The Evolution of an Innovation

Print Share on LinkedIn More is known to many in the nonprofit sector for its job listings service, but it is much more than that. The brainchild of entrepreneur Ami Dar, Idealist was conceived as an international forum where people could match their civic interests with the organized opportunities provided by nonprofits around the world. It gets about 30,000 visitors a day, and lists profiles of more than 40,000 organizations, 5,000 nonprofit consultants, and 200,000 individuals.
Below, Dar discusses some of the challenges the nonprofit sector poses for innovators.

NPQ: You’ve been highly innovative and you’ve taken a lot of risks, personal and otherwise. What stands in the way of other organizations acting in that same way?

Dar: Well, first let me say that I was very lucky. When I started Idealist, I was working for a software company that allowed me to pursue this dream by giving us an office from which to work (they still host us now) and paying my salary. Without that incubation, we wouldn’t have survived our first few years.

In terms of the obstacles to innovation, I think we need to look both internally and externally. Internally, say you have an idea for improving your own organization: a new program, a better policy, a cheaper way of doing something. If you are lucky, you work for an organization where new ideas are welcomed and encouraged, and where everyone on staff—even that twenty-two year old who joined last week—is always heard.

This seems to be rare. Most organizations—in any sector—are hierarchies. And hierarchies tend to isolate those at the top from those below them. This is unfortunate because in most organizations the junior staff have the best collective view of what’s really happening in the organization, both internally and in its relations with those it serves, and also because good ideas are like flu viruses floating randomly around the office: anyone on staff can get them, regardless of age or seniority.
Externally, there are a couple of difficult dynamics. First, in a culture of real or perceived scarcity, collaboration among different organizations can be hard. If you have an idea for a new project that can’t be done by a single organization, the first thing you need is to meet with potential partners. This can be surprisingly difficult. Under a public rhetoric of collaboration, many organizations are intensely competitive, sometimes to the point of preferring that a good idea never get off the ground if it isn’t proposed by them.

And then of course you have the funders, which can be the most difficult nut to crack. One of the things I learned at the beginning of this whole process is what a huge burden it is in the nonprofit world to be what people call a “nobody.” To be a complete nobody and get a first meeting at a big foundation can be unbelievably difficult. This came as somewhat of a shock to me because in the high-tech community, which is the part of the business world where I come from, having connections helps, of course, but what really matters is your idea. This is not the case in the foundation world, especially at the national level.

NPQ: Why do you think that is so?

Dar: I am no expert on foundations—they still baffle me—but I think there’s a variety of things going on. First, there is the sheer question of volume. On its Web site, the Ford Foundation says that in 2002 it received about 40,000 grant requests and made 2,500 grants, of which only 800 went to first-time grant recipients. This perceived tidal wave of requests can lead to organizational cultures that are more about keeping the beggars out than about inviting people in to have a conversation. I say “perceived” because the large foundations also have large staffs, so I am not sure that the number of proposals is the biggest problem.

More important, it seems, is the aversion to risk, a lack of internal incentives to make big bets, and most critically, a lack of faith that somewhere out there is an idea that could change the world (or my community, or my sector), and that I am going to do everything I can to find that idea, and then support it with a major grant.

And here again we got lucky, and our luck may help to illustrate the problem. First, in 1999, after four years of surviving on a budget of $100,000 a year, the Stern Family Fund reached out to us, invited us to apply for their annual Public Interest Pioneer grant, and doubled our budget overnight by giving us this $100,000 grant in 2000. Then, a young friend of one of our staff members got a job at the Ford Foundation, and personally introduced us to some great program officers at Ford, Surdna, and Carnegie, who then decided to support our work.

Getting those grants was wonderful, of course, but while I believe that we deserved them, I also realize that some of them would never have happened without that fortuitous personal connection. Everyone tells you that funding “is all about relationships.” But isn’t something wrong with this? Shouldn’t it be about merit first, and about relationships only second, if at all? What about all those thousands of people, working on a great idea, who will never be funded because they don’t know anyone?

NPQ: Can you talk a little bit about how Idealist got started? What was the opportunity that you saw?

Dar: About twenty years ago I was traveling in South America, trying to decide what to do with my life, and meeting and talking with other people who were bothered by the poverty they saw around them. I then became obsessed by this almost mathematical challenge: with all the resources we have, all the ideas, and all the free time, how much more could we do about all our problems? Is this really all we can do? How far can we push the envelope? The whole story is very long, but after several years of thinking about this, I saw the Web for the first time and I thought: “OK, with this tool one person with no money can actually do something interesting.”

I then found a couple of interns (this was in the summer of 1995, in New York) and I asked them to go to the Web and find every nonprofit Web site in the world. After about two months we had found 2,500 nonprofit Web sites, arranged them all by issue and location, and launched our first site as the biggest global directory of nonprofit Web sites.

The next step was to design and build a system that would allow any organization anywhere in the world to get a presence on the Web, and to be able to list and update its mission, volunteer opportunities, events, resources, internships, and jobs. We built that second site over the winter of 1996, with $3,500 and a personal computer, and launched it in the summer of 1996 under the name, Idealist.

NPQ: Can you talk about how Idealist’s concentration on human resources developed?

