THE HOW: Different Types of Non-Profit Investment

A hypothetical: a nonprofit develops a valuable, proprietary SaaS platform. Customers love it, but the organization needs significant resources to properly develop, scale, and distribute the technology.

At some point, leadership comes to the conclusion that they are the wrong organization to grow and shepherd this platform. Perhaps they lack an internal development team that can properly follow through on their technical roadmap. Perhaps they want to focus on their core competencies and founding mission. Whatever the reason, they know they are sitting on a valuable asset.

This is not purely a hypothetical. Many ubiquitous, well-known technologies were initially developed by nonprofit organizations, including the Google algorithm, Siri, and ChatGPT.

So what can the nonprofit do? In simple terms, there are two options. Below, are two different real-world examples from actual nonprofit organizations….

Option #1: Focus on the Product

"The Hill Learning Center has announced a deal that will boost the reach of a popular reading program it developed and allow the nonprofit to focus on its core mission: training teachers and serving students with learning differences.

The 95 Percent Group, an education company that provides whole-class and small-group literacy solutions grounded in the scientific reading research, is buying the HillRAP intervention program that Hill developed for striving readers.

“It’s going to allow us, first of all, to achieve our dreams – which is to get this out there,” said Beth Anderson, executive director of The Hill Learning Center. “For over 25 years, we’ve been trying to figure out: How can we export the whole methodology?”

The move also will allow Hill to focus on its core mission, which is to transform students with learning differences into confident, independent learners. “We don’t have the capacity and resources to continually invest in HillRAP,” Anderson said. “Everything needs continual investment as a software. And now we’ll have access to all of the upgrades that 95 Percent Group will make as they go forward.” - EdNC, 2023

Option #2 - Focus on the Company

"Harvard, MIT, and edX announced today that edX, the two institutions’ 2012 joint venture into online education, would be sold to leading educational technology company 2U for $800 million. 2U, a publicly traded company listed on the NASDAQ, with revenues expected to approach $1 billion in 2021, is an online program manager.

The company provides digital platforms and marketing and logistical support that allows colleges and universities to offer online instruction but does not itself provide degrees.

The proceeds from the transaction will be used to fund a nonprofit organization led by Harvard and MIT that will be focused on “transforming educational outcomes” and “tackling learning inequities.”

In an assessment shared in the Harvard Gazette, Harvard University provost Alan M. Garber said that edX risked falling behind as for-profit online education providers invested in new platforms and courses. He added that 2U has the resources to carry out edX’s mission of including access to low-cost and free courses for diverse learners with continued innovation and at a greater scale than is readily attainable for a nonprofit." - Harvard Magazine, 2021