We’ve defined user value. And we’ve tried to nail social value. But that’s not enough. For your project to survive beyond it’s grant you must generate financial value. However, financial value isn’t easy for us charities to think about because we’re not used to behaving like businesses.
“Sooner or later someone’s gotta pay” says James Dean to Rock Hudson in 1956’s ‘Giant’.
Someone’s got to pay because in general we can’t rely on goodwill and charity alone to get us through life. Sooner or later we need to work and earn our keep. And that means someone needs to be paying us.
The same is true for your tech for good project. You can’t rely on grants forever. In fact you’ll be lucky if you get two in a project’s lifetime.
You’ve got to start generating financial value, and a customer to pay for it.
A crude definition
Financial value can be crudely defined as your digital service’s ability to generate money. And you know, it’d be OK to stop there and explore it no further. Just stop reading here, walk away and spend the time squaring up to the question of how your product will generate money once it’s grant expires.
It’d also be OK to stop reading because from here on financial value gets a little more complicated. So I’ll try and explain it as simply as possible.
Getting sophisticated: financial value to whom?
Defining financial value in more sophisticated terms is trickier, because its meaning changes depending on who is doing the defining and when.
At the beginning of your Tech for Good journey it may be best defined from a grant funder’s perspective. To them your idea’s financial value is the strength of it’s potential social value that they are willing to fund.
At the same stage you can also define it from your charity’s perspective. Here financial value is your idea’s ability to generate funding, even if you only have research findings or proof of a valid concept.
Financial Value must have a customer
As your project develops beyond a concept the question “who is the customer?” becomes more important. However, charities can find this challenging because having ‘customers’ implies selling and selling isn’t what we usually do. But someone has to pay.
Often the customer will be someone who is not your core user e.g. Mind Moose sells mindfulness software for children (users) to schools (customers). Mind Of My Own sells a young people’s (users) app to local authorities (customer) and Labour Xchange sells ethical labour solutions that help job-seekers (users) to businesses (customers, and users too).
You’ve spent your grant and you’ve launched your digital service. Financial value can now be defined in new terms.
To your charity, when you have a clear idea of who your customer is. Financial value has become your product’s ability to generate enough revenue to make it sustainable. A bit like a business.
To your customer, when they are an organisation e.g. a council, a charity etc. Financial value is your product’s ability to save them money or increase their impact, and that they will pay you money for
To your customer, when they are an individual (common commercially, less common in Tech for Good). Financial value is your product’s ability to improve their life, and that they will pay you money for.
But when Financial Value doesn’t have a customer…
This happens sometimes.
In this case usually your organisation is the customer. It’s actually worth funding the product or service from your internal resources.
This could be because it indirectly generates revenue or because it supports your core mission and creates impact in such a way to make it worth it.
A couple of examples might help here. YoungMinds run a medication advice website called HeadMeds. It’s medication information has to be kept up-to-date, creating a cost. Because of the site’s value to it’s users and YoungMinds’ core mission they fund these updates internally.
Another example: your organisation decides to digitise part of its service to help it win a local authority contract. In this case your internal investment leads to increased external revenue through the contract. This is an example of using digital tech to grow an organisation’s services and revenue.
Design Love will save you
We’ve learnt that as your project evolves so must its financial value. You need to design your service or product for customer needs in just the same way you’ll design it for user needs and social impact.
This means exploring your product’s value to potential customers and any conflict between its user and financial value, or even between social and financial value.
For example: what features will be free (user value) and what will be paid for (financial value)? Or how will you balance a quick, easy sign-up process (user value) if your product relies on capturing data to create social and financial value?
Do you feel comfortable talking about Financial Value?
Many charities don’t. We’re happier thinking about funding bids, tender opportunities and generating donations.
But if you’re serious about your Tech for Good then you’ve got to push through your resistance and get good at thinking and talking about financial value.
Because someone’s gotta pay. If they don’t then you’ll end up down that Tech for Good toilet bowl.