First Time Founders with Ed Elson – This Nonprofit Raised $1B to Bring Clean Water to the World

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29:11We're back with First Time Founders. So I just want to fast forward to today. uh charity water has now funded more than 184 000 water projects around the world operates in 29 different countries it is on track to serve more than 20 million people yeah we've already passed that yeah already passed it it has served more than 20 million people uh we talk a lot about impact um on this podcast and how to make an impact and what it takes to create impact. This is like real impact. This is probably the most impactful organization and founder we might've had on this podcast in terms of actually changing people's lives.

29:52So as it stands today, give us the synopsis on Charity Water. What is Charity Water doing today and how is it helping people? You know, it's interesting. I mean, in some ways we're doing the same things as when we started 18 years ago. You know, we've now raised over a billion dollars, which is not that much money, you know, at this table, right? The people who have sat in this chair. But we've been able to mobilize a couple million people to give that. So the money has not come from governments or primarily foundations or corporations. It's been everyday people. and raise a billion in a night.

30:24Yeah. I'll say as well, you know, we've really helped bring awareness to this issue. And I think that the entire sector has grown. We now stand at 700 million people without water on a close to 8 billion population. So we've gone from 1 in 6 alive to 1 in 10, 1 in 11 alive. So we've actually made huge progress. And I think that's important because, you know, with any of these paralyzing global issues, I think to some people it feels like there's no end point. Yes. Right? Ah, we're just sending more money to Africa. You know, sending more money to these. No, we're actually making huge, huge progress.

31:02The biggest challenge that I tell our team is, you know, no one listening to this podcast woke up this morning, turned the tap on, took their shower, you know, used filtered water for their coffee, you know, maybe grabbed a bottle on their way to the gym or the yoga studio and said, my gosh, I'm so grateful for the clean water to the privilege that I was born into. Let me go find a water charity so that I can go help people who are suffering. We have no customers, right? So I think the biggest challenge is how do we get people to even pause and consider the problem that they have never experienced?

31:48You've raised more than a billion dollars to date. That's more money than many of the largest, most successful startups in the world can say. and you did it for something where there was no economic incentive for the people who are funding you. So, I mean, I think that you are a lot of things. One of the things that you certainly are, in my view, you are a master fundraiser. What would you say is the secret to fundraising and what do you think it takes to raise hundreds of millions of dollars? I still am looking for that key, you know, the unlock to generosity. I've picked up some things around the world.

32:25I'll tell you one really powerful conversation I had. I was about to go and ask somebody for$10 million. A young tech entrepreneur, been a part of a multi-billion dollar IPO. And I was flying out to Hawaii and I stopped in San Francisco and I was meeting somebody at the Battery. And he was an older gentleman. I think he was a Goldman Sachs partner for many years. And I said, hey, I'm about to make this ask. So this is more money than I've ever asked a human for. I don't get any of it, right? I mean, 100 % of it goes straight to the, but I said, how do you feel when someone asks you for a whole lot of money?

33:08And he said one word that has just changed the paradigm for me. And it was not what I was expecting. I was expecting him to say offended, uncomfortable. And he said, I feel flattered. He said, I feel flattered that they think I would be that generous. And I wound up making the$10 million ask, actually getting a$12 million gift from that family. And I had an experience a couple years later where I was going to make another$10 million ask. And I asked the founder, and I did it in a really interesting way. and it was a kind of a beautiful proposal that spoke to the way that he had made his money.

33:54And he got back to me a couple of months later after getting this proposal and he says, you know, that was really beautiful. Thank you for honoring me and my family. He said, I have only one question. Why did you ask me for so little? And I said, well, because I didn't have the guts to ask you for 40 million. And he said, well, I'll do that then. He said, I need 10 years and I can send four right now. I think those two things, that it's okay to stretch someone. It's okay to ask them to think about radical generosity, to think about using their resources to end the needless suffering of others, maybe in a way that they hadn't even contemplated before.

