How New Nonprofits Are Thinking Like Startups To Tap Internet-Powered Giving

By Stephen Robert Morse

Stephen co-founded Skillbridge, an online platform to find and hire the world's best business and strategy consultants.

Scaling a charity is statistically harder than it is to grow a business. According to the National Center for Charitable Statistics, there are more than 1.5 million nonprofit organizations registered in the United States, including public charities, private foundations, and other types of nonprofit organizations, including chambers of commerce, fraternal organizations and civic leagues. Despite their large number, the social impact consulting firm The Bridgespan Group reported in 2005 that only 144 nonprofits had gone "from founding to at least $50 million in revenue since 1970."

According to Charity Navigator, 86% of charity dollars go to the top 1% of charities. Ken Berger, who served as Charity Navigator’s President and CEO from 2008 through mid-2015 says that this figure has "remained relatively static.""The number of charities that are actually able to scale up each year is pitiful," he says. "It’s less than one quarter of 1%, some minuscule number. I mean it is really quite pathetic."

Yet the nonprofit sector remains large: In 2010, the nonprofit sector accounted for 9.2% of all wages and salaries paid in the United States. The nonprofit share of U.S. GDP was 5.3% in 2014.

Technology plays a greater role than ever before in the nonprofit industry and can make the difference between anemic growth and rockstar nonprofit success. As in other industries, technology gives distinct advantages to younger nonprofit organizations that don’t have to overhaul antiquated systems, allowing them to leapfrog over established competitors.