Business Model Innovation in Charities

By Hattie Willis, Lean Startup Coach & Project Manager at Rainmaking Innovation

When someone tells me I have 20 minutes to run a panel on Business Model Innovation in Charities, I find myself torn. On the one hand, it is one of my favourite topics, on the other… I could talk quite happily on this topic for 2 hours and barely be started, and you’re telling me I have to give the charities and audience a chance to talk too?

Luckily, there were a couple of things in Cosmina Popa’s favour when she asked me to do this at the Rainmaker Foundation Demo Day:

The charities she put on my panel were awesome, so I was more than happy to hand over the answers to them.
The event itself offered the opportunity to celebrate a cohort I have loved working with over the last 6 months, and so I certainly wasn’t going to turn that down

So, for those of you who have stumbled on this blog from nowhere, and are now wondering what on earth is the Rainmaker Foundation and what do they have to do with Business Model Innovation let me recap:

The Rainmaker Foundation is an accelerator program which helps a selected cohort of charities speed up their search for a repeatable and scaleable business model, and helps them explore use of technology to amplify their impact. Some of the charities in this cohort have actually been operating for many years (in one case nearly two hundred years!), and already proven one model, but are now testing new business models to deal with declining donors; while others are brand new (so new they were still registering as charities when we held the selection days) and testing all of the assumptions inherent in building something from the ground up.

I first came across the Rainmaker Foundation when running a rebranding exercise for the company I work with, a company rather confusingly called “Rainmaking”. I remember being intensely frustrated that this Foundation had all of the social media handles I was lusting after. It wasn’t until a few months later, when Rainmaking established our “Do Something Good” initiative that I really began digging into what they did.

At Rainmaking we do several things: 1) We own and operate Europe’s largest accelerator program “Startupbootcamp”; 2) We build Ventures — both on our own and with ambitious corporate partners; 3) We facilitate pilots between startups and corporates; and 4) We build the capability for corporates to test their own ideas internally. Some of you may be wondering why I’m giving you our product list; well aside from hoping one of you may be looking for some corporate innovation services, it does have relevance to the story… When we decided we wanted to do something good as a company we explored numerous options, from helping at homeless shelters to painting schools, but we really wanted to do something that leveraged our unique expertise to add real value.

As luck would have it; we also do a fifth thing at Rainmaking: own and run co-working spaces for entrepreneurs; and it just so happened that Rainmaker Foundation was based in our London office. So it emerged that the first round of our company initiative would be to work with the Rainmaker Foundation, offering support, mentoring and training wherever we could. Over the program, the name overlap continued to cause confusions but perhaps was symptomatic of just how aligned the two companies are at heart.

One of the core skills Rainmaking use, whether in our accelerator programs, our Venture Development, pilots or internal innovation training, is Business Modelling, and specifically, Business Model Innovation.

This is about systematically engineering a repeatable, scalable business model which embeds defensibility from the start. A big part of doing this successfully means following Lean Startup principles by stepping back from your perfect model on paper, identifying the inherent assumptions and designing the quickest ways to test them.

One of the key tools we use for this is the Business Model Canvas, created by Alex Osterwalder and Dr Yves Pigneur. It allows for quick prototyping of your business model and as a tool to visualise and communicate the core elements of your business, allowing you to highlight, unpick and make your assumptions explicit, I think it’s unparalleled.

So, even before the program began, we worked with Rainmaker to deliver an “Innovation Day”, introducing the Lean Startup and Business Model Canvas to prospective applicants; we used this as a tool both to understand the charities’ current models in more detail, but also to check their appetite to learn and apply new skills.

We embedded this approach alongside further startup skills training throughout the program, including Customer Development techniques and Business Model Canvas Deep Dives with individual charities.

And so, 6 months later, I found myself sat on stage at the BT Tower with 5 charities, discussing how they had used the program to innovate and test their business models.

The charities on my panel were varying of maturity and all supported totally different causes; they’d each had 2 minutes to present their charity ahead of the panel, so by the time we sat down I think they were so relieved just to relax and leave the time keeping to someone else.

In pitching order the wonderful panellists were:

