How Does Khan Academy Make Money?

I recently wrote a post that looks at online-only Khan Academy, which offers free instruction in a wide variety of school subjects to anyone with a computer. In this post, I’ll take a look at who funds this popular online instruction platform. How Does Khan Academy Make Money? Who pays the bills? If it’s a nonprofit, why is it generating all this money? It’s an amazing story, so let’s take a look.

This short video on using Khan Academy gives a quick tour of all the options there.

Who Funds Khan Academy?

Looking at the academy’s list of donors is like reading a Who’s Who of the country’s richest families. The academy’s website invites donations from individuals and users.

Major Founding Partners

Khan Academy’s founding partners include the Bill and Melinda Gates Foundation, Google, the O’Sullivan Foundation, the Valhalla Charitable Foundation, and Anna and John Doerr. These are some of the wealthiest philanthropists in the world.

In addition, the academy boasts a long list of generous donors who have contributed $10 million dollars or more. How does Khan Academy pay the bills? Apparently, it does so with generous donations.

Millions and More

Donors who have given $1 million to $5 million include:

  • JA and Kathryn Albertson Foundation.
  • AT&T.
  • Oracle.
  • Walt Disney Foundation.
  • Hyatt Hotels Corporation.

Although the academy is a nonprofit, tax-exempt organization, it can legally take in money as long as the money is used only for operating expenses and salaries. According to the IRS and government law, a nonprofit can’t hold onto extra money because that would be considered a profit.

Does the academy spend all that on operating expenses and salaries? Salman Khan’s 2018 salary was $824,000 plus $47,000 in other income, as CEO of Khan Academy. The academy took in total revenues of $42,742,940 that year.

How Does Khan Academy Pay the Bills?How Does Khan Academy Make Money?

Salman Khan has said he struggled to make the academy financially viable in its early years. He started Khan Academy in his spare time while he was still working at a full-time job. He paid the academy’s bills from his own income for three years.

After launching Khan Academy as a full-time venture, he lived on his savings the first year. By the end of that year, he had about 60,000 users.

First Big Gift

At that point, he met with philanthropist Ann Doerr, who convinced her husband to give Khan a $100,000 grant. That was the academy’s first major donation.

Khan told MarketWatch magazine that this early donation, coupled with his background in finance, made him appear legitimate when he approached other wealthy philanthropists. He used the Doerrs’ interest to catch the attention of Bill and Melinda Gates and other big donors. A year after getting the Doerrs’ donation, he had taken in almost $4 million in gifts.

According to MarketWatch, “Khan Academy gets much of its funding from major donors, though it also accepts contributions of any amounts via its web page. Other than the Doerrs and the Gates Foundation, the likes of Comcast and Bank of America have pitched in with over $10 million in donations since its inception. The Omidyar Network, led by eBay founder Pierre Omidyar, recently donated around $3 million.”

Various Ventures

Khan has branched out into new moneymaking ventures. In 2016, the academy teamed up with Bank of America to produce educational videos. Aimed at young professionals, the videos focus on personal finances, budgeting and preparing for college.

According to a YouTube analysis, the academy also takes in more than $500,000 annually from its YouTube channel. It’s not clear how the YouTube earnings fit into the academy’s nonprofit model.

Is Khan Academy a Worthwhile Venture?

It’s clear that Khan has been very successful at getting large, well-heeled foundations and corporations to fund his online education platform. His motives appear altruistic, and supporters note the many benefits of the Khan platform:

  • Anyone in the world can get a good grounding in academics, no matter how poor they are or how poor their school system is.
  • It allows low-income students to compete with well-off students who can hire SAT and AP tutors.
  • It lets students get extra tutoring even if their parents can’t afford a tutor.
  • It’s free to everyone.

Criticisms of Khan AcademyHow Does Khan Academy Make Money? - Skeptical Administrator

At the same time, the question of who funds Khan Academy has led to some criticism. Some people are skeptical of Khan’s closeness with powerful figures like Bill Gates.