34:40And I still think like, maybe we're just not asking for enough. Yes. You know, maybe we're just leaving so much human capacity for good, for generosity on the table by not being bold. Somebody told me once a fundraiser, listen, there's only three things that people can really say. And if you're okay with all three of them, then you just got to keep showing up. You know, so what can people say? They could say no. Right. They could say less or not now. And if you're okay with all three of those, right? And how many founders here have had no pitch decks and people probably crapping on their ideas, crapping on their pitch decks?

35:21So you have to really be able to take a lot of no's. And I guess the fourth category is when people say they're going to do it and they don't do it. That's probably the most frustrating. I'd rather just not be strung along. But I remember that I go home, if I hear seven no's in a day, my kids still think I'm great. My wife hopefully still thinks I'm great. And then you get up the next day and you go ask and ask and ask. And, you know, there's something almost freeing about the fact that none of it is personal gain. You know, I froze my salary six and a half years ago. I haven't even taken a cost of living increase.

36:00I wanted to kind of take, you know, that incentive completely out of the work. So if I raise, you know, 100 million this year or a billion for the poor, it doesn't impact me at all, right? It's money going through your hands. I remember just an early driver. I was sitting with a tech founder, you know, unicorn startup, multibillionaire. And over the years, a lot of people have said to me, why don't you just start a company and make a lot of money and give it away? I would ask you that question. You seem like, you know, it's just very logical. I've probably had hundreds of people say, you know, why don't you go start something, dude?

36:41Like ring the bell, you know? And I would always ask them, how much have you given away? And let's say early on my number was, okay, well, I've given away$50 million through Charity Water. I've given away$250. Now at a billion, I'm starting to thin out those people. I know very few founders and probably very few founders, you know, sitting at this table who have given a billion dollars to the poorest people in the world. And, you know, I think we're in the beginning of the second inning. So I would hope if I can continue to lead this movement and continue to build the organization, you know, that number might be 50 billion has gone through my hands, making a few hundred grand a year as the CEO of the organization, you know, being able to have a fine living and provide for my kids.

37:28But the billions, 50, 100 billion dollars has gone to the poorest people in the world. So that's our job is to inspire people, is to kind of winsomely invite them to make their legacy through generosity more expansive than perhaps they even thought possible. I want to go back to the 100 % model. You made that commitment. You're going to donate 100 % of the public donations are going to go directly into these causes, and that's your promise. I have a lot of friends—it sounds like you know these people, too—who say they don't really trust charities. You know, I would give, but I don't really know what they're going to do with it.

38:12You know, I've heard of this charity as a scam and that charity is a scam. And now we have a lot of distrust around NGOs in general. How do you counteract that? And I'll also ask, to what extent are those concerns warranted? Like, how many charities actually are scams? And then how do you build trust among your donators? Many, many, many charities are doing really great work at great human sacrifice. You know, people who are living way beyond the status that they could be living at, you know, even working at Charity Water. You know, if I think about my software engineers or our product people or our water programs team, they could be making more money.

39:01and getting better benefits and stock bonuses out in the for-profit sector. And they have chosen to serve. So I think there's a lot of good. I think there's also a lot of opacity. And what we have been really trying to kind of preach as a value is build a transparent organization. And I believe donors are open to myriad value propositions. If I told you right now that the biggest need we had at Charity Water is to fix our copy machine and it's$1 ,500 to get the Epson guy to come, you would give$1 ,500 right now to meet a specific need. That's like the most overheady thing. Right. But if it helped the organization move the mission forward by fixing the copy machine, you would be willing to do that and write that check and pay for that overhead.

39:54But you would know where your money is going. And I think with a lot of organizations, it's just, you know, they do an imperfect and sometimes a very bad job at just telling people where the money is going. Is it going to sit in an endowment for the next 50 years? Is it going to overhead? Is it building a new building? Is it going to the field, you know, to deliver direct services? So our model has, you know, the separation of kind of the church and state. You know, these bank accounts get audited by KPMG every year. and for the last decade plus, they write an opinion. We force them to audit the 100 % model and then post that opinion on the website.

