I’d like to dedicate this post to my father’s intrepid new business venture.  On January1st, 2009, Bob Vaccaro will open Yoga By Donation in small-town Portsmouth, New Hampshire.  My father has taught yoga for over 15 years now, most recently owning and operating Ocean Spirit Yoga in the same space, and has muttered his intent of launching a pay-what-you-can yoga studio consistently over time, so it is with great pride that I get to see him bring his dream to fruition. For years he has fine-tuned his yoga teaching style to welcome and accommodate all levels of physical ability, and this new studio will continue on that trend by welcoming people of all levels of financial ability as well.

The concept is simple: the studio offers 20 something yoga classes a week, all without set fees.  So anyone can come and pay whatever they are comfortable with based on their unique financial situation, or nothing at all.  Dad will teach about half of the classes and he has invited a handful of other teachers to join him.  Donations will cover $2000/month of set overhead studio fees and the rest will be divided amongst the teachers per class taught.  If there is no surplus of donations, my father will cover the cost and teachers will not be paid.  From a yoga teacher’s perspective, this sounds a bit risky.  Yet every teacher he invited agreed to join him in this venture, and even seemed eager to do so. A few days before the studio was set to open I accompanied my father to the health food store under his studio, where employees had seen the sign announcing the new studio concept. “Bob, we’ll be there on Friday! We’re so excited,” they told him. They had never been to his yoga class before, and clearly the fees were the barrier.

I followed my father to Brown University, and with any luck I may follow him to Harvard Business School as well.  My father gave up his explicit business career when I was a baby in favor of a yogic lifestyle.  I remember chuckling when the HBS alumni magazine included a profile of my father’s yoga classes amongst its other atypical alumni stories. It’s a delight for me to see him create an interesting business model with this generous yoga outreach endeavor.

My father’s studio is the only donation-based yoga studio in New England as far as he’s aware. But in California’s Bay Area, New York City, and other urban centers, donation based yoga classes abound. And in other industries, donations are a way of life, such as colleges and non-profits, which rely on the generosity of their supporters to varying degrees. Wikipedia is a donation-based success story, raising $1.5 million in 2006 donations, nearly 4 times as much as was raised in 2005. Donation-based business has worked for online music sales as well. Radiohead, for example, launched a “donation-only” album online which was a huge success: “In terms of digital income, we’ve made more money out of this record than out of all the other Radiohead albums put together, forever” Thom Yorke said.

In any case, I’m hoping my father’s generosity will catch on, so if you have friends in the New Hampshire seacoast area, please spread the word.

Lastly, I’m curious about your opinions. What do you think? Have you seen donation-based business ventures succeed? If so, what needs to be in place to ensure success? What do you think of the Yoga by Donation business model in particular?

[Extended version originally posted to JustMeans]