Founding effective nonprofits (international development)

By · Published August 2014 ·

Summary

If you have gained expertise in a relevant area of international development, there are opportunities to found a nonprofit that seeks to efficiently and transparently implement an evidence-backed intervention which is not already the focus of an existing nonprofit. Organisations like this have the potential to receive tens of millions of dollars from funders like the Gates Foundation and GiveWell within a couple of years, achieving a large impact.

Pros

  • • Potential to have a large direct impact within international development.
  • • Builds expertise in international development, as well as generally valuable career capital.

Cons

  • • It seems to take several years to build up the necessary expertise.
  • • The people who take this path seem highly able, suggesting it's very difficult.
  • • We're very uncertain how easy it is to find and take these opportunities before they would be exploited by other non-profits or governments.

Key facts on fit  

Well-rounded, risk-taking, very long hours, grit, independent, deep knowledge of relevant area.

Next steps

If you’re at an early stage, focus on accumulating expertise and connections that put you in a better position to discover and take advantage of opportunities to found nonprofits (e.g. a postgraduate degree, working on the ground, doing project management), while keeping your options open. Find out which interventions are developing an evidence-base but don’t already have a nonprofit focusing on them, and consider especially focusing your learning on these areas.

If you’re considering founding, speak to GiveWell, the strategic development foundations such as Gates and CIFF, and other groups which are attempting this, such as Evidence Action and Charity Entrepreneurship. Aim to find out what conditions your organisation would need to satisfy in order to get funding.

Sometimes recommended

We recommend this career if it is a better fit for you than our other recommended careers.

Review status

Exploratory career profile 

What is this career path?

This career path involves attempting to found nonprofits that contribute to the cause of ending global poverty through international aid, and that implement evidence-backed, cost-effective programmes, with a high level of transparency and monitoring. This will initially involve aiming to build up expertise, as well as finding an idea and a founding team, before ultimately raising funds and attempting to grow the organisation.

For more, see GiveWell’s list of criteria.

Potential for impact

Sometimes, evidence-backed interventions are discovered within the field of international development before there is a nonprofit focused on implementing them. A current example where gaps still exist is micronutrient fortification.

Moreover, there are several large foundations which want to fund nonprofits which can efficiently implement such interventions, including GiveWell, CIFF and the Gates Foundation. But GiveWell claims that it’s hard to identify people able to run such programmes, particularly people able to solve on-the-ground logistical issues.

This suggests there’s an opportunity for a team with the necessary skills to create and scale up such a nonprofit relatively quickly, which would have a substantial impact. For instance, GiveWell reviewed Against Malaria Foundation (AMF) in 2009. By 2013 it had caused AMF to gain over $10 million in donations, and it will likely reach over $50 million in 2017. $10 million is enough to pay for about two million malaria nets, which are expected to save several thousand lives – and AMF only has two staff members.

Moreover, these kinds of nonprofits often serve as pilots for larger programmes, implemented by governments, and so can help to accelerate a larger scale-up.

Evidence Action has already successfully incubated Deworm the World, and is now working on several other projects, such as No Lean Season, which has received funding from GiveWell.

Charity Entrepreneurship founded Charity Science Health, which has also received a grant from GiveWell.

For more information, see:

We’re not sure how easy it is for an individual to target these opportunities. Often they are taken by experts who happened to be in the right place (although AMF is an exception). If you’re not already one of these experts, it may be hard to get yourself to the forefront of the field before the opportunity is gone. However, we suspect it’s still possible to work in generally promising areas, and to build the right sort of network and skills, in order to substantially raise your chances of being able to found an effective nonprofit in the future.

Charity Entrepreneurship’s success so far is encouraging, since the founders are young and don’t have a background in development.

Other factors

Earnings

This is not a path you take for the earnings — many nonprofits rely heavily on volunteers. The median salary for a nonprofit CEO in the US is probably in the range of $50-$80,000 per year (perhaps slightly larger after including bonuses and insurance).1 However, the median is lower than the mean due to a large number of small charities. For nonprofits with a budget of several million dollars, typical compensation is $100,000-$130,000 per year.2

Advocacy potential

Being the founder of a nonprofit can provide many networking opportunities because it allows you to speak for the organisation — there are many opportunities for founders to attend conferences and generally get access to interesting people. To run the nonprofit, you’ll also need to work with other organisations, funders and supporters, who will contribute to your network. Finally, you can use the nonprofit itself as a vehicle for advocacy by using it as a model for others. For instance, GiveWell has helped to encourage greater transparency by being extremely transparent themselves.