Dar: Well, this was definitely not in the plan. When we first designed the site, we asked ourselves: What do all organizations have in common? The first answer was that all nonprofits, without exception, want more money; but we decided from the beginning not to go in this direction of online fundraising.

So we said, “OK, apart from money, what do most nonprofits need and what do they offer the public?” and we came up with seven items. Nonprofits offer programs, resources (newsletters, books, videos, etc), events, and campaigns; and they need staff, volunteers, and interns. From the beginning, then, we designed the site around these seven components, allowing organizations to post under their profile as many of these seven different things as they wanted. All listings were free, and we didn’t emphasize the job listings in any way over the other resources.

But then two or three things happened. First, we started noticing that users were coming back to look at jobs more than at any other part of the site. We then set up a mailing list where you could enter your e-mail address and next day you’d get an automatic message with all the new jobs entered into Idealist in the previous 24 hours. This list started growing by about a thousand new users a month, and people started forwarding our messages around the country, which led us to many new users and organizations.

At the same time, by the fall of 1999 we were basically starving. We had $400–$500 in the bank, and paying our two staff people was a daily challenge. At the same time, Idealist was becoming well-known as a good place to post a job. The obvious thing to do was to start charging for these job postings, but this was a scary idea because we had no way of knowing if nonprofits would continue using the site if we charged for our services.

So after a lot of thought, we came up with a price of $40 per job posting, which was nothing compared to any kind of print listing at the time. The rest of the site would remain free, with jobs in the United States being the only thing for which we charged. We made the changes on the site, crossed our fingers, and on October 16, 1999, sat and waited for the first organization to post a paid job. As was to be expected, our job listings fell that week from 80 to 50. But the money went from $0 to $2,000, and the site was suddenly paying for itself . . . By the end of that first week, for the first time in five years, we didn’t have to worry about our payroll.

Last year, over half of our $1.2 million budget came from these little job postings (which are now $50). Only two of our current staff of twenty deal with the jobs directly, so the jobs really subsidize everything else we do.

The next step, led by Russ Finkelstein, one of those two original interns who is now our associate director, was to start organizing nonprofit career fairs around the country, of which we have done 60 so far, and to reach out to more nonprofit HR managers to tell them about our services. To do this, we tried to find a national association, a mailing list, a conference, or a magazine for nonprofit HR managers, assuming there had to be one. We quickly found out that nothing existed nationally, so in the summer of 2001 we did seven focus groups with HR people around the country asking them what else we could do for them.

People generally agree that by the time an organization has a staff of 50 it should have an HR person. But what we found in these focus groups was that many of these managers had been hired as the first HR person of their organization when the place already had 80 people, 100 people, 150 people. So when they came in on the first day of their new job they were completely overwhelmed, and the last thing they could do was go out and organize their peers. At the same time, they essentially said, “If you guys do the work and organize a national conference, we’ll attend. If you do a resource center, we’ll use it….” So with that we went to Carnegie, and got a grant that allowed us to host the first national conference for nonprofit HR professionals, and to start working on more services for them.

NPQ: Going back to the original question, how do you compare the receptiveness of potential sponsors for innovation in the nonprofit world with the receptiveness you find in the business world?   

Dar: The part of the business world that I know best is the high-tech sector, with venture capitalists and investment bankers providing the money. Honestly, it’s a much more open sector. It’s a sector that’s based on greed, and greed is definitely a good motivator there. If you have an idea in the business world you can go to your uncle, a bank, an “angel investor,” or a venture capitalist, and your pitch to them is very different from what it would be in the nonprofit sector.

In the business sector you say, “I see this amazing need; I have this great idea to meet it. The idea needs an investment. If you invest in my idea, there’ll be a profit and I will share that profit with you as an investor.” It’s a completely different model. People will perk up when they see the potential for making a profit on your idea. So people listen to you in a very different way.

NPQ: But in theory, if I work for a foundation and I want to maximize the public benefit of the foundation’s dollars, won’t I be on the same kind of lookout for those ideas that will deliver results?

Dar: In theory, yes; and there are definitely some funders that think and work this way. But many others do not. If a plan to change the nonprofit sector in some amazing way doesn’t fall within their set guidelines, a program officer will often not even see the proposal. And the trouble, of course, is that truly innovative ideas often don’t fit in anyone’s guidelines.
A big difference between the nonprofit and high-tech sectors is in how people look at meetings. Venture capitalists (VCs) are investing their money, or their clients’ money, and they would never invest in a new company without meeting its management. In the foundation world I can make a million-dollar grant and resign my job the next day. That million is not mine. At the same time, VCs usually understand that truly new ideas can be very difficult to express purely on paper. You should want to meet with the person, hear them out, and see the light in their eyes. And on the grantee’s side, you should want to hear the investor’s questions because it helps to build out your idea and anticipate problems.

There are very legitimate differences between the sectors, but I think there are things one could learn from the other: more openness; more phone calls; more schmoozing opportunities. Most of all, there should be a realization that right now there are some great ideas out there that we’re not hearing about. Let’s go and find them somehow. Let’s create new pipelines and gateways and scouting mechanisms. This little world of ours is too closed for our own good. Both funders and grantees need to consider how to open it up.