The nonprofit sector has a scaling problem
· Fortune
About 35 million Americans live below the poverty line. In 2024, that meant a family of four struggling to get by on roughly $32,000 a year. But that figure doesn’t capture the full extent of economic hardship. When we expand the definition to include families earning up to twice the poverty threshold, or about $64,000 for a family of four, the number of Americans struggling to afford necessities like housing, childcare, healthcare and groceries climbs past 100 million. That is almost one-third of the U.S. population.
Across the country, extraordinary nonprofits are developing solutions to challenges like these. Yet too often, a program transforming lives in one community never reaches the hundreds of others that could benefit from it. Instead, philanthropists fund new initiatives and pilots, sometimes without realizing that a proven solution already exists.
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The challenge is that philanthropy is largely organized around supporting local organizations, not helping successful ones expand nationally. In reality, it shouldn’t be one or the other; it should be both.
I’ve spent 26 years in venture capital, including as co-founder and former co-managing partner of General Catalyst Partners and as co-managing partner of Sigma Prime Ventures. Venture capital is, at its core, a bet that big problems deserve big solutions. When millions of customers share a common need, we build companies capable of meeting that demand at scale.
Consider Airbnb. The company began in San Francisco, proved its model could work and attracted investment to expand into new markets. As it grew, it generated more revenue, became more valuable and attracted additional capital.
That’s how successful businesses scale. Growth generates more revenue, which attracts more investment, which fuels further growth.
But that economic engine doesn’t exist in the nonprofit sector. Nonprofits must raise enough money to sustain their operations, but rarely generate the additional revenue needed to finance rapid expansion. And unlike businesses, they don’t have investors eager to fund growth in anticipation of future profits.
I know this from personal experience. While studying at Oxford, I founded Kids Enjoy Exercise Now (KEEN) to provide recreational opportunities for children with disabilities. Later, I co-founded the Steppingstone Foundation in Boston to expand educational opportunities for underserved students.
Both organizations had the potential to serve far more communities, yet expansion was extraordinarily difficult. Every new city meant starting almost from scratch, finding local funders, building relationships and securing the resources to operate. KEEN eventually reached eight U.S. cities and Steppingstone three, despite the potential to serve many more.
The problem wasn’t a lack of ambition or demand. Unlike a successful business, we couldn’t count on revenue from one city to finance expansion into the next.
I began to wonder why every nonprofit needed to spend years building the same relationships and raising money in every new city. What if we could build that local infrastructure once, and then use it to help multiple proven organizations expand?
That was the idea behind GreenLight Fund.
Our model starts locally. In each city we operate in, we work with local leaders, government officials and other stakeholders over the course of a year to identify the community’s most pressing unmet needs. We then search the country for a proven solution that can address the greatest gap and continue to work with local partners to bring it to the city, providing the funding, relationships and public-sector partnerships it needs to take root and last. The proven solution is pulled in by the community itself, not pushed. One community, one solution, one lasting change per year.
By doing this work up front, we can help an organization establish itself in a new city in six months to a year, rather than spending years building those relationships on its own. We also help connect organizations with the local revenue streams needed to sustain their work, whether through school systems, government agencies or other community partners.
I think of GreenLight as building railroad tracks that other nonprofits can travel on. We do the hard work of establishing local infrastructure and once those tracks are in place, we can bring one proven solution after another to a city.
We’re building the distribution network, but what we’re delivering is change.
What began as just an idea 22 years ago now operates in 15 cities, soon to be 18, with another 10 to 15 communities waiting. Our latest annual impact report shows what this approach can accomplish: 71 nonprofit investments, reaching 1.6 million individuals and families in a single year and unlocking more than $450 million in follow-on funding to sustain and grow. And this is set up to scale. At the current course and speed, 10 years from now, we project to be in over 28 cities, with more than 250 additional nonprofit solutions reaching close to 10 million children and families annually.
Our experience suggests the problem isn’t simply a lack of money. It’s how philanthropic resources are deployed. Funding an individual program can change lives in one community. Investing in the infrastructure to bring proven programs to new communities can multiply that impact for decades.
This isn’t a failure of any individual donor or nonprofit. Local philanthropists are doing what they’re supposed to do: supporting organizations that serve their communities. But we need more funders willing to invest in the infrastructure that allows proven solutions to expand and more community leaders willing to look beyond their own backyards for answers. It’s an AND, not an OR.
New ideas will always be necessary. But before funding another pilot, donors and community leaders should ask: Has someone already developed a solution that works, and could we bring it here?
Our model is not the only way, nor should it be. I hope other leaders will chart their own paths to locally driven impact at scale, whether through networks, public-private partnerships or approaches no one has invented yet.
We know how to identify promising ideas and help them succeed locally. Now we need to get equally good at bringing those solutions to the communities that need them.
The children and families waiting on us do not have time for anything less than ambition that matches the scale of the challenge.
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