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Lesson #9: Starting a charity is twice as much work as starting a business

If you're starting a charity, this is the closest you should ever come to running like a business person.

There is a prominent school of thought that says charities need to be run “like a business”. While it is true that charities have a lot they can learn from business, starting a charity is NOT starting a business. It’s twice as much work.

Successful businesses offer a good or service that people want at a price the customer is willing to pay and that generates enough profit for the business to thrive. If a business has a successful product and customers find out about it, the more they buy the more successful the business becomes. This just isn’t the case with charities.

By definition, charities are offering goods or services that the target customer cannot afford or that cannot be priced appropriately (because of economic principles like freeloading - think clean air and water). Even if you offer the very best service in the whole wide world, the people who use it cannot compensate you for the cost of providing it. As more people choose your product or service, it becomes harder to supply it because your resources are drained and not replenished; there is absolutely no relationship between the quality or pricing of your work and your revenue. None.

The solution is to market your charity to a whole second group of people: those who fund your work. They usually aren’t the ones who benefit from what you do. The only way they hear about your work is through outreach and advertising initiatives that cost time and talent above and beyond the cost of marketing your charitable good or service to the people who need it. The only way donors support your work is if they see a value in it that aligns with something important or significant to them - usually something other than self-interest or gratification. 

In other words, starting a charity is twice as much work. You have to design and execute services or a product that help a target group in need. You also have to design and execute a marketing strategy to inform potential donors about the work that you do and win their support. You are essentially managing two operations at once, usually without capital, assets, or investors to help you get things off the ground.

The for-profit sector has it easy.

Lesson #10: What we do is not rational

Lesson #8: Success creates more work, and that's a good thing