Planning, Startups, Stories


Tim Berry on business planning, starting and growing your business, and having a life in the meantime.

Nonprofits with Legs and Teeth 3

Maybe it’s about baby boomers not retiring, and maybe it’s about ex-hippies in positions to do something they’ve always wanted, or maybe it is just about the world getting more crowded. Could there be a long tail of entrepreneurship, opportunities for people with motivation other than pure profit?  If all was ever fair in love and war, it was always just business for business. Until business became personal. And green. And socially motivated.

I just finished reading the Sunday New York Times piece called “A Capitalist Jolt for Charity”.

Today, the once-struggling venture has morphed into a primarily for-profit enterprise. And the striking transformation of In2Books is emblematic of a larger trend: charities are changing their spots and making use of some of capitalism’s virtues.

The process is being pushed forward by a new breed of social entrepreneurs who are administering increasing doses of bottom-line thinking to traditional philanthropy in order to make charity more effective.

In the old days there were nonprofits. They were foundations and the like, the alleged “do-gooders” that were conceived on missions like fighting poverty and racism, broadening the meaning of art, spreading education. You know them. You’ve lived with them forever. United Way. Toys for Tots. Meals on Wheels.

It occurs to me that the magic of the social enterprise has to do with control and power. If I build a nonprofit foundation to solve a social problem, I depend on being able to raise money through donations. But if I build a social enterprise instead, and figure out how to make my own money, at least enough to power the enterprise, then I’m in charge. I focus on the business model and the social benefit and the underlying purpose, instead of the fundraising.

So social enterprises are doing things like creating channels for developing country handicrafts, or PlayPumps distributing low-power-consumption technologies for poor countries. Bill Drayton, founder of Ashoka, talks about a new generation of people thinking they could “do better.”

I’m wondering now whether the tradeoffs between social enterprise vs. straight nonprofit isn’t a lot like the tradeoffs of bootstrapping instead of raising money through venture capital. With one course, you own what you build, you get to grow it and steer it and make it work as well as you can. You’re in charge. That’s bootstrapping and, I think, the social enterprise. With the other course, you get more resources but because of that you’re also not in charge, you might be the captain of the ship but you can’t change destinations without permission, and if you change course in mid-journey you’d better be able to defend your decision very well when the board asks about it later.

Of course I can’t make the straight parallel between these two ideas, because where they come apart is the matter of choice. Some bootstrapped business chose that option, but many other never really had the choice of investment. Does the social venture have the option of going straight nonprofit?  That’s hard to generalize. At the very least, these are interesting questions.

  • http://laf.ee/wp/ Michael

    Hi
    I am living these issues here and now in Tartu, Estonia. I developed an NGO over the last 12 years working on legal reform, finally stepping down last January as director. I started up a new NGO to develop regional projects. Bingo! I see pretty clearly that social enterprise thinking is the only way to escape project and grant treadmills. The problem tends to be tht most people working in public interest fields do not (yet) have this orientation. I welcome any and all to follow some of our (humorous) adventures on my blog Quickthink – http://laf.ee/wp/ . You will find a post on the same NYT article there.

  • http://cubert-codepoet.blogspot.com Charles Robinson

    Tim, did your post get cut off? It ends rather abruptly.

  • http://knoxify.com CP

    Tim,

    Wow! That's about all I can say to this. I have been dormant in my efforts to build my current non-profit into a "social enterprise". Now, with the energy from this post I feel as if an infinite load has been lifted from my shoulders and I can ground my idealogies in something real. Something that allows our group to revolutionize the market we operate in. THANK YOU!