The Business Reality of Running an NGO in Asia – Tom Stader | Entrepreneurs For Good

 “For [my team], it’s literacy, its programs, its libraries. It’s that, our first school in Cambodia that we donated a library to – that school, six months after we donated the library, won the best reading competition in the region. That’s what gets them up in the morning. What gets me up in the morning is giving them the space to build the best organization that they can.”
– Tom Stader, The Library Project

What makes running an NGO different from running a business? Less than you might expect.

For some making their first steps as a social entrepreneur in China, starting a non-profit venture can be intimidating if you don’t know what to expect. In many areas, the NGO approach hasn’t been attempted before – and in a way, this is the heart of entrepreneurship.

Just as with any company, you have to be committed to providing the highest quality of service to your beneficiaries, providing a high quality of service to your clients – in this case, your donors – and finding ways to inspire all your stakeholders to aligning to your vision. Further professionalizing this donor-organization relationship is one critical step to improving China’s overall culture of philanthropy.

In our latest interview in the Entrepreneur for Good series, Tom Stader of The Library Project explains how running a non-profit is no different than running a business. At the end of the day, you have customers, you have a business process, you have teams, and you have a vision. Navigating these shared realities bring in unique challenges for an NGO, from raising money, driving a team forward, or nailing down great partnerships.

Tom’s story is one of commitment, integrity, and pragmatism.

As part of the first group of foreign NGOs set up by an entrepreneur, Tom was on the ground at a time when most people didn’t even consider the founder of an NGO to be an entrepreneur. Through this interview, we came to understand a lot more about the challenges of heading up an NGO – but at the same time, just how similar it is to running a for-profit organization.

Finances and Mission: Running an NGO

Strongly opinionated, self-confident, and no-nonsense, Tom is someone with true hands-on experience and a willingness to share that experience to help the social entrepreneurship community improve.

One of the most critical areas in which he offers insights is financing, an area that many organizations struggles with, and especially NGOs. The non-profit sector faces particular risk under financial pressure, which can lead to mission drift – when an NGO will “follow the money” instead of “following the mission”.

Tom is very clear and concise about his stance on this dilemma.

Tom Stader E4G Quote - Collective Responsibility

Specifically, Tom emphasizes the need for NGOs to be selective about potential donors, as well as the necessity for more accountability to those donors. A non-profit can only achieve this accountability when it’s the focus of the organization – with infrastructure and a competency in place to support it.

Marsha Sinetar says, “If you do what you love, the money will follow.” When you’re committed to what you do, others will come to understand the brand. An organization isn’t about the vision itself, but about commitment to that vision. If there’s a natural alignment between that commitment, then support will come.

Ultimately, this is why Tom has succeeded over the last 10 years: Even in the biggest challenges to the vision, he stayed committed.

In this interview, Tom offers his unvarnished insights into the realities of what it takes to start, build, and scale a successful, impact-focused organization.

We hope Tom’s words provide inspiration and instruction to donors and NGO leaders alike.

Click here or watch Tom’s full interview below, check out the interview transcript following, and subscribe to Collective’s YouTube channel to keep up with the “Entrepreneurs for Good” video series.

About Tom Stader

Tom Stader is the Founder and Board Chair of The Library Project, an organization that donates libraries to under financed schools and orphanages in Cambodia, China and Vietnam. He believes that education is the key motivator to breaking the cycle of poverty that exists in the developing world.

In 2006 at the age of 32, Tom had a simple idea to donate libraries to two orphanages in Dalian, China. Soon after those libraries were complete, Tom founded The Library Project. Since then, Tom and his dedicated team have completed 1800 library donations, impacting over 500,000 eager young readers.

Tom is passionate about International Social Entrepreneurship and improving rural literacy.

Tom Stader E4G Library Project - Collective Responsibility
Image Credit: THE LIBRARY PROJECT

For more interviews from Collective Responsibility’s “Entrepreneurs for Good” series, check out the playlist here. Stay tuned for more clips and full interviews in the coming weeks.


This article was prepared by Gabrielle Williams, Research Analyst at Collective Responsibility.

Tom Stader, Entrepreneurs For Good: Full Transcription

Tom: My name is Tom Stader. I run an organization called The Library Project. It’s an organization I started about 10 years ago – we’re on our 10-year anniversary, so we did it. And I think when I say “we did it”, I believe our greatest accomplishment is we stayed focused over the past 10 years.

We are called The Library Project, we donate libraries, we continue to donate libraries, and that’s all we do. We focus on children’s literacy, and throughout the years, we have been pushed into building schools, to working on any number of other projects – and we’ve said “no” to all that. And I think that is a huge reason why we have been around for 10 years and why we’ll be around for many more years after this.

It wasn’t because of children’s literacy. I’ll say that. I became a believer in our mission years after the organization actually started. It was really because I saw that there was a basic need, and I saw that I was making a small impact. That’s what kept me going. Now, I guess – how did we start an organization? That came after we donated nine libraries. Someone on our “board of directors” – which was a very loose group of friends – met someone at a conference, I think in Florida. And that guy said, “You know, I really like what this guy is doing in Vietnam” – where I moved to.

