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The Danger Of Abandoning the Nonprofit Sector

By Nell Edgington



This is a post that originally appeared on the Change.org Social Entrepreneurship blog last March.

With all the excitement and energy around social entrepreneurship, there’s a tendency to dismiss the sector that was working on social impact long before it was cool: the nonprofit world.

These days, nonprofits get far less airtime in the social innovation movement than their for-profit, social entrepreneur counterparts. Perhaps that’s because the for-profit form of social change is new, so it seems more interesting, sexier — more apt to create change. And, of course, the idea that business can be reworked to address public goods is incredibly compelling.

But often the older nonprofit sector is left behind, partly because the sector tends to be risk- and change-averse. Again and again, Ive heard again that innovation will never become part of the nonprofit system — that nonprofits are too set in their ways. Or that the sector is too broken to emerge anew.

That attitude, though, is unacceptable. There’s great danger in dismissing the sector. Sure, it’s inefficient, dysfunctional and broken. Yet it has tremendous potential for innovation. Indeed, without innovation in the nonprofit sector, the broader movement to solve social problems is doomed.

The current hype around for-profit social entrepreneurship sometimes reminds me of the dot.com bubble, or even the more recent unbounded speculation in the financial markets. We have to be careful of the hubris that accompanies new trends. The nonprofit sector is an enormous part of our economy and has a long history of working towards social change. If we were to cast it