40:31Like to basically forensically audit every donation we use for overhead needs to have an audited paper trail. So trust, I think, is the overarching value. And one detail of the 100 % model that most people don't know is that we actually even pay back credit card fees so that there's perfect integrity when we say 100%. So if you went online after this podcast and you gave 100 bucks on your Amex, I'm gonna get 97 from your donation. I'm actually pulling$3 from the overhead account, adding it to the 97 I got after Amex took their transaction fee. And then I'm gonna send and track and prove your$100.

41:14That'll cost me$800 ,000 this year to raise for overhead, to pay back MasterCard, Visa, and Amex and make those donations perfectly whole. You know, we've raised over a billion dollars. I've never used donor money for a business class ticket for myself. I'm doing 80, 90 flights a year. There's a value of stewardship. You know, do I want to fly Cochin Air Ethiopia? No. But am I going to spend an extra 10 grand of donor's money? You know, I haven't been willing to do that. Believe me, I'll take all the upgrades that the airlines want to give with status. I've had a donor, you know, give miles, you know, in other circles, but there's kind of these values that you can put into an organization that really help you build trust.

42:00And that's what I'm hoping and a hundred percent model has just allowed us to do that by design. We have a product that we're launching in the fall called waterproof that will track every single donation. So if a kid goes out and sells lemonade and gives$6.13 to their parents, and their parents go on and give$6.13 online, we can track that to a well in Malawi and show them a satellite image of the well, exactly how much that project cost, and all the other people they shared it with. And, you know, that helps. That really helps win trust. And it helps win repeat donors as well. We'll be right back.

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45:09We're back with First Time Founders. On the operational front, the nonprofit structure versus the for-profit structure. There's a debate in society about when nonprofits make sense and when for-profits make sense. And a lot of people believe that nonprofits, by virtue of the lack of economic incentive, are just overall less efficient. They're slower, they're maybe more bureaucratic than a for-profit organization that makes money. Maybe they attract not as great talent, for example, because you can't pay them as well as you could at a for-profit. What is your view on that? Is there truth to that skepticism around nonprofits?

45:54And how have you pushed back against that? How have you made your organization as efficient as some of the most well-run companies in America? It's interesting. So when our donors and many of our overhead donors, so I should just clarify, the way that we pay for the overhead is a multi-year giving program called The Well. It's 135 founders, entrepreneurs, and families. And the goal is to get that program to 200. So that's growing every year. So 135 people currently pay for all of the overhead so that millions of people can give in the other bank account in the purest way possible. So that maybe just to demystify that.

46:36So I kind of have 135 LPs. Yeah. I have to keep them happy. They are our investors. Now those people, because it's the founders of Spotify and Pinterest and LinkedIn and, you know, a bunch of people, Shopify, a bunch of people who have been on this podcast, they know that an organization is only as great as the talent that you can recruit and then retain. So they don't mind building the organization as long as it's efficient and transparent. When they look at our numbers, they can't believe how much we do for how little. So the overwhelming sense is we're way more efficient than their businesses, than the ROI that they would expect to get from almost any action.

47:21You know, there was a time when, you know, almost every employee at Charity Water was raising a million dollars. You know, it was like a million dollars revenue. I mean, there's not that many companies that are doing a million dollars of revenue per employee. We're probably at 900 ,000 now or so. So they've always kind of appreciated that efficiency. I will say that it is really hard because of the nonprofit class to retain talent. I remember in the early days in New York, we would lose an engineer at Google who would triple their salary. And so that is just a challenge that you're just stuck with.

47:57We did one interesting thing to meet that. We designed a program called The Pool where founders can donate equity and that gets profit shared among our employees. So our employees had a little bit of Uber stock. There are a bunch of founders as they're building a company that'll pledge one or two percent of their personal equity into a bonus program. So, you know, it's still they're not ringing the bell. I mean, this is this is not significant income, but it's it's helped us feel a little more like a for profit. Yeah. By design. Yeah. But it's a big challenge. And I think, look, we don't really hang out with other nonprofits.

