Financial sustainability is always top-of-mind for social enterprises, particularly once a solution has proven viable and begins to scale. When you develop a solution that works, one people depend upon, you want to make sure it can continue to grow its impact and meet the community’s needs independent of the economy’s ups and downs. The path of maturing funding models is often pictured as a transition from one type of funding source to the next as the solution grows, settling on one primary funding model that meets your organization’s needs.
Our work reflects an alternate reality. Pulling from the for-profit technology playbook, we have implemented multiple distinct revenue mechanisms in parallel for different types and stages of work.
Benetech’s mission in inclusive education is to make information accessible for people with disabilities that affect reading, such as dyslexia or a visual impairment. We’ve been working in this field for nearly two decades, impacting the lives of well over a million people in over 80 countries. Our Bookshare™ initiative is the largest single library—and now global network—of accessible e-books and learning resources in the world. We are now working with the publishing industry to achieve the next level of systems change.
We hope that by sharing our sustainability story openly, highlighting the mix of earned revenue sources, philanthropy, and government funding, and the opportunities and drawbacks to this approach, we can help widen the conversation about sustainability models for nonprofits, shining a light upon different paths to impact.
First Came Seed Capital
Benetech began, uniquely, with two kinds of seed capital: proceeds from the sale of a previous nonprofit and a more typical nonprofit source—private philanthropy. These funds allowed Benetech to launch two software-driven solutions: Bookshare and a human rights tech-and-data program. This capital helped us fund initial software development through the launch of a minimum viable product (MVP) and beyond.
In the case of Bookshare, this seed capital also funded the work on the core content and customer support processes. Given its beginnings as a library created by its users, who donated their scanned books to be shared (thus, “Bookshare”), the fledgling service needed to develop a scalable way to take in scans and manage the volunteers and their work. Without such seed capital, these product and process pillars might never have matured enough to offer sufficient value to paying users.
Philanthropy can hold a strategic place in your funding model throughout your organization’s development. Philanthropy often serves as the fuel for your innovation engine, and it can continue to drive your programs forward from infancy to maturity when paired with other sustainable funding mechanisms.
Sustainability through Subscriptions
As a direct-to-consumer online service, we introduced a subscription model at the beginning of Bookshare, allowing any qualified person to sign up and access the Bookshare collection for a nominal fee. (Bookshare operates under section 121 of US copyright law—the Chafee Amendment—which allows us to distribute accessible copies of books to people with qualifying print disabilities.) In 2002, when Bookshare began, the very notion of buying e-books was still in the future for the vast majority of consumers, and waiting months or years for audio was the norm in the accessible book world. Thus, a technology innovation that offered new, popular books in multiple formats relatively quickly was worth an annual fee. (Bookshare offers books in five formats: BRF, Audio, EPUB, Word, and DAISY.) It was also a positive model for many people with disabilities, who would prefer to pay for something that worked for them.
For those who couldn’t afford it, Benetech began offering the option of volunteer credits in exchange for subscription, thus further building the collection and raising the value of the service.
Bookshare had individuals signing up online in other countries, and it was clear there was a massive need for Bookshare globally, especially in developing countries with the most severe accessible book famine.
Would a subscription fee work globally? Our innovation for global growth began in India, offering subscriptions on a sliding scale based on World Bank income classifications by country, either directly or through partner libraries. We began to extend this around the globe, with a model of richer countries helping to subsidize poorer.
Philanthropic or other seed capital is still required when starting up in a country that lacks a reasonably-financed accessible library partner to establish the awareness, local content pipeline, training, and capacity building required for success. However, the core Bookshare technology platform has mostly ceased to be a financial barrier to entry because of economies of scale gained through our largest single revenue source.
Government Partnership: Transformative, But Is It the Endgame?
Government is sometimes seen as the final frontier for a social innovation. After striking out on your own to fill an unmet need and proving your program’s viability, government adoption or support for your service may be the ultimate achievement. However, is there a path to even greater impact?
We got a big break and surprised many people when we won our first competitive award from the US Department of Education, Office of Special Education Programs, to provide accessible educational materials for free to all qualified US students. We won by pledging a 10x improvement over past solutions, to serve five times as many students for half the cost. This funding, in lieu of subscription fees, allowed us to scale our technology and rapidly grow our collection and user base.
That reach has turned into a 50x improvement so far, reaching over half a million students and their families who have benefitted from our work in 38,000 schools and school districts across all 50 states and US territories. Such achievement has solidified our orientation toward competing and continuing to lower our cost-per-user. Meanwhile, the US taxpayer pays the equivalent of a fraction of the standalone subscription price per student.
A strong, multiyear source of funding, such as our award from the US Federal government, is transformative, but relying on such partnerships alone may mean narrowing focus or limiting impact. In the case of Bookshare, our government funding has been pivotal for students, but it does not cover services for audiences such as non-student veterans and seniors in the US, or the millions of people who could benefit globally.
