Scaling A Non-Profit: The Case Study Of Ashesi

14 January 2013

Last week, I was in Ghana for a board meeting of the Ashesi University Foundation. I also visited startups and a startup incubator that I will talk about in subsequent posts. I’ve written about Ashesi’s leader Patrick Awuah before. In full disclosure, I’m a big fan of Ashesi and was just elected chairman of the foundation board. For me it’s the kind of leveraged philanthropy and social entrepreneurship that can really make a difference—exactly what Bill Gates has described as catalytic giving. This post is about the Ashesi story as a startup; and part of it comes as an outgrowth of a short part of a long conversation about many topics with Steve Blank a few months ago. Specifically, we were talking about social and non-profit entrepreneurship; and my contention is that even non-profits can benefit from the ideas of customer development and lean startup; and that in particular, it’s important that non-profits also think about their business model in the same way as a for profit does.

The rest of this post goes through a short history of Ashesi, and a current snapshot of how the Ashesi University team is addressing its growth and why I think it provides great catalytic philanthropy example.

The Mission and Vision

Patrick didn’t start out thinking he would build a university in Ghana. He first thought he would start some sort of business to help economic development; but when he visited, he noticed his experience being educated at Swarthmore and working at Microsoft built critical thinking, leadership, and practical skills that were missing from his secondary school peers who stayed. His view was that in a country where less than 5% of people who are qualified to get a college education actually complete, that college educated people would end up running the countries government, non-governmental organizations and businesses. He felt the way to change the direction of the country and continent was through generating a new set of African Leaders with strong critical thinking, practical skills, and ethics. In 2001, when Ashesi was beginning, he took advantage of a change in the educational structure in Ghana that enabled the forming of private universities.

Since its founding, Ashesi has focused on a singular mission; educating a new generation of ethical, entrepreneurial leaders in Africa. Its vision is that an African Renaissance can be driven by a new generation of ethical entrepreneurial leaders. The underlying principal is that African progress will be driven by Africans—not through direct aid from outside.

Patrick started working on his plan while a student the Berkeley’s Haas School of Business. He and some fellow students (including co-founder Nina Marini) did market research in Ghana to understand whether there was a market for his product—high quality African focused higher ed. What he saw was a way to re-segment higher education. For college ready students in Africa, there were two choices: go to the US or UK to be educated, in which case the vast majority would become diaspora; or stay and go to the free public university. Ashesi identified the market in the middle: that parents would send their children to a school in Africa that cost less than sending them abroad but offered higher quality— in terms of critical thinking, communications skills, practical experience, and true concern for society that would enable them to make a local difference.

Even Non-Profits need a business model: designing for sustainability

At the turn of the century, when Patrick was first working on the plan, he thought of it in terms of the late ‘90s way of building a business: raise enough money in the states to build a full campus for a thousand students based on philanthropic contributions. Unfortunately, the .com crash contracted the number of likely donors; and it was clear that a more “bootstrapped” plan would be necessary to make Ashesi succeed. Lesson learned: startup businesses are different from big businesses. They must run experiments to prove their model on a small scale before becoming a bigger enterprise.

While the vision is indeed noble, putting it into practice was hard work. While Patrick had advisors with deep academic and African business experience, none of them had started a private university from scratch, much less in Ghana which had unique challenges: petty graft that could impact even the simplest things like placing the ads for enrollment, infrastructure gaps like power and internet connectivity that are taken for granted in the U.S. but poor or intermittent in Ghana. Students who had great potential; but needed work to get to the critical and ethical standard we aspired to. The best way to address these challenges was to get started in a build/measure/learn loop by beginning classes; which Ashesi did in 2002 in rented classrooms near the center of Accra with a pioneering class of students. While many of the students paid tuition, the organization’s cost structure still had a significant US fund raising operation designed for the “old model” of get big fast. This ended up being a significant drain on cash flow. In 2003/2004 as a board, with two classes of students in school and running dangerously low on cash, Ashesi made the decision to focus on proving out the model; and from a business model perspective getting to a point where the University could run operations on a cash flow break-even basis without outside funds before building out a campus. This implied that students who had the ability to pay would more directly subsidize those who couldn’t. We experimented with student loans (that didn’t work) and settled on a model where we could still get the best student regardless of ability to pay with grants, at tuition far below the cost of Ghanian students going abroad for college. Ashesi cut the US fund raising operation and focused on working with our strongest advocates—essentially Ashesi’s “Angel” investors—to insure money was focused on proving the Ashesi model would work. To address our objectives around scholarship and leadership with practical application, curriculum was introduced in the form of a “leadership seminar” that started with the basis of the good society and culminated with a practical project in the senior year of making a difference in the community. The belief in the mission also caused the curriculum to focus on practicing what we were preaching in terms of ethics—implementing an honor code that required students not only to pledge not to cheat; but to turn in those who did. Each step of the way, we learned from these experiments and they had an impact beyond the classroom. Initially, our curriculum was questioned—why do computer scientists need training in the liberal arts and ethics? How could the Ashesi honor code possibly work in Ghanaian culture? In the former case, Ashesi’s example helped shape the curriculum of other institutions in Ghana. In the later, the honor code spurred a national debate and an ethics summit hosted on campus about what the issues and solutions were to making a stronger ethical society. Patrick talked about this at TED a few years ago.