Too often charities take a “just do it” attitude toward helping people, launching into a solution-based approach to help people in need without taking the time to really understand the problem they’re trying to solve.

While built on good intentions, this flawed logic can lead to inefficiencies in how help is given (or risks missing the mark of what people need altogether), risking future fundraising as well as the well-being of the recipients.

This is where charities can learn from lean startups: how to prove your solution fits the problem you are trying to solve, and ramp it up in the most cost effective manner possible.

Like charities, when startups begin, they usually have very constrained resources, so they need to run in a lean and efficient manner. Similar to how charities experience cash flow fluctuation from donors, startups have to use money effectively after funding rounds and have a limited amount of runway.

Any funding they receive must be used to get a product into market as soon as possible, so they can learn, iterate, and grow. This mirrors the sense of urgency at charities to use donor funds as effectively as possible to start helping people.

Embracing the lean startup philosophy could allow charities to:

start small and easily scale to meet program demand with minimal staff and funding

understand what recipients need from the start to create the best solution

learn fast as they go

reduce overhead

Here are four lessons that we at GiveCrypto have borrowed from the lean startup philosophy:

1. Don’t Overestimate Your Own Intuition

As humans, we often fool ourselves into thinking that the product or service we’ve come up with is foolproof. But, unfortunately, this is often wrong when applied to the complex lives of other people.

This is because it’s easy to get caught up in the stories of all the people who need help in the world, and many charities oversimplify the problem from the start and build a foundation that doesn’t support the actual problem these communities face.

We believe that this misconception is one factor in why charities can struggle with proving effectiveness or may come off as well-meaning, but ultimately ineffective, ventures.

For example, the charities of Somaly Mam — who was recognized as a champion of women and girls forced into sex trafficking before she was exposed for ethical issues — theatrically failed to understand the reality of the people they were designed to help.

Now, there are a lot of layers to Mam’s fall from grace, but we can learn some lessons from her story about preventing scandal, hurting recipients, and being ineffective and how startup-like experimentation can help charities steer clear of these issues.

The charities, which were designed to provide resources for these disenfranchised women to help them escape sex trafficking and take control of their lives, continually used the images of the recipients in their marketing campaigns. While this came from the desire to spread awareness about the issue, they didn’t realize that this put these women at risk of being recognized and abused again.

Furthermore, her charity was quick to assume they knew what these women and girls needed most and failed to understand the community they were supposedly “helping.” This included continually ignoring that prostitution and sex trafficking are the not the same, furthering misconceptions of who the victims are and the challenges they face by marketing an inaccurate depiction of them and failing to offer aid that was practical and useful to the women who were being abused.

By spending more time at the start trying to understand the unique challenges of women and girls forced into sex work and experimenting with what aid helps them the most, the charities could have avoided embarrassing, endangering, and failing their recipients.

Using another popular charitable cause as an example: Rather than saying “kids in Africa need clothes,” charities should invest in exploratory projects that not only identify exactly where and how African children need clothing, but what the unique job is that needs be done that the charity can carry out.

2. Embrace Build, Measure & Learn

As the saying goes, to err is human.

But without a logical, consistent process for measuring success and the impact of their work, it’s difficult for any organization (especially charities) to learn where they went wrong and how they can be better moving forward.

Many charities often default to a long cycle time between writing grants, executing projects, and evaluating the results. While this seems safe, responsible, and comfortable, it can cost more money, effort, and time that could be better spent actually helping people in a smarter way.

Instead, charities (and startups) can cut overhead and time wasted through validated learning. This means adding a step at the beginning of the process that calls for an analysis of your core assumptions about what people need. This doesn’t just help you create a better program, but it also helps you write more actionable grants and better evaluate your results.

When you build your service (in this case, philanthropic aid to those in need) through this process, you create a minimum viable product (MVP) to start helping people as quickly as possible that is more scalable and better informed.