Specialize and Collaborate
Economists since Adam Smith have argued that specialization and trade leave all parties better off. Collaboration, though critical, is underpracticed in the underresourced social sector. In part, the concern over sustainability for all participants may be to blame. As increasingly noted, there is also a seemingly insatiable desire to fund the newest ideas for social impact.
As a software organization in the social sector, we often see other nonprofits build their own systems where well-established solutions already exist. Happily, the movement to cloud computing and software-as-a-service (SAAS) created new opportunities for us to implement our technology in collaboration with nonprofits with aligned missions.
Recognizing the value of our technology, and the investment required to develop it, we have found success “renting” our platform as a service to leading organizations in other countries that help people with reading barriers, including blindness and dyslexia. This is a typical business-to-business software model or private-label approach, which we were able to incorporate into our work to increase our impact in other countries.
These organizations contracted us to leverage Bookshare’s powerful technology to host the organization’s own accessible library. For us, it means we can make accessible books available to this organization’s huge network of people with reading barriers, with the already established organization doing the heavy lifting for awareness-raising amongst potential users and local training and support. This platform as a service model, along with annual support, ultimately has much more impact than we would have going it alone.
For technology nonprofits, in particular, this is a replicable and scalable revenue source. What workflows, technologies, and systems has your organization invested time and money into perfecting? Would they be of value to other organizations too? If it would be more effective for you to extend (or even customize) this system to the organization’s needs, than for them to build it from scratch, that’s not just a good business opportunity, but a better overall investment of philanthropy dollars.
New Models for Greater Impact
Our US government funding helped us create partnerships with publishers, and now over 900 of them donate books to Bookshare. This work also meant we were deeply engaged in the field as publishers began to focus on their new reality—more and more of their content would be “born digital,” truly made for electronic consumption first. It struck me like a thunderbolt: Anything born digital can, and must, be born accessible. That became our new mantra, and it meant that someday we could put Bookshare out of business, even as we fought hard to deliver its benefits.
This idea seemed possible based on our work under another US government award, DIAGRAM, a research-and-development center exploring new accessibility solutions for education. We were now at the center of a community of stakeholders from publishers and technologists to students and teachers, that could help lay the groundwork for commercial, as well as social, change.
So, leveraging our accessibility expertise and existing relationships with publishers, we created a program to certify that a publisher’s books are “Born Accessible” for a small fee to help cover the cost of our work. As technologists well acquainted with both accessibility and publishing, we were well prepared to work with publishers to address accessibility problems in their workflow and serve as a third-party certifier that their e-books have the required accessibility features.
Expanding into this form of partnership allows us to address key obstacles to our goal of inclusive access to information at the source, and dramatically scales our impact. We hope that one day this process will eliminate the need for Bookshare as a primary source for books for people with disabilities. Nonprofits and social enterprises should not discount their expertise as a potential source of revenue and scaled impact.
Strength from Multiple Revenue Models Means Strength for Your Mission
Each of these sustainability models does not exist in a vacuum. They interact with each other and strengthen each other in various ways. For example, our US government award also funded the initial development of our Born Accessible program, which lent us the necessary capital to get the program up and running. Meanwhile, as a validation of the value we create for our Bookshare users, individual donations from users and their families provide capital for further improvements and other needs not covered by restricted grants.
For countries where we have a limited presence, private philanthropy funding is once again seed capital. It funds the three critical elements we need: on-the-ground outreach, initially through grassroots partners; sponsoring individual memberships; and providing technology for Bookshare access. This smaller-scale entry also allows us to demonstrate value that paves the way for future partnerships with a local government, partner, or as a part of larger development initiatives.
Building the Right Team
While building a comprehensive revenue system has served us well in pursuing impact, it does come with some challenges. The mixed-model approach requires a sophisticated finance team, comfortable with the challenge posed by the differing forms of revenue and the regulations that may govern them. Beyond finance, the skills required for success in each revenue model vary, and you will need to hire for each new phase of strategic growth. In our case, that has meant hiring the right mix of individuals with strong marketing, engineering, business development, fundraising, and product and program management backgrounds among others.
No Silver Bullet to Sustainability
With diversified revenue models, we’ve experimented with different paths to scale for each new market that we enter, whether partnering with a large organization to provide a streamlined inclusive reading service for their thousands of members or building grassroots awareness and support for the needs of people with visual impairments at the local level. We have been able to achieve sustainability through different revenue models cost-effectively because of economies of scale and the maturity of our technology.
As social impact technology organizations explore different avenues to create change, it may require experimenting with different revenue sources. Our comprehensive funding model has enabled us to address a major global challenge on multiple levels, and we are still evolving and innovating. We are laying the groundwork to experiment with pay-for-success type models as another means to expand our global footprint, particularly as we implement Bookshare increasingly within employment skills development realms. By sharing our lessons learned to date, it is my goal to empower others to explore a combination of revenue options to achieve lasting, positive change.