Calif. Tech Companies Aim to Help Charities Start Business Ventures

In Silicon Valley, a new crop of nonprofits focused on developing entrepreneurial business models to do good is shaking up old philanthropic ways of giving, writes The Washington Post.

In March, Y Combinator, which has launched successful for-profit ventures like Airbnb and Dropbox, graduated its first class of nonprofit organizations. The six graduates of the program are now looking to further their social missions by focusing on their business model rather than solely relying on donations.

For instance, CareMessage, a health-care nonprofit startup and graduate of the program, is seeking a $2-million initial seed investment, which is similar to the approach many for-profit startups adopt when starting out. Additionally, CareMessage is trying to selling its products and services to well-off hospitals so it can give them away to the needy or sell them at cost. CareMessage aims to bring in enough revenue each year to be self-sufficient so it never has to raise money again.

Some experts in the nonprofit world argue that Y Combinator’s Silicon Valley approach is shortsighted as it ignores the importance of developing relationships with people interested in a nonprofit’s work.