Career capital

Founding a new project is highly demanding and it’s generally clear whether you’re succeeding, so it will force you to learn new skills and develop as a person. In particular, you’ll learn a package of very useful transferable skills, such as fundraising, strategy and management. And you’ll learn how to apply these independently, which is a sought after combination.

As mentioned in the ‘advocacy’ section, being a founder is great for building connections. Launching a new project is also very impressive on your CV. So, overall we think this is an excellent option for career capital.

Exploration value

We think this is a high-variance path, in that most nonprofits fail or stay small, while a small number have a big impact. It could be valuable, therefore, to embark on this path in order to learn more about your degree of personal fit.

Working to found a nonprofit will also help you to learn a huge amount about the relevant cause area, and other opportunities within the cause.

Personal fit

Entry requirements

You can enter this path whenever you have a sufficiently good idea and enough credibility to attract funding. In practice, founders have often first accumulated substantial expertise in relevant areas. For instance, the founders of GiveDirectly met while studying postgraduate degrees in economics and the founder of SCI is a Professor of Tropical Parasitology. Rob Mather, the founder of Against Malaria Foundation, had a successful background in business, giving him a network, sales skills and enough financial capital to initially self-fund. Alternatively, getting a job at Evidence Action generally requires an advanced degree and several years of experience doing project management in a related area.

So, we expect that in order to have a good shot at launching a project, good preparation would be:

  • A Master’s or PhD in a relevant area.
  • Several years’ experience of project management, including some ‘on the ground’ experience (or other experience that builds entrepreneurial skills).
  • It may also be useful to do something like consulting in order to build some savings and a network of potential funders. Consulting could also be a useful bridge job between university and a project management position.

During this time, you could hope to identify some promising ideas and potential co-founders. For more see our interview with effective nonprofit leaders on how to enter the sector.

However, note that the barriers to entry might be coming down. The amount of money available for these opportunities has risen dramatically in the last couple of years. Charity Entrepreneurship’s success so far could be evidence of this.

What does it take to succeed?

Successful nonprofit entrepreneurs are well-rounded, very intelligent, motivated and have a deep expertise in their programme area. Like for-profit entrepreneurs, we suspect they have a bit of a ‘break the rules’ independent attitude.

In some ways, nonprofit entrepreneurship is even harder than for-profit entrepreneurship, because your business model will be more complex (fundraising and programme implementation are separate, and it’s difficult to measure success) and there is less money available. So, we think this is a highly challenging path.

Job satisfaction

The work is potentially highly satisfying, since you can make a big difference, while doing varied, high-status and challenging work. On the other hand, you’ll need to put in long hours and face a high risk of failure. If you can accept this stress, then we think it can be a very rewarding path.

Next steps

Evidence Action and Charity Entrepreneurship are trying to put this into action, so if interested in this path, we recommend contacting them.

GiveWell are also happy to speak to nonprofits who might one day satisfy their criteria.

Further reading

Notes and references

  1. The 2012 Watkins Uiberal Report found that (LINK): The median salary for executive directors/CEOs is between $50,000 and $75,000. CEO salaries correlate with organisational budget size. For small organisations, the median salary is between $30,000 and $50,000. Among medium-sized organisations, 36% of CEOs have salaries between $50,000 and $75,000, while 50.5% earn more than $75,000 and 13.5% earn less than $50,000. Among large organisations, 14.2% pay salaries of $100,000 or less; 38.1% pay between $101,000 and $150,000; and 47.7% pay more than $150,000. Note that this is significantly lower than the median figures reported by the prominent Charity Navigator Annual Survey. This is because Charity Navigator focuses on “mid to large” US charities, which pay substantially higher salaries. ↩
  2. For instance, the 2014 NPT Salary and Benefits Report, found that: Operating budget less than $499,999 — Average CEO salary: $60,206; Operating budget from $500,000 to 999,999 — Average CEO salary: $81,991; Operating budget from $1,000,000 to $2,499,999 — Average CEO salary: $103,704; Operating budget from $2,500,000 to $4,999,999 — Average CEO salary: $125,899; Operating budget from 5,000,000 to $9,999,999 — Average CEO salary: $153,858; Operating budget from $10,000,000 to $24,999,999 — Average CEO salary: $184,926; Operating budget from $25,000,000 to $49,999,999 — Average CEO salary: $226,023; Operating budget more than $50,000,000 — Average CEO salary: $317,024. LINK ↩