Overcoming the Limitations of Donations: An English Education Nonprofit in India Transitions to Social Enterprise
With English as the default language of both elite global academic institutions and multinational businesses, access to quality English instruction is now a key to upward mobility in the developing world. In response, many organizations have emerged to meet this growing need in countries around the world, employing either nonprofit or for-profit revenue models. However, for nonprofits in the English education space that are looking to rapidly scale, the donation-only model – an unstable revenue stream dependent on macroeconomic trends – is a non-starter.
We know the limitations of this model from experience. At Instilt Educate, a charity providing free, live, online English instruction to thousands of underprivileged kids across India and other countries, we’ve navigated the litany of issues that arise when a nonprofit – much like a growing teen still trying to fit in his childhood clothes – sees that its limited, donation-based resources cannot keep up with its pace of growth. That’s why our team is launching a paid element to complement our usual donation-based fundraising efforts. In the process, we have been forced to tackle the issues faced by any burgeoning social enterprise, including maintaining quality control at scale, utilizing creative low-cost marketing that leverages human capital, and developing a unique value proposition in a competitive market populated by much larger players.
Why Launch A Paid Offering?
We launched our organization early in the COVID-19 pandemic, riding the remote work wave by giving young people across the globe an opportunity to teach English online from the comfort of their homes. To that end, we’ve recruited a pool of volunteers composed of young native English speakers based in multiple countries, assessed their skills and trained them in our curriculum, and connected them virtually to learners in India and Sri Lanka (with new projects under initiation in Egypt and Nigeria). After experiencing much faster growth than we expected, we reached a point where continuing to scale without revenue growth would be unsustainable in light of mounting operating expenses – including the heavy account fees for all the online platforms we use, like Zoom, Google Workspace and web hosting. Moreover, the absence of financial slack hampered other important organizational goals: For instance, we found it difficult to expand our services to reach more excluded students, because we could not provide the necessary hardware (e.g., a fast laptop) and software (e.g., capacity to conduct simultaneous Zoom calls at multiple schools) that they would need to reliably attend our classes. Nor could we fund rewards and monetary incentives to recognize the efforts of our members (who are currently working as unpaid volunteers), which we know from research can significantly raise productivity.
To finance these projects, it became necessary to come up with a revenue model apart from donations, which we feel are simply inadequate to address the needs of a rapidly growing global organization like ours. First, donations by their very nature are neither a regular nor a stable income source; in fact, intuition and data both suggest they can be quite cyclical, sporadic and dependent on trends in the broader economy. Second, we know from prior research that competition for donations is often a zero-sum game, with competition from more nonprofits causing a decline in average donations as these organizations divide up the same limited financial pie. Being a student-run organization without significant fundraising experience, we decided that it would be more socially responsible and practical to spend our time earning that money by creating value – that is, baking a new pie altogether.
What Is The Pain Point, And How Is Our Product Solving It?
While our traditional target demographic is the underprivileged child population in India most obviously in need of English tutoring, there is also a pressing need for these services among the broader Indian public. Consider the nation’s urban private schools, which cater to middle class children, claim to reinforce students’ language skills by speaking English in class, and are often viewed as the gold standard in Indian education. Despite these schools’ reputation, just 12% of their fourth graders are proficient in English. Although many wealthier Indian parents want their children to receive the premium-quality English instruction necessary for eventually studying and working abroad, even the country’s elite paid schools fail to deliver in this regard. Our new offering is designed to close that gap.
To ensure equity in educational quality, those who purchase our paid product – for a modest, one-time fee of $15 per course – will be enrolled into our regular English courses alongside underprivileged, non-paying students. But if everyone is in the same class, the natural question is: How do we justify asking middle class students to pay without creating unequal “tiers” in the quality of tutoring, or giving them some form of preferential treatment? Our solution will strike a balance by manually tracking the individual progress and comprehension of paid students. Non-paying students’ progress is also tracked, but due to the sheer volume of these students, individual tracking isn’t possible. However, the benefits of tracking paying students will flow down to the entire class: After all, if the majority of paid students, when surveyed, indicate they did not fully understand a grammar topic, it is likely the unpaid students did not understand it either. When we use this feedback to review a confusing topic with students, everyone will learn better.