48:37We're hanging out with, you know, I'm taking inspiration typically from high growth startup culture. I took Daniel Ek from Spotify to Africa. And I think Spotify had 900 ,000 paying subscribers. And he told me in the back of a Land Rover, he said, you know, I stood up in front of the company. I said, we're going to 100 million paid subs and we're going to do it in 10 years. I think it took him 11. And he's what, now at 300 million, going to a billion. These are the people who have inspired me over the years, these really big global thinkers, maybe less than, you know, someone trying to keep the lights on at a nonprofit.

49:18I know that you've used virtual reality to tell the stories of what's happening at these water projects. You've used drones with cameras to film what's happening. You're extremely active on social media. Talk about the importance of leveraging technology and I think using social media to keep your business growing. It seems like it's been endemic to everything you've done. It's also getting harder. So, you know, we were the first charity to get a million Twitter followers. I remember speaking at Twitter headquarters where there were 38 people working at Twitter. We were the first charity to use Instagram on morning one when they opened it up to organizations.

49:59So social media was a big part of our early growth. It's really hard to get people's attention right now. So I would say that our challenge has never been greater. You know, click-through rates are what, 0.6 % now? It's unbelievable. So how do we get our media seen is, you know, amidst all of the scrolling, amidst the diminishing attention spans. you know the volume i woke up this morning and i had 200 emails like i batch deleted 140 maybe yeah including a bunch from charities like mine doing really good work but i didn't have time to take in their content this morning you know as you get ready for your day and you know and the the stuff coming in from your team that needs response so i i think we're thinking about what are the tools of the future that are going to allow us to move people towards compassion, to be generous.

51:02So I think charities have it harder now, maybe in this glut of information world where we're really thinking about it. It's all about us. Like everything is personalized. The technology, you know, I associate a lot. So I'll see a piece of technology and wonder if that could be used for good. I'll give you two examples of that. when Nest came out many years ago, I saw a donor change the temperature of their vacation home on their iPhone. And I was like, whoa, if you can have a smart home, you could have a smart well. And, you know, we had no R &D budget. So I went and convinced Google to give us a bunch of money for R &D to build a sensor.

51:43And we made 3 ,000 sensors that we installed in rural Ethiopia. and we connected 3 ,000 wells to the cloud. And in that pilot, we got the largest data set in the history of the world, over a billion liters of flow. And that project is still ongoing and very simple idea. Like when a well breaks that has a sensor on it, a mechanic gets dispatched, turns up on a motorbike with tools, fixes that project. The community pays for that repair and then they move on to the next one. so you know using a smart thermostat the same idea to create a well where water can continue to flow over time and you know the up rates you know that it continues to work in year three or year seven or year ten uh is association so that's a that's a really exciting sensor program that's still going on we're working on four different sensors now for different water program types in different stages of R &D.

52:47And we're raising all that funding separately as well. So that's not actually coming from the public donations. You know, that's an R &D fund. The second, you know, just example, I remember when VR first came out, do you remember it was the Samsung phone that you would slide into that? It had Gear VR, right? And then Google had that little cardboard box. It was Google Glass. So I remember going somewhere, some conference, and it was Marriott, and they put a headset on me. And I was in the penthouse in Dubai, looking at Dubai. And I just remember thinking, wow, I could take people to Ethiopia or Malawi or Nepal to a village without water.

53:29And, you know, we're pretty scrappy too. There were no VR cameras on the market. So I got GoPro to donate eight GoPros. And I found this guy, Chris Milk in LA to turn it into a 360 rig. and we went to Ethiopia and we shot this beautiful eight minute VR film of a 13 year old girl who gets clean water for the first time in her life. And people would put on the headset and see the swamp that she was sharing with animals. It's fecally contaminated. They saw the rig, the million dollar drilling rig with Ethiopian drillers roll into her village and jump out and start looking for groundwater. water. There's this moment where they strike water and her father picks this little girl up and he's dancing and he's spinning her around.