To start, take down your core assumptions about who it is you are helping and what the problem is that they face. Then, through smaller pilot projects, measure the results of applying your program to this problem to demonstrate evidence-based impact. Ideally, you could set up a randomized controlled trial where one group receives aid through a model used in the past and another gets it through your new, hopefully improved, method.

Based on this information, you can reject projects or scale them into larger organizational programs.

Leading up to the launch of our Venezuela Pilot Project this year, we conducted more than 20 experiments around the globe to find the best way to carry out our mission (distributing cryptocurrency to people struggling under broken economies and governments). Yes, we ran into barriers such as losing an ambassador contact and fraud. But rather than have these issues derail our entire program, we were able to break them down, learn from them, and create a better solution for our full-scale projects.

Without this kind of experimentation, it would have been incredibly difficult to know if we’d missed the mark before we actually did.

3. Find Market Fit for Donors and Recipients

Much like startups, charities have to balance the wants of the people donating their money with the needs of those receiving the help. The only way to do this is to produce a solution that tangibly helps recipients, securing donor money in the process.

For both charities and startups, it can often seem like the needs of the people using your solution and the wants of the people funding it are at odds. The need to satisfy both parties is what unites charities and startups behind a common goal: finding product market fit in a two-sided market.

Much like the allure of a visionary product in the early stages, the promise of helping people can be enough to get a charity off the ground and donors on board, but organizations need to prove demand and need among recipients in order to show their solution is a good fit in the long-term.

Donors, like investors, don’t just want fluffy marketing and optimism; they want to know their dollars are being used for a good cause and are addressing the problem described in the charity’s mission statement.

Similarly, charities need to know (and show donors) that their solution isn’t just well-thought-out, but has demonstrated an ability to address the day-to-day needs of their recipients.

Charities can provide this peace of mind in a similar way to how startups prove to venture capitalists that their company is worth funding:

providing hard numbers on impact

providing hard numbers on efficiency (overhead vs. total spend)

providing regular updates on people helped, projects funded, and goods bought

At GiveCrypto, we’ve created a monthly (soon to be more frequent as we move into our first major project) update schedule that publishes these figures for donors and supporters.

Openly publishing our impact metrics not only helps donors see how their money is being used, but it also combats the perceived transparency issues many traditional charities face with the public.

4. Learn Fast and Help People

Startups and tech giants, like Facebook, have become famous for adopting the “move fast and break things” mantra when it comes to progress and the pursuit of cutting-edge solutions.

While there’s certainly something to be learned from this, there are ethical and moral considerations to failure that charities have to hedge.

For instance, if a startup fails to understand the needs of their target demo, the worst case scenario is lost money or unsatisfied customers. In extreme cases, like Facebook, customer information could be shared when it wasn’t intended.

However, if a charity misses the mark, they not only risk wasting donor money and souring future fundraising, but they can also cause a real, tangible negative impact on the lives of people who are already struggling.

For this reason, perhaps a better fit for charities is “learn fast and help people.”

Regardless, the moral of this lesson from lean startup land is to embrace change and experimentation in order to better learn what works and what doesn’t. While it may feel scary and less secure than the slow cycle many charities are used to, this proactive approach to adjusting your organization to the needs of the recipients means you can help more people in the end.

As we touched on above, GiveCrypto has taken this mentality to heart by using the first six months of operations to conduct a variety of short experiments across the globe that allowed us to try out different distribution models quickly.

Embracing Startup Lessons to Build Better Charities

Historically, charities have been slow to embrace fast-paced, experiment-based development models because of slow grant cycles, unclear understanding of the problem they are attempting to solve.

As tech becomes more and more a part of how charity is done — and motivates creative solutions for helping those in need — the industry can learn a lot from the lean startup philosophy of Silicon Valley. We’re excited to see how these lean startup lessons can help organizations outside of Silicon Valley better serve people, especially those most in need of our help around the world.