Lessons - Why He Promised 100% of Every Donation Would Go Directly to Clean Water | Scott Harrison - charity: water Founder & Author of Thirst

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In this lessons episode, discover why mission-driven organizations require constant reinvention and unwavering integrity.

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Understand how resource constraints can force better business models.

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Explore why trust is essential when funding an idea and uncover how a compelling mission can attract exceptional talent and create lasting impact.

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Now, this journey, it's not just been all up and to the right.

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You've had difficulties too.

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I mean, at one point, you almost went bankrupt.

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Talk me through, because again, when you innovate, you're going to have to solve things that people have never solved before, or this particular business model is not the way it's always been done, which ended up working, but going to be tons of growing pains in the process.

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So talk me through some of the difficulties, the hurdles, the shit hitting the fan moments that you had to go through when you were building out Charity Water.

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I mean, I think the biggest one is one of the early ones was grinding to a halt because we couldn't raise the overhead money as fast as we were raising the water money.

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You know, it turned out the 100% model is very compelling.

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If I give a donor two choices, hey, do you want 100% of your money to go straight to the field and build a water project that you can see getting a satellite image and photos of?

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Or would you like to pay for a staff salary in accounting?

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Right.

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I mean, you know where we know where the money was headed.

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So it took a lot of really creative storytelling to and finding the right people, the builders, the entrepreneurs, the business leaders who saw the value in John's job in accounting and how important that would be to the audience.

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to building a world-class organization that would eventually impact hundreds of millions of lives on the planet.

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So yeah, we almost went bankrupt and we almost ran out of cash.

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And there's a story in the book that I wrote about where this stranger walks in at that existential moment of insolvency and writes a million-dollar check.

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and says, I love your idea, you just need more time, and gave us more rope, more runway, and we're able to steward that extra year of OPEX capital and actually build out what's now a program

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where 130 and growing families and entrepreneurs pay all the overhead so that millions of people can give in a pure way.

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And we call that program The Well, and it's multi-year and multi-tier, and it's international, and we do events, and we treat them like shareholders or LPs.

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So it's become sophisticated, but it almost didn't work.

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You know, we built a really cool platform that allowed people to donate their birthdays to Charity Water.

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And we wound up raising over $100 million as people effectively crowdfunded for us.

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And then we realized nobody would do it again.

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So it was all kind of a one-time donation business that we built.

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And people would only do one birthday.

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They'd have a great experience, but they'd never come back.

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And, you know, we wound up having a down year and kind of having to kill the engine that drove growth for the first eight years and completely reinvent a new engine, which was a subscription engine.

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much more of the Spotify or Netflix or Disney Plus model.

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That's the spring.

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That's called the spring.

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And we had a couple years of kind of down years while we were building that.

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That then wound up tripling the size of the organization.

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But it felt bad for a couple years.

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When you're killing the thing that got you there, you got to completely reinvent and reimagine something new.

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You're not sure it's going to work.

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In our case, it did, and we were fortunate.

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But, oh my gosh, challenges.

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I mean, I hired a president six months ago and, you know, she basically said, your CRM's a mess.

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I said, well, yeah, we never really had the time to invest millions of dollars in, you know, great data management and great CRM.

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You know, we were always putting that money in the field or hiring the next, you know, marketing person.

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So, you know, there are myriad challenges that come with...

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Um, you know, it's, you're always fighting for resources and it's really hard.

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I mean, you're, you know, my, my wife, you know, kind of knows, I joke that there's not a day in my life in the last 18 years where I'm not asking someone for money.

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In some ways you're not in control of your own destiny.

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You know, we are the guide in the hero's journey.

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You're the hero, right?

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You're the hero.

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We're just the guide saying, you want to be generous?

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You want to make your money work in the world?

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We have this vehicle that we've created that can help you do that.

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But if there's no heroes, there's no money.

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You know, we're just sitting on our hands, you know, waiting for somebody who wants to take that step.

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And I think sometimes I'm jealous of my friends who feel a little more like masters of their own destiny because they're selling a physical product or they're selling software or they're building something that people are buying and they need to sell more widgets where they need to sell more software.

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I'm selling...

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an idea of generosity.

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I'm selling an idea of clean water.

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And you hear no a lot.

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It sucks.

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It sucks to hear no.

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But I mean, you still, you're selling an idea, but I think that a lot of people, listen, at the end of the day, everyone's selling an idea, but the way that you've built a process that accomplishes an objective,

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Yes, you're selling an idea, but I do believe that people are inherently altruistic and inherently do want to give back.

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I think what you've done very, very well is you've just bridged that trust gap.

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I know you hear a lot, but I think that bridging that trust gap is probably the most useful lesson that somebody can take away who's trying to build a nonprofit or even just build a company.

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I think that if you applied the framework and the trust gap that you've deployed in Charity Water, I think that would help most companies.

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Yeah, I think that's true.

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Trust is a really big... And, you know, you get...

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opportunities all the time to compromise and to compromise your integrity or play in the gray.

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And, you know, that has been, I think, one of the things I'm most proud of is just, you know, I see the world in so black and white and maybe, you know.

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Maybe not as a surprise with the extreme changes in my life, but at that moment of insolvency, it was interesting.

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We had $880,000 in the water bank account.

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It was more than eight months of operating capital.

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We could have borrowed from that.

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We could have written an IOU.

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We could have said our money's fungible.

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I was going to shut down the organization rather than borrow one penny.

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of the public's money because we'd promised that all of it would go straight to projects.

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So I was calling lawyers at that moment.

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It was the second year of Charity Water saying, how do you unwind a 501c3 because I don't have enough money to run the overhead side?

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But I intuitively knew that if we borrowed, if we dipped even one penny into that public bank account, there would be a crack at the core of the foundation.

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There would be a crack in our integrity.

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And I didn't want to work at a place like that.

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I would rather shut the organization down and try again or try with the traditional business model.

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And we were very fortunate at that moment to have somebody walk in and kind of save the day for us.

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But I would have been willing to take, I guess, the high ground, make good on our promise, and walk away with integrity intact and maybe no organization.

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You keep mentioning that resources are constrained in a charity or non-profit, and you're always thinking about, how do I get the most out of the operational expense and the most out of the money that I do have?

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You've built a massive brand, over a billion dollars raised.

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There has to be a lesson in there for the people that you attract into the organization, because I think that...

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Companies with budgets 2x and 3x what you have have a tough time attracting people that are sort of on for the ride and on for the mission.

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So when you look at the president you hire all the way down to Joe in accounting or the latest marketer you just brought on, what's the secret to getting people that are really willing to go above and beyond for the company and the mission?

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Brand is really important and ambition, I think, is really important.

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We hired 36 people last year.

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We had 16,500 full applicants for those 36 jobs.

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I think it's 10 times harder to get into charity water than Stanford or MIT or Harvard.

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And that, I think, is because...

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Uh, people also want to work with purpose.

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So I think we're also just tapping into a little bit of a zeitgeist where people say, I want my work to matter.

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You know, um, maybe more people are realizing what I, I came to realize without the 10 years.

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going down that path.

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I mean, we have people applying to Charity Water as their very first job, exiting college, exiting a master's program and saying, I want to dedicate my life and great, if I can make an income that helps me to support my family.

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I'm happy to do it over here and make and trade that financial success and trade, you know, the vacation house or the, you know, the boats or the planes or those aspirations for work that matters, for work that that benefits other humans.

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Thanks for tuning in.

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