54:20And then at the end, you watch her walk to the well, pump it and taste clean water for the very first time in her human life. And, you know, as primitive as the technology was, we would put headsets on people and they'd be weeping. You know, eight minutes later, they have tears streaming down their face. And we wound up using that film to raise millions and millions of dollars. We took it to our Met Gala. And after dinner served to 350 people in black tie, we served 350 VR headsets on trays. And we pressed play at the same time. We took everybody out and back in eight minutes. And the minute the film finished, we just asked them for money.

55:00We helped 100 ,000 people get water in that moment. So I'm always wondering how can we use technology to further the mission, which is really simple. The mission is just to get everybody on earth clean water. Yeah. That's the drop the mic moment. There is a finish line. When 703 million people have water, we're done. It's done. Yeah. It's a world where every human has the most basic need for life met. We talk a lot on this podcast about money, how to build a profitable business, how to get rich. That's one of our big themes, which, you know, I don't think that's a dishonorable cause. But I do think that we underlook on this podcast the meaning and the value of service and what it can do, not just for other people's lives, but for your own life.

55:53and what it can do to your own happiness and the impact it can have. So for someone who's listening to this podcast, and, you know, there are two parts. There's the life of money and wealth and the fame and the glory that comes with that, or a life of service and helping others and philanthropy. Make the case for our audience for going the latter route. What is the value in living a life of service and helping other people? I mean, I think I was almost a slave to the consumerism that I was pursuing. All the markers of success. And, you know, however, and I've heard this actually from a lot of our donors.

56:38You know, a lot of people will have a number in mind. And whenever they reach that number, the number changes. and you know I'm worried that if you live that life you know it's almost like the like the cartoon right like the carrot is just out in front of you yeah and you know it's consumption and more houses and more planes and more cars and you know I it for me I'm only speaking personally it didn't bring happiness so you know the animating quote in my life um is almost 17 years ago, there was a guy who worked for me and he was passing a New York City bodega, a deli. And there was this saying on like one of the boards outside, do not be afraid of work with no end.

57:26And it came from an ancient like rabbinic text. Do not be afraid of endless work. And in some ways, you know, I think the one path is it's like endless spending, endless endless attaining, endless consumption, endless accumulation, maybe, or endless service. And, you know, I love that idea of, you know, if your work, if the work is showing up and saying, you know, first, like, how can I be a great husband? How can I be a great father? How can I be a great friend? How can I be a great leader, you know, of an organization? And how can I serve? How can I make the biggest impact to people living, you know, close to me in my local community, in the global community?

58:17There's no finish line to that, right? It's the same way that there's never enough. There's no finish line. But you get to look back and like, oh, wow, we've helped 20 million people get water. Okay. Hopefully I get to look back and say, oh, we've helped 100 million people on planet Earth. We've got this problem solved. you know i i i was at madison square garden not too long ago with my wife and you know madison square garden holds a little less than 20 000 people and it was sold out for a concert and i was like we've done this a thousand times like you would have to build a thousand madison square gardens to contain 20 million people i was sitting in a thousandth of the impact and I haven't met these people.

59:05I'm never going to meet 20 million, 20.2 million people with water, but that's the pursuit. How do I use what I've been blessed with, my time, my talents and my money and my personal money as well. I also believe in giving. I have to eat my own dog food. You know, I need to be as generous as I'm asking other people to be. How do I use that in the service of others? and it's I think you know provides for a fulfilling life where you know that it matters Scott Harrison is the founder and CEO of Charity Water Scott this has been inspiring I hope it was inspiring to others and I really appreciate your time thanks for having me

59:56our producer is Claire Miller our associate producer is Alison Weiss, and our engineer is Benjamin Spencer. Thank you for listening to First Time Founders from the Vox Media Podcast Network. Tune in tomorrow for Prof. U. Markets.

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