A tech nonprofit is a technology company that can make money, attract top talent, and scale up to billions of users around the world. But unlike a normal for-profit technology company, the extra money it makes doesn’t leak out to venture capitalists, shareholders, and executives. The extra money, what’s normally called “profits”, always gets reinvested. So the tech nonprofit can hire more employees, expand to more locations, serve more people, do more innovative research, build more cool things, and have a giant impact.
Big impact by design is already exciting. What’s even more exciting is that tech nonprofits need to focus on building authentic relationships with loyal communities in order to survive. They need to build loyalty with the people they serve, with the people who fund them (customers, charitable donors, corporate sponsors), with the people who volunteer to work on their projects, and with the people who advocate for them.
That focus on people is huge an advantage today, when so many technology companies are struggling to stand out, build a following, and last for more than 5 - 10 years.
One reason tech nonprofits have to focus on building authentic relationships is that they don’t attract venture capital. Since nonprofits aren’t owned by anyone, venture capitalists can’t own them and profit off their sale. There is no opportunity for tech nonprofit founders to confuse venture capital funding with revenue, investors with customers, hype with success. And with enough community support, what they lack in venture capital they can make up with crowd-funding, peer-to-peer fundraising, and large charitable grants.
But perhaps the most exciting thing about tech nonprofits is that they are legally obligated to make a positive impact on the world. While Facebook was selling user data to questionable third parties to keep up with shareholder expectations, the tech nonprofit Mozilla was building a simple free tool to contain the damage Facebook had done.
If we care about tech for good, about equitable access to innovation, about retraining people to excel in a dynamic technical world, then tech nonprofits matter. And in my opinion, they’re both the competitive and cooperative way to go.
What do you think?