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Losing the Charity Mindset

By Nell Edgington



Along with the burgeoning social entrepreneurship movement comes a bit of hubris that social entrepreneurs know better how to create social change than do the nonprofits that have been working toward social change for years.  Some social entrepreneurs argue that nonprofits are too set in their ways to embrace a new way of creating solutions.  I tend to disagree.  We can’t, nor should we, discount and dismiss an entire sector of people and organizations that have been working on social problems for centuries.  However, I do think that there are some things that nonprofits can learn from social entrepreneurs.  One of those is how to lose the charity mindset.

Nonprofits are sometimes referred to as “charities,” and it is a real misnomer.  But beyond semantics, the word, and more importantly the mindset, does a real disservice to organizations working toward change  A charity mindset is when an organization, its board, its funders or others promoting its work have a narrow view that the organization is benevolent, but not critical, to the world at large.  The charity mindset assumes that a nonprofit starts from the position of need, inadequacy, and burden, rather than a position of opportunity, strength, and effectiveness.  The charity mindset differs from a social entrepreneur mindset in a number of ways:

  • Symptoms vs. Solutions: A charity, by its very definition, exists to provide aid to the needy, not to solve the underlying cause of the need.  This is not to say that every nonprofit can work toward solving an underlying problem; there will always be organizations that exist simply to provide basic needs (food, shelter, safety, etc.).  But I wonder if too many nonprofit organizations view their work as residing in the “charity” camp, instead of working, as social entrepreneurs do, to understand the cause of the need and how how they may be able to attack and solve it.

  • Fundraising: A fundraiser in the charity mindset apologizes for the burden of asking someone for money, but a social entrepreneur offers investment opportunities to prospects.  Wendy Kopp from Teach for America went around evangelizing the Teach for America story and sought investors who wanted to get in on the ground level of an incredible opportunity to change the American public education system.

  • Investment in Infrastructure: Charities spend every last penny on the program and leave little money for building the organization.  Social entrepreneurs understand that it takes organizations, infrastructure, systems, and talent to effectively execute on a solution to a social problem.

  • Respect: Charities may be beloved by their supporters, but they may not garner a lot of respect from them.  Social entrepreneurs behave as equal partners with funders in creating solutions, and, as such, they command and receive real respect from investors, volunteers, partners and others.

  • True Costs:  Charities like to claim that as much money as possible goes to direct services, but social entrepreneurs recognize the true costs of their endeavors and are open and honest with funders about those costs.  In fact they demand that funders understand and support those true costs.

I think the old adage is true, people will treat you the way you ask to be treated.  If a nonprofit acts like a charity, people will treat it like one.  Nonprofits need to stand up and demand to be treated as critical, equal partners in creating solutions.


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About the Author: Nell Edgington is President of Social Velocity (www.socialvelocity.net), a management consulting firm leading nonprofits to greater social impact and financial sustainability. Social Velocity helps nonprofits grow their programs, bring more money in the door, and use resources more effectively. For more information, check out Social Velocity consulting services and clients.


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9 Comments to Losing the Charity Mindset

Vipul
January 20, 2010

Excellent post. With exactly the same mindset and vision http://www.susapta.com was formed. Thanks for blogging this Nell.

Caryn Capriccioso
January 20, 2010

Really appreciate this perspective, Nell. Have also seen it in certain government departments – often human service, library or parks/recreation departments – that think they are considered “nice to have” or “extra” services rather than essential like fire and transportation.

Critical, equal partners – agreed!

Susan Hyatt
January 20, 2010

Thanks, Nell! I so appreciate your perspective about what I call the old school “charity” mindset and what can be learned from social entrepreneurship. When I do nonprofit trainings around the country on how to develop strategic partnerships with businesses, it is soemtimes frustrating to see how well the tin cup mentality is entrenched. And the idea of new service delivery models and innovative partnerships drawing on the expertise of both business and social sector organizations causes some folks a lot of discomfort.

