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Sustainability and Growth at GuideStar

 

One of my greatest frustrations in trying to build a sustainable nonprofit organization has been the difficulty in finding capital. GuideStar has been blessed with a consortium of foundations that have generously invested tens of millions of dollars in our early years. But as we have grown and reached mid-life in our maturation, foundation dollars for operations have been harder to raise. Several years ago we took on over $2 million in PRI’s as a way to bring in stable and reliable dollars that we could invest in product development, sales and marketing in order to continue our growth at a fast pace. We’re pleased to say that we ended 2010 with 90 percent of our operations covered by sales of products and services and we’re now to a point that increasingly we are relying on foundations for special projects and opportunities, but not support for direct operations. In general we’re now starting to see some attention given to the lack of nonprofit capital and there are a number of interesting developments going on in the nonprofit sector (a subject of another blog). I’ve often thought, though, that with easier access to capital, GuideStar could have grown much faster.

I was therefore pleased to read a blog by Mark Suster an entrepreneur who joined GRP Partners in 2007 as a General Partner after selling his company to Salesforce.com. He focuses on early-stage technology.

Suster writes that entrepreneurs should “keep their capital expenditures really low while they’re experimenting with their product and determining whether there is a large market for what they do. In the initial phases of any new market you’re developing a product (hopefully with a minimal set of features), getting feedback from customers, refining your product based on user feedback and then re-launching your product. Rinse & repeat. Nobody really knows whether or not the idea is yet going to be big, so I believe in not over capitalizing too early. Markets develop for a complex set of factors that are often beyond all of our control. It is often the fortuitous mixture of new technologies, customer awareness and then acceptance of the technology and then the slow adoption into our daily lives that leads to markets exploding. Nascent startup markets are like fine wine, they take time to develop. It is encapsulated in one of my favorite quotes that I first heard from Bruce Dunlevie of Benchmark Captial, “Good judgment comes from experience, but experience comes from bad judgment.”

I take some comfort from these words of advice. I’m still impatient, still determined, still frustrated with our rate of growth. But it’s good to know GuideStar’s path of development is more common than I sometimes recognize.

Bob.jpgThe preceding is a guest post by Bob Ottenhoff,  Chief Executive of the Center for Disaster Philanthropy. With an entrepreneurial spirit, strong technology focus, and a quest to make an impact in the world, Bob has the ability to take an organization and lead it into strong performance, sustainability, and industry leadership.

Topics: Just Because GuideStar Nonprofits