Rich: Okay.

Tom: “I want to give this guy $10,000 to start an organization.” But I had to quit my job, I had to move on and actually do this full-time. And honestly, I hated my job, so it was really easy decision for me to make.

Rich: But $10,000 isn’t a lot of money, so… you know.

Tom: Well, it’s a lot of money when you’re broke. I mean, today: Is $10,000 a lot of money? I would say that it still is, but it’s not – it was enough for us to take a risk, for me to take a risk.

And I think, putting into context – $10,000 in America, I doubt you could even start anything in America with $10,000. But in Asia, I was able to hire an employee, I was able to implement a couple of programs, a couple of libraries, so your dollar gets stretched out here a lot more than in Phoenix, Arizona or San Francisco. I couldn’t even make rent for that in San Francisco.

But I do remember the first time I got a donation from someone that I’d never met, and it was guy named Alan. He read about us on some blog, and said, “Hey, I want to give you $1,000 dollars.” And I’m standing in an airport, and I’m like, “Really? I’m gonna remember this.” And then a couple years later, I actually got to meet him and let him know, like: “You were the first donor that wasn’t my mother or my friends.”

Rich: The little wins, right?

Tom: Yeah, man! It really was. I mean, I think that was one of those turning points where I realized, “Hey, this could grow into something beyond myself, I guess.”

FAILURE ISN’T AN OPTION

Tom: Failure kind of really wasn’t an option, so when we ran out of money, or when we ran into any number of issues that we were facing, it wasn’t an option to fail. I mean, I have 27 staff members that work for the organization right now, in three different countries. We’re registered in six different countries, we’ve got hundreds of donors on an annual basis – failure kind of isn’t an option. And it’s something that drives me as an entrepreneur: to continue to grow the organization.

Rich: What do you do?

Tom: Like, what phase of the organization? Like right now, we’re 10 years in. We’re doing financial forecasting for two or three years out, that we’re planning two to three years out. That doesn’t mean that our – what we like to call our “go broke date” is three years out. What it means is we’re planning three years out.

But when I started the organization, I was planning 30 days in advance. I was like, “Do I have enough money to pay my team of one, or two, or three people at the end of the month?” That’s what I was worried about.

I wasn’t really worried about if our programs were going to be implemented to a high quality, or our libraries were going to be of the highest quality. That was my team’s job, and that’s why I hired the best people to do that. But what I was more focused on was, “Am I gonna be able to make payroll?” And that, I think, is true of most entrepreneurs in the world.

I think most entrepreneurs don’t focus on the product or service at a point. They focus on, “How do I support my team so that they can do the best job?” Giving them space to implement the best libraries. I can honestly tell you, today – well, I mean, back up a bit.

Nine years – the first nine years of The Library Project, I was what you might call the “CEO of the organization”. Last year, I hired a CEO. I hired what I like to call my “boss”, which is kind of fun – and it was the best decision I ever made for me, personally.

I kind of lost the passion to grow an organization – thinking about all the finances, and the HR, and the compliance of six different countries. I mean, I did it and I was really happy about it, but I wanted to step back into the programs – and really, the reason why I started this. And get back into communication, where my professional was.

PASSION IS DIFFERENT FOR EVERYONE

Tom: What gets me up in the morning is my team. 100%. Programs are very second. The literacy that we provide is very secondary – for me.

For them, it’s literacy, its programs, its libraries. It’s that, our first school in Cambodia that we donated a library to – that school six months after we donated the library won the best reading competition in the region. That’s what gets them up in the morning. What gets me up in the morning is giving them the space to build the best organization that they can.

BUILDING THE TEAM

Tom: I think that it’s hard to find people globally that… I think that once you start thinking about your teams being fundamentally different – whether they are Chinese, Vietnamese, American, Canadian. European – you’re gonna run into some… You’re gonna have a real issue.

I think that, fundamentally, when you come down to the basics: All teams need training. All teams want to make a pretty good salary. All of them want to feel as if they’re part of something larger than themselves. They want to know that the company is going somewhere, and that they’re going to be learning along the way, and that they’re going to be empowered and making an impact.

I do believe that if you bring people that believe in your mission that just don’t want a job – you can do an interview, and if they come in and say, “I want a comfortable job,” just don’t hire them. It’s the wrong position for them. We look for people that are inspired by what we do, believe in the mission, want to make a difference – whether they’re our accounting team, or whether they’re the project managers on the ground doing the literacy programs at the schools, to our fundraisers.

And what I would say is, the one thing that we have not done is, we’ve never hired people that have experience, I would say. We’ve hired for passion, and then we train. And that training can occur over a six-month period, or it can happen over a seven-year period. But I personally believe its hiring for passion.

And age, gender, nationality, race –it doesn’t matter. It really comes down to the passion for whatever you’re doing.

CHINA

Well, you know. I mean, I think that the world is a really big place. And I think that: Why do people donate to the organizations they donate to? Why do they donate to the issues that they donate to? Well, it’s because it’s a very personal experience.