Sue Hyatt
Business Nonprofit CONNECTIONS, Inc.
@Susan_Hyatt

Nell Edgington
January 21, 2010

Vipul, Caryn, and Susan,

I’m glad that you all enjoyed the post and appreciated the perspective.

I agree that the tin cup mentality is fairly well entrenched in the nonprofit sector, but I do see signs of hope. In fact when I have these sorts of conversations with nonprofit organizations I sometimes sense an enormous feeling of relief, as if they feel suddenly released from the chains that bind.

And I absolutely agree that government agencies as well suffer from this charity mindset. I am hopeful that the growing convergence of the three sectors will help free nonprofit and government agencies from this mindset.

Janis Foster Richardson
January 25, 2010

Thanks for the interesting post, Nell. I think there needs to be more conversation about the role of non-profits in creating change – what they can do/are good at and what they have been assigned to or gravitate toward because of the need for funding.

Through my work with Grassroots Grantmakers, I have seen funders equate “nonprofit working in a community” with “people who live in the community”, and place solid nonprofit organizations in the role of “speaking for” or serving as the voice of a community. In many cases, the people who work with that nonprofit may know the community well, but go home at night to another community and another reality – clearly working with and caring for, but not the same as being from that community. I think there is a missing ingredient in the community change formula that we have all been using – and that’s the people who are served by the nonprofits and governmental agencies who are trying to create change. Social entrepreneurs would think about critical partners as well as key audiences or customers. Wouldn’t it be fantastic if more non-profits could see strengthening authentic community voice as in their best interest? Wouldn’t it be amazing if more non-profits had the strength and foresight to say “no” to funding opportunities that positioned them as competitors to the residents in the communities that they serve?

I’m glad that you have initiatied this conversation.

Check out my blog – Big Thinking on Small Grants – would love to see you weigh in there as well.

Nell Edgington
January 26, 2010

Janis,

You raise some great points. I absolutely agree with you that the communities where solutions are being formed need to be key partners in change that affects them. That’s true for any social impact organization, nonprofit, for profit or government. Thanks for writing and for pointing us to your blog.

Teo Tijerina
January 27, 2010

There is also a problem with a “positivist” approach used by Donors who like to support Charitable nonprofits.

When I say charitable non-profits, I mean those whose work are entirely focused on giving or charity: soup kitchens, scholarships, after school mentoring, health care subsidies, etc. These organizations, by the nature of what they do, typically have very low overhead costs. Most of their money should be a pass-through to their recipients.

Many nonprofit consultants have set benchmarks for the “industry” and tell donors that if a nonprofit doesn’t have 10% indirect costs, then they are “ineffective” in the work. And, nonprofit consultants have been telling their donors that the impact must be “immediate” and “tangible”

Well, social change nonprofits (policy institutes, economic development work, etc) is an entirely different business model than “charitable” work. We’ve done all the benchmarking with similar entities, and our work is high risk, high overhead, and tangible results take 5-10 years.

It is frustrating to have people tell me that I’m not running EDCO like a business when they have no clue whatsoever how much we are doing with so little funds, relative to the organizations that are engaged in the same type of work we do. The training they receive should teach them about different models, so that Philanthropists can approach their investment or analysis in a more “pragmatic” manner.

Nell Edgington
January 27, 2010

Teo,

I hear your frustration, but I think the root of the problem is more systemic than just nonprofit consultants. I think the way IRS standards and accounting practices are set up, the way philanthropists are educated, the way nonprofits communicate, the way the incentives are created, etc all work together to create crazy metrics, like at least 80% of funding should go to “program.” I completely agree with your frustration and that’s one of the reasons I write my blog is to get some of these issues out in the open and get people talking about them. Thanks for joining the discussion!

Jim Lord
February 20, 2010

“The Charity Mindset” — yes, Nell. Slay that dragon.

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