How a Tech Non-Profit Became the Hottest Ticket in Silicon Valley

http://www.wired.com/business/2012/06/khan-academy

by 2arrs2ells • 14 years ago

73 19 14 years ago

raptrajs• 14 years ago

The formula is:

1. Take a hard, tough-nut-to-crack problem, like making education not suck.

2. Take something that's traditionally been behing high-priced walled gardens (ie universities) and offer it online for cheap or free.

3. Put an extremely intelligent, visionary man at the head of it all.

This isn't Pandora for cats. This is making quality education more widely available and making the process to do so transparent and honest. Bravo, Khan.

2arrs2ells• 14 years ago

Paying a competitive salary (like Khan does) also helps!

samstave2• 14 years ago

What is this Pandora for Cats you speak of, can you give meow information?

bignoggins• 14 years ago

I'm thinking of starting a tech-nonprofit my self. How does it work in terms of fundraising? Are you raising donations instead of investment? And do you have to constantly seek donations since you don't really ever have the intention of making real revenue?

kkowalczyk• 14 years ago

First, a disclaimer: I know next to nothing about non-profits. The fact that you know even less should give you a pause. If you're serious about this, do some (or even a lot of) research before asking the most basic questions.

A non-profit status is not about making revenue or not. It's a legal categorization of your company. So first, you need a company. Then you have to apply for a non-profit status with the government.

How do you apply for non-profit status? I don't know, you'll probably need to hire a lawyer specialized in non-profit registration to guide you through that process. It's also not a one-time thing: in order to maintain your non-profit status, you have to convince the government every year that you still are a non-profit.

You're confusing the means with the goal. You don't need non-profit to be benevolent. You can have crazy profits by day and spend those profits on benevolent activities by night. You can build wells in Ethiopia, send vaccines to Nigeria or any other thing that non-profits do without being a registered non-profit. You can think of non-profits as a way for rich people to do benevolent things (via donations) without spending time actually doing those things (i.e. rich person signs a check, a non-profit does the work of sending a malaria net to africa).

So why people register for non-profit status? First because it gives them a preferential treatment from government in terms of lower taxes (?), ability to fund-raise money that is tax-deductible for the donor etc. I'm sure few google searches will direct you to a much more extensive information.

Given preferential treatment why won't every company register as a non-profit? Because government doesn't give that treatment to just anybody. There is a checklist of things that a non-profit can and cannot do. If you're Locke, you won't like being a non-profit.

That partially answers your "fundraising vs. investment" question. I'm guessing that "investment" is not even on the table for non-profits due to government rules so they can either earn their money or do fundraising. If you think, however, that fundraising is easier than making money, then you're probably wrong, but that's a whole new topic.

rprasad• 14 years ago

Non-profit status is primarily about your goals, not your revenue, hoever, earning too much profit (revenue>expenses) can endanger your nonprofit status. If you take in revenue, the revenue-generating activity must be strongly related to furthering your non-profit mission or it will be recharacterized as taxable business income ("UBIT") (but see the tax cases on museum gift shops for examples of how far you can stretch the definition of "related"). Too much UBIT can result in the loss of non-profit status. Any profits generated must be used toward the non-profits charitable purpose.

Why do people register for non-profit status? - Donations are not treated as income - No taxes on revenue raised and spent on charitable activities (taxes on UBIT are same as for-profit rates) - Certain types of non-profits, i.e., 501(c)(3) non-profits can receive tax deductible donations (but donations to any other non-profits are not tax deductible) - Non-profit status is required for most private foundation and government grants for charitable activities.

You are right about donations vs. investment. Non-profits must constantly raise money from a variety of sources in the form of grants or donations. To avoid "private foundation" status, that money must be raised from a variety of sources. (A private foundation is a type of non-profit with burdensome compliance requirements and restrictive related-party transaction rules.) A non-profit can charge for the services/products it provides, but generally must charge at- or below-cost rates.

Also, salaries and compensation to employees is significantly more burdensome. You have all of the same compliance requirements as a normal for-profit company, but you must also justify the salaries and benefits paid to your officers or generally, any employee making more than $50,000.