I mean, I want to support rural literacy in Asia. I’ve got a friend that wants to support women’s issues in North America. I’ve got friends that want to do HIV/AIDS in Africa. And so these are all needed, and they’re all relevant – and for me, I like China. I like Chinese people, I like Chinese food, I like the culture.

And getting back to why I started here: Honestly, I had US$10,000, like I said before. I got a free office space, and that was a big reason for me. I was like, “I only have $10,000, I want to start this organization, I have a free office here, and I have a potential employee might want to come on. And I like China, and there’s a need.”

So it just all lined up, and it’s very serendipitous that it just kind flowed. And it really was the best decision we ever made. China has been very good to us. We will be donating our 2,000th library this month. I don’t think I could have achieved that if I would have set this organization up in Cambodia first. Now, Cambodia’s our third country. So it’s just the way it kind of played out.

And if a donor – whether it be a corporation, a foundation, or an individual – if they’re not willing to support your team, do not take their money. Do not take their money. It is hurting your organization, it is hurting the industry, and it will eventually bury your organization in debt.

IT’S A BUSINESS

Tom: One of the hardest things that a lot of these entrepreneurs have is that they are having a very, very difficult time coming to the realization that starting a nonprofit organization – a charitable organization – is a corporate entity. I think that produces a lot of anxiety, and they have a hard time communicating that to themselves, and also to other people.

Rich: But what do you mean it’s a “corporate entity”?

Tom: It is physically corporate entity – we’re an incorporated entity based out of Phoenix, Arizona. We are an Inc. The only thing that makes us different than a bookstore down the road is that we have a tax ID that makes us a “nonprofit status”.

And that defines what we can do with our profit, and what we can’t do with our profit – meaning we can’t pay it out into dividends for our board of directors. You can only do that with a corporate entity. We have to reinvest it back into the organization. We can issue tax-deductible receipts. We still have to pay tax, but it’s just an ID.

And I think that is that’s the biggest thing: It’s coming to grips that you need to find – you have to hire salespeople to fundraise for it. They’re just not called “salespeople”, they’re called “fundraisers”. It’s not called “revenue”, it’s called “fundraising” – but really, it’s revenue.

We have expenses, we’ve got income statements, we’ve got balance sheets, and it’s a business you’re starting. I think that shock occurs about six months in. And it is a rude awakening, and it’s a scary one! Because you’re like, “Oh, my god. I’ve got two employees. How am I gonna pay these people because I have no money?”

And then it comes down to building a quality product, a quality service, reflecting on your mission to make sure that whatever you’re doing and you’re creating is of quality – and staying on point, keeping a razor-sharp product service for your mission. It’s just hard.

MANAGING CASH FLOW

Tom: Fundraising isn’t the real challenge. I mean, yeah, you’re always going to have that problem. Like when someone asks me, “What is your greatest challenge you have right now?” Like, it’s fundraising.

But really, it’s cash flow. That, whether it’s a for-profit, whether it’s nonprofit organization: It’s managing your cash flow. That, I think, gets challenging as you grow.

Well, that depends. I mean, we’ve got 10 years of history here. So I mean, the first two years. We literally had no money. We did it hand-to-mouth. We would raise money – we would raise $1,000, spend $1,000. Raise a $1,000, spend $1,000. Raise a $1,000, spend $1,000.

And then we got a donation for US$50,000, which was like, “What? Woo! We got money in the bank!” But then what happened was, we had to hire two new people to be able to implement that program to a high level of quality – which changed how we asked for funds. Then, we weren’t just asking for a $1,000 dollars. We were going in looking for $10,000. $20,000. $50,000.

And the organization changed fundamentally at that point. And so as you scale, and as your revenue grows, and as your programs grow because of your revenue growing – everything grows exponentially.

There’s not a lot of times where I stand back, and I say to myself, “Wow, this was a really easy day in the office.” It is hard. But then again, there are moments that keep me going – very finite moments.

Like, two months ago, I went and saw the best library donation I have ever seen at the organization. We were at like 1,950 libraries or something, and I found “the one” library that I was like, “We did it! It just took 1,950 to get here.”

If it was easy, I wouldn’t do it. I’m just not interested in easy. I mean, if I wanted easy, I’d go get a job in America. You know, you get a job description, and you sit down, and you do your job. And you’re kind of protected by this insulated box.

And I’m not saying that it’s easy in America, but for me, I was bored. I was sitting at a desk doing this box. I couldn’t get out of that box, it was a job description, and it just was really uninteresting. And I didn’t move to Asia to do that – and I didn’t even know what an entrepreneur was, really, in America. It wasn’t really even an option for me.

But once I started this organization, I realized, “Wow, this is really interesting. It’s really hard. It’s rewarding – it’s really hard. It’s really hard!” And I think that… I don’t know. I mean, I think that I can just say entrepreneurship is really hard, but it’s also for people who are looking for challenges and looking for something that…

Yeah, I don’t know. Yeah, I hope that answers your question!


This interview was transcribed by Gabrielle Williams, Research Analyst at Collective Responsibility.

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