CreateGood

We recently came across an insightful HBR article that provides a compelling case for why more nonprofits should consider instituting beneficiary fees to drive greater impact and sustainability. The authors argue that while access and scale are important, true impact comes from enabling meaningful change through a combination of access, consumption of services, and performance. However, funding constraints often limit nonprofits' ability to achieve this impact at scale. By charging even nominal, affordable fees to beneficiaries backed by strong education on the value being provided, nonprofits can generate crucial revenue to expand their reach. This also incentivizes greater accountability and engagement from both sides. The article provides examples of innovative organizations like Project Maji and Worldreader that have implemented such models with sensitivity to beneficiaries, creating win-wins for all involved. For instance, by charging just 2 cents per 5 gallons of water, Project Maji has been able to sustainably provide clean water access to over 300,000 people daily. The authors suggest nonprofits create pricing tiers based on ability to pay rather than seeing people as a homogeneous block. Impact is treated as a shared responsibility between nonprofits and beneficiaries. Performance based contracts and outcome tracking are critical. While this commercial approach may feel counterintuitive, it allows nonprofits to live up to their ambitions for change without compromising their mission or values. I believe there is exciting potential for social focused organizations to drive greater collective action through such blended funding models. What do you think? Have you seen or implemented similar approaches? Are there any risks or downsides to consider? I welcome perspectives from both nonprofit leaders and donors.