Know about the Khan Academy Business Model

It is an online learning platform that provides instructional videos on mathematics, economics, and computer science.

Donations, tuition fees from its Khan Lab School, and pay for its SAT prep classes are how Khan Academy makes money as a charity.

Based in Mountain View, California, Khan Academy was founded in 2008 and has grown to become one of the most popular online learning platforms in the world. Every month, more than 30 million users access its platform.



What is Khan Academy, and how does it function?


Khan Academy is a nonprofit company that produces educational videos on various subjects, including computing, mathematics, economics, science, history, art, and more.


The material of the courses is geared mainly toward kids under the age of 18 who are in kindergarten through high school.


Videos are constructed in convenient 5-to-20-minute segments, specifically designed for watching on computers and mobile devices.


A series of short quizzes then follow the videos. These tests assess a student’s comprehension of previously covered content.


In addition to educating students on a variety of school-related topics, Khan Academy also offers courses on test preparation, such as the SAT or LSAT.


Aside from its online content, Khan Academy collaborates with teachers (for free) to improve their classes’ learning experiences and raise their students’ success rates.


Khan Academy’s programming is available through the company’s website, mobile and tablet applications (for Android and iOS), and YouTube channels. English, Spanish, Hindi, and French are just a few of the languages offered by the nonprofit.



History of the Khan Academy


Salman Khan founded the Khan Academy, which is based in Mountain View, California (CEO).


Khan was born in 1976 to Bengali immigrants in Metairie, Louisiana. He was raised by his mother, who served as a cashier at a 7-Eleven, for most of his life.


He showed an early interest in both formal and natural sciences. He won national math competitions during his high school years and eventually graduated as valedictorian of his class.


He worked in tech-related professions in the Valley after graduating from MIT. After the tech bubble burst in early 2000s, Khan returned to his notebook and pen, pursuing an MBA at Harvard Business School.


While Khan’s objectives were admirable, his finances quickly dried up. After all, he sponsored Khan Academy with his own money, which was rapidly depleting. Khan Academy, for example, created its website in late 2008 (while still working) to reduce its reliance on YouTube.


Khan’s films, fortunately, found their way into the homes of some compelling and affluent people, who quickly began promoting the socially minded entrepreneur. The first large donation to Khan Academy was donated by Ann Doerr, the wife of venture capitalist John Doerr.


Khan took his most significant step forward in 2010 when Bill Gates officially endorsed the nonprofit in front of a crowd of over 2,000 people at the Aspen Ideas Festival.


The Bill and Melinda Gates Foundation would go on to award Khan Academy a two-year grant. The Gates are now lifetime benefactors to the charity, donating more than $10 million every year.


However, that sentiment was not shared by everyone. According to a 2012 Washington Post report, many of his video lessons contained substantial mistakes.


Khan Academy now has more than 4,000 hours of educational video content available. Nearly 1,000 people work for the nonprofit organization. Sal Khan still records a third of all Khan Academy tutorials.




What is Khan Academy’s revenue model?


Donations, tuition fees for its Khan Lab School, and SAT prep services are all ways that Khan Academy makes money.


Let’s see each of these revenue streams.




If you wish to know how does khan academy make money, the know that Donors account for the majority of Khan Academy’s revenue.


Google, Bank of America, Bill and Melinda Gates, AT&T, Oracle, The Walt Disney Company, Elon Musk, and others are among the most renowned donors.


Khan Lab School:


Khan Lab School first opened its doors in 2014. It’s a private school that provides kids aged 5 to 18 with a personalized learning experience.


Many new approaches to classroom-based learning are tested at the institution. Sal Khan wishes to one day share what he has learned with educators throughout the world.


Khan Academy makes money by charging tuition fees for students to attend the institution. Annual tuition for enrolled students (or rather their parents) is present $29,000.


Khan can use the funds to hire teachers, purchase educational tools like iPads and painting materials, and pay rent.


SAT Preparation:


As a result of its agreement with the College Board, Khan Academy began offering SAT preparation courses in 2014.


Khan Academy had access to genuine test questions as a result of the collaboration. This would allow the researchers to identify flaws in the existing exam arrangement and develop a sophisticated SAT preparation program.


In addition, Khan Academy has released software that identifies weak spots in a student’s submission.


Khan Academy earns $10 million per year from its preparation courses, according to a Forbes report (also including the LSAT or Praxis). In all likelihood, the organization’s partners reward it in exchange for free preparation courses. If you want to know how does khan academy make money, this is one way.




Funding, valuation, and revenue for the Khan Academy


Khan Academy has raised $16.2 million in 5 outside fundraising rounds, according to Crunchbase. The Amgen Foundation and the Omidyar Network are the organization’s principal backers.


The nonprofit never declared a valuation or revenue (or, in this case, donation) data.


Despite this, the nonprofit makes the number of gifts it receives and who makes them public. Khan Academy has received $62 million in donations by 2020 from the Gates Foundation, Netflix CEO, founder Reed Hastings, Google, and others.


In addition, the organization made another $10 million by offering SAT, LSAT, and Praxis preparation courses.




Who is the owner of Khan Academy?


Nonprofits, such as Khan Academy (which is a 501(c)(3) nonprofit), do not have an ownership structure.


As a result, when it receives donations, it does not change its shareholding structure. On the other hand, many for-profit businesses rely on equity capital to fund their initial few years of operation.


There are a few advantages to being a nonprofit organization. Nonprofits, for starters, are free from paying income tax on their net income (but they still have to pay state and property tax). Second, because nonprofits do not have shareholders, they are not obligated to declare earnings. Third, NGOs are frequently able to recruit employees who are willing to work on a volunteer basis.

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