Watsi is not that different from many other new nonprofits. It has its goal – to deliver crowdfunded medical care to needy patients around the world – and it has its initial “investors” – a group of three generous men who will fund the startups first 18 months. But that’s where the similarities with most startups end.

You see, Watsi is different for several reasons. To start, its investors never plan to see even a modest return on their money. For all intents and purposes, they are donors, and they are fine with that. However, the greatest difference between Watsi and most other nonprofits is its birthplace: the notable startup incubator YCombinator.

2013 was the first year in its successful but short history that YCombinator has accepted applications from nonprofits. Watsi is the first nonprofit to come out of YCombinator, but everyone involved hopes that they’ll have some company soon.

Chase Adam, the founder of Watsi, conceived his idea when he was frustrated with slow-moving nonprofits during a stint in the Peace Corps. He dreamed of a more nimble and agile nonprofit that would operate along the same lines as many young startup companies.
Adam sought funding from angel investors and they came through in a big way, with an initial funding round of $1.2 million.

A lot of nonprofits are perpetually fundraising, always raising money,” Adam said. Yet had other ideas for Watsi. “How does it work in the for-profit world? You go out, raise money for a few weeks, meet those milestones, get to work.”

Watsi’s innovative, nontraditional route maintains a few significant advantages over more standard nonprofit fundraising, especially for a fledgling operation not yet established enough to earn grant money or the trust of traditional supporters.

Adam envisions a future where nonprofits will operate more like for-profit businesses, particularly startup businesses. The lean, mean nature of many startups is perfect for young nonprofits still struggling to stand on their own two feet.

No one starts a nonprofit and says, ‘I really want to fundraise,’ ” Adam said.

By raising money like a startup, Watsi is able to send 100 percent of all donations to its patients overseas, but what happens when their initial funding runs dry? They’ll do what startups do and seek a second round of funding, of course. By the time the second round has run its course, Watsi hopes to be self-sustaining, either through donations from benefactors as with many traditional nonprofits or through corporate partnerships.

This innovative new approach for funding young nonprofits may change the way that many smaller organizations do business, but will it have a lasting impact on the way that nonprofits operate in the future? Will Watsi succeed? Only time will tell.

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