Education and technology professionals have long sounded the alarm about Khan. They have pointed out that he does not have a teaching background, uses a standard lecture-and-quiz teaching format that is hardly innovative, and is too closely linked to well-heeled people who want to destroy the teaching profession rather than save it.

Not That Innovative

In a 2011 article in HackEducation, Audrey Watters noted that Gates has called Khan his favorite educator and wants his ideas to spread to all schools. Watters pointed out that Khan’s teaching approach wasn’t that innovative or exciting after all.

“There’s actually very little in the videos that distinguishes Khan from ‘traditional’ teaching,” Watters wrote. “A teacher talks. Students listen. And that’s ‘learning.’ Repeat over and over again. Pause, rewind and replay in this case. And that’s ‘drilling.’ And while Khan and his students may tout mastery, some educators aren’t so sure.”

High school physics teacher Frank Noschese was even more blunt.

On his blog that same year, he wrote, “The fact that TED, Bill Gates and the media love Khan Academy shows the failure of education. The academy looks great because our country has reduced teaching and learning to preparing students to bubble-in answer sheets for multiple choice tests.

If we shift the purpose of education from consuming knowledge and stating answers to creating knowledge and exploring solutions, the fallacy of ‘reinventing education’ is blatantly apparent.”

What’s the Future of Khan Academy?

The buzz about the Khan Academy does not seem to be dying down. In 2017, Khan built a brick-and-mortar school, the Khan Lab School, in California. The school claims to use a totally innovative approach to learning. It emphasizes flexible schedules, constantly changing environments, several different labs and heavy use of technology.

According to BusinessInsider, “Hundreds of visiting teachers visit Khan Lab School each year, and they are encouraged to share their findings on how learning is changing or what students may need. [The] team focused on giving teachers designated spaces that cater to a desire for brainstorming, reflecting and sharing.

Final ThoughtsHow Does Khan Academy Make Money? - Great Idea

What are your thoughts about the Khan Academy model? Does the innovative approach excite you too? Do you see ways you could take something like the Khan approach, or maybe your own unique idea, and turn it into the next new educational buzz?

If your idea will utilize technology like the Khan approach, consider the options your own online business will provide. After all, that’s what Sal Khan has done!

Whether you are a pro at building your own website, or need a great framework to get started, take a look at my #1 recommendation for turning your online dream into a reality.

This is a great company that offers a warm community of like-minded individuals.

You’ll get

  • World-Class hosting.
  • Amazing tools.
  • Self-paced lessons that will teach you everything you’ll need to know.

You could have your website up and running in a matter of minutes…really!

There is no obligation to take a look and see if this will meet your needs. It could be the start of something wonderful for today’s kids and future generations.

 


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4 thoughts on “How Does Khan Academy Make Money?”

  1. Hello Nancy – I really don’t understand the critics of Khan Academy.  I think any organization that provides tools for learning is a worthwhile venture. After all, it hasn’t attracted the donors it has if it didn’t offer an advantage to students. It just verifies that there’s always going to be a critic around no matter what.

    Thanks for this opportunity.

    Reply
    • I agree with your conclusions.  There will always be critics, and it seems anything that disrupts the status quo draws lots of attention from the fans and the critics.  I think too many people believe education should be a one-size-fits-all situation, and humans need all kinds of options when it comes to learning.

      Thanks for joining the conversation; I appreciate it!

      Reply
  2. With ideas like that of Khan Academy, anyone could venture into projects like these and come out with profits.  What I do not get is how they account for all the other income generated. It is kind of a mystery for some people, so I must thank you for sharing this article to show this to us.

    Reply
    • I agree that others can use the Khan idea and create a business too.  It seems that most of their money comes from donations, and very large ones!  Khan Academy is allowed to make money.  They just have to deal with it differently, since they’re a non-profit organization.

      Thanks for joining the conversation; I appreciate it!

      Reply

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