Ryna Sherazi from Anti-Slavery International: the oldest human rights organisation in the world; even after nearly 200 years of execution they’ve worked hard to keep the agility of a startup. They came to the program to test a new model: taking their expertise in anti-slavery lobbying and policy creation and selling it as a consultancy service to companies looking to remove/guard against slavery within their supply chains.
Bob Bharij from Foundation for Change: looking to use the program to develop a strong foundation for their model; Foundation for Change aims to reverse the relapse rate of those who go through rehab for substance abuse, by providing a range of projects to develop new skills that trainees can use to take back control of their lives; one model they explored through the program was developing their own clothing line.
Laura Sheldon from Multi-Story Orchestra: Laura had a baptism of fire; joining as the charity’s first employee just as they were accepted onto the accelerator. Now, she’s focussed on creating a financially sustainable model which can be scaled nationally. The Multi-Story Orchestra aim to making orchestral music more accessible and inclusive through interactive carpark concerts which subvert typical class associations with the art and running workshops in local schools to develop passion for this music.
Amy Shocker from Invincible Me: as the only single founder on the cohort, Amy couldn’t spread the workload of the program, but still turned up without fail to workshops and events, with an attitude that could have convinced us she had an army of workers behind her. She’s focussed on taking her project from pilot to a scaleable model; delivering mental health training to teachers to help educate children on mental health before symptoms of poor mental health occur.
Ruth Tidy from Peace Direct: the first charity I know who developed a revenue stream in which they’re paid to deprive their customers of all their creature comforts and force them to catch their food on a deserted island in Scotland. One of the more mature charities on the cohort, Ruth’s biggest challenge has been finding a new way to engage donors and augment typical revenue streams with new corporate partnerships.
Up first, we discussed the challenges of focus. This was particularly hard for self-confessed speed demon Amy, who admits she doesn’t have a slow-mode. For anyone who has worked with her, Amy is like a whirlwind, and that’s how she’s got so far on Invincible Me single-handed. But moving with speed isn’t the same as moving with agility. This was one of Amy’s key learnings throughout the program, and the Business Model Canvas proved a key tool to show this; once Amy stood back and looked at her canvas, she began to think about the business she was building far more systematically and strategically. It allowed her to start to plan more for the type of business she wants to build, rather than getting caught in the reactive loop of execution mode, particularly when she is currently the charity’s biggest resource. She’s since changed her focus, working on ensuring she’s developing her Key Resources to make her model more defensible and ultimately more attractive to partner schools.

During the program, Multi-Story Orchestra faced a similar epiphany moment when tasked with coming back to look at their business model from scratch. For them, the need to draw in new revenue streams or reduce costs with key partnerships proved pivotal, and the need to make big changes was irrefutably hammered home when they stepped back and looked at their canvas as a whole; that said, it also gave them a new starting point to begin to prototype new models which can sustain their efforts locally, with the ambition to then scale nationally.

Some may say that Anti-Slavery didn’t have the luxury of being able to draw a blank canvas when starting this exercise; with so much history, they not only had to continue running other legacy services, still funded with old donation models, but they also had to deal with internal culture challenges that come when introducing a fundamentally new model into the business. However, for Ryna, the culture has always rewarded agility; in fact, this adaptiveness has been key to their ability to quickly respond to ever changing mediums of slavery; as one kind is abolished another surfaces, and so slow reaction time has never been a luxury this charity could afford. One of the things I loved about Anti-Slavery International was this approach; instead of believing they couldn’t create a new model because of legacy products, they looked at the history and expertise they already had as a key resource and innovated a new business model around it; turning a skillset they’d built over years of campaigning into its own product, now sold to corporates. What I love most of all is the new model they engineered puts impact on a par with financial gain; the more they sell to corporates, the more value they deliver as they help engineer slavery out of the supply chain. Better yet, they came to the accelerator with the intention of proactively testing the assumptions in their model, rather than assuming this neat idea that maps so well on paper will play out perfectly in reality.

Another charity exploring a new customer segment for their business model were Peace Direct; and for Ruth, unlocking new behaviours and more active ways to engage this segment has been a huge challenge throughout the program. They’ve become creative with their channels though, and invented things like a fundraising challenge where corporates pay to send their executives on a team building weekend to a desert island; there, they hunt and gather their own food, build shelters to stave off the Scottish winds and hopefully avoid killing a colleague in the process.

However, as one audience member raised, this isn’t always an easy segment to work with; and with more charities looking to unlock the CSR budgets, competition for donors here is no less fierce.

Luckily, Bob had a hands on suggestion for how we can begin to counter this: calling out the need to create common language and build a real mutual relationship when working with Corporates, Foundation for Change went so far as to offer their own space as a place to forge this new frontier, with meetups where charities and corporates can come together and meet on a more equal footing; getting rid of the business jargon and social sector slang.

There was so much more we could have covered, but the final point we ended with was a poignant question on the challenges this sector still faces: change is hard, and while we had an amazing group of social entrepreneurs or charity leaders (whichever term you prefer) on stage making great headway; there are still sector wide struggles that persist. I strongly believe and heard this belief echoed often throughout the event, that the answer to a great many of these challenges comes at the intersection of sectors; not by keeping them distinct.

Business model innovation is a great example: charities often think of businesses as sitting in another sector, operating for a wholly different purpose; meanwhile established organisations often think of the Business Model Canvas as a tool for entrepreneurs not multi-national corporates; yet, over the course of the accelerator we showed how one tool can cut across three groups that often segment themselves and begin to engineer a better way to execute social impact.

Even without my steer, collaboration emerged as a key theme of the panel, but this was fitting as it was undoubtedly the theme of the event, and of the accelerator itself. Individuals collaborated to move the charities forward; charities collaborated to push each other forward; across sectors, we collaborated to inject new expertise and knowledge to solve complex problems. If this spirit, which we saw so clearly in the room at Demo Day, is at all indicative, then personally, I can’t wait to see the business models that evolve over the coming years: I’ll be looking especially closely at the new partnerships they build, the value propositions they create and the new segments we can serve.