Justifying a paid element is also complicated by the fact that a number of our members are newer tutors, and paying students (or their parents) expect tutors who are deemed to be highly skilled and experienced in their profession. We are addressing this issue by sharpening tutor quality via mandatory training modules, and by providing these tutors with a revamped, professionally-designed curriculum. As part of this effort, we have recruited a seven-member in-house advisory team to review and enhance our curriculum. This team consists of experts like Andrew Frankel, an assistant professor of education at Denison University with a wealth of experience in supplemental education, who completed his Ph.D. thesis on English immersion in underserved Tibetan communities. Likewise, another advisor currently teaches English to children in Vietnam. By leveraging the knowledge and expertise of those who have done this work before, we are implementing quality control for our product.
Still, what good is a great product if nobody knows about it? For the time being, we lack the capital to run large-scale marketing campaigns involving cold-calling and paid advertising. Our low-cost model instead leverages the fact that many of our India-based members live in close-knit residential communities, where the nation’s potent word-of-mouth culture is especially concentrated. By having our members act as “brand ambassadors” by spreading the word to parents in these communities – efforts we reward by giving them gift cards, merit awards and the like when they refer a new student to the program – we can organically grow our paid enrollment without breaking the bank. Furthermore, in the regions where Instilt already has a foothold in terms of membership, our brand ambassadors are able to approach school administrations and offer our service as a summer course – something very few local schools provide on their own. This proposition, which saves us time and money by having educators spread the word for us, also avoids direct competition and friction with the schools’ own curriculum during the academic year.
Yet this approach also brings its own challenges: For instance, when we promote our services to local families and schools, how can we pitch our product so that students will choose us over the giants of India’s English tutoring industry, such as Duolingo and Cambly? While we lack the resources to compete with them on a large scale for market share, we can box them out of more local areas with a unique value proposition consisting of three elements. First, we will offer classes for a fraction of the cost: $15 for six months at Instilt, compared to a minimum of $294 for a six-month Cambly subscription. Second, our tutors hail from around the globe, including much of the Anglosphere – a feature that’s invaluable to students who wish to eventually go abroad, because these tutors teach English as it’s actually spoken worldwide. By contrast, the predominantly native Indian tutors used by other platforms are, in our view, often subpar in English and plagued by insular speaking habits. Third, we offer regular live classes with student tracking, whereas other services like Udemy and Khan Academy do not offer these benefits, instead opting for recorded lectures with minimal feedback.
To make a long story short, as an education nonprofit launching a paid option, we have taken on the daunting task of creating a service that is quality-controlled, marketable and differentiated – yet still aligned with our core aim of ensuring equal access to English instruction for kids of lesser means.
Looking Toward Our Future as a Social Enterprise
This product is designed to meet our medium- and long-term objectives as a social enterprise by allowing us to make continual re-investments into core priorities like marketing. In the medium term – the next year or two – the proceeds from our paid offering will enable us to hire (or contract) marketing and fundraising professionals. With more professional campaigns, we will be able to recruit a higher volume of paid students, allowing us to finance even better marketing efforts in the future.
We expect that this snowball effect will carry us to our ultimate, long-term goal: to provide all of our underprivileged students with physical infrastructure – laptops, earbuds, tablets and phones – so they can reap the full benefits of remote English learning without interruption or distraction. Alongside these improvements in connectivity, we will be able to offer students a higher-quality curriculum – one designed by experts, taught by more motivated tutors (given our financial resources to reward them), and informed by greater tracking of and sensitivity to student comprehension – all in hopes of creating a truly level playing field. We hope that by leveraging the power of for-profit social enterprise, we will be able to increase our reach and amplify our impact as our nonprofit grows in the coming years.
Photo courtesy of Nithi Anand.