Finally, there are restrictions on what a non-profit can do. Money and property donated to a non-profit cannot be given to any of its employees, officers, or donors. It must be used/liquidated in furtherance of the non-profit's mission or given to another non-profit. Political activities can result in the loss of 501(c)(3) status (which means no tax-free donations, but the non-profit otherwise retains its non-profit status). Related party transactions can trigger loss of status, fines, penalties, and jailtime.

However, if you want to make money and still do good, you can follow in the footsteps of Californian companies like Patagonia and register as a "B" corporation. (There are benefits to registering in California.) B corporations can spend money on charitable purposes without the risk of a shareholder lawsuit. Only a handful of other states offer B corporation status; Delaware is not one of them.

Mz• 14 years ago

I would strongly encourage you to think about your reasons for wanting to do this and wonder whether or not your goals can be achieved following some other model. Not-for-profit is not the only means to be a do-gooder. It isn't necessarily even the best means.

zhemao• 14 years ago

What I find weird is that there is no mention of Khan Academy hiring any educators. Even if your teaching methods are non-traditional, you still probably need someone with traditional teaching experience to tell you whether the lessons will actually be effective.

keithpeter• 14 years ago

I think that Khan Academy is providing small nuggets (videos, quizzes) of content.

As a teacher, I can take Mr Khan's currants and bake my own cake with them (i.e. use their stuff to support part or all of a course). I pick and choose, but of course my students know the site and they can pick and choose as well.

stchangg• 14 years ago

Hi zhemao, thanks for the comment! I'm a Khan Academy developer. I just wanted to add that we do hire educators. Among them are Beth and Steven who are our in-resident art history faculty (http://www.khanacademy.org/about/the-team). We also have a dedicated School Implementations team (http://ka-implementations.tumblr.com/) working directly with schools to understand how Khan Academy can be integrated in classrooms and to evaluate our performance against independent test results.

eslavitt• 14 years ago

Thanks stchangg! I'm on Khan Academy's school implementations team and just wanted to add that Maureen, who is also on the school implementations team, is a former 6th grade teacher. This summer, we also have 2 experienced math teachers working with us to flesh out a significant amount of our math content: Chris Talone (teacher at Marlborough, a girls' school in LA, who taught 7 levels of math simultaneously with Khan Academy this past year) and Jesse Roe (teacher at Summit, a charter school in San Jose, who taught Algebra and Geometry to 9th graders with Khan Academy this past year). We're really grateful for their thoughtful contributions which are grounded in years of experience teaching math to lots of different types of students.

gte910h• 14 years ago

I'd really like to see you guys team up with someone like Dan Carlin (Hardcore History) or the guys at Crash Course World History to get more history material out there.

They seem to have the right levels of exceedingly INTERESTING history along with getting narrative out about why X is important or Y is to us today, etc

tomjen3• 14 years ago

Why would you want that? Khan academy has tons and tons of data on what is effective. They can (and I hope they do) run statistical test to figure out what the best method of teaching is, what works and what doesn't.

Involving humans, even experienced once, just bring in all kinds of crazy, irrational, beliefs about what works and what doesn't.

krakensden• 14 years ago

It sounds mean and dismissive, but it's a point that's been proven over and over again. Thanks for saying it.

samstave2• 14 years ago

Khan Academy is fantastic.

We need a charter school that uses it as the core of its content delivery for educating on the subjects covered as a test.

I would put my two kids in that school without question.

astrofinch2• 14 years ago

These guys make a good argument that you can do just as much good or more by working a conventional job and donating money to nonprofits than by working for a nonprofit directly:

http://vimeo.com/32787159

joshzayin• 14 years ago

(Current KA intern here.)

That video assumes that nonprofit jobs aren't high-paying, but that's not always the case. KA, for instance, pays competitively. If you can both have a high-paying career that enables you to donate while also using your skills to help advance causes you care about (especially if the skills in question are skills that many or most people don't have), then by the reasoning in the video, that's better than either option they present.

astrofinch2• 14 years ago

Makes sense.

How a Tech Non-Profit Became the Hottest Ticket in Silicon Valley

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