 Well
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.

The Spring
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.

The Pool
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.