Question
Why have this model?
Why Not Just give Direct donations?
Answer
Compared to for-profit businesses, nonprofits face significant double standards when it comes to overhead expenditure. Most donors have a visceral aversion to overheads, wanting a majority of their donation to go directly to the cause and not towards compensation, advertising & marketing spend, investment in IT and innovation etc. Sadly, this 'Overhead Myth' is crippling the nonprofit sector, stagnating innovation and destroying growth potential. t seems counterintuitive that the very organizations that have altruistically committed themselves to making the world a better place, are often constrained from maximally doing so!
If we donated funds raised through our model directly to nonprofits, they’d then be expected to apply a majority of this towards their programming in order to maintain their overhead ratio. To reference an old adage, we see this as ‘giving them a fish, so they can feed their cause for a day’. The Virtueconomy model is designed to instead ‘help/teach them to fish so they can sustainably feed their cause for a lifetime’.
We do this by converting these funds into creative and supportive services that won’t affect the overhead ratios of nonprofits. But even more importantly, it helps nonprofits to invest in growing and multiply their impact in ways that they can’t or don’t themselves. We empower nonprofits to break free from the Nonprofit Starvation Cycle by providing them with services that help them not just to survive, but to grow! Leg-ups, not handouts.
For further insight at how damaging it is that we judge charities by their overhead ratio, we highly recommend watching Dan Pallotta’s TED talk [Embed VIDEO]. The overarching metric of success should be about doing the most good, not having the lowest expenses. This is a real eye-opener and was a huge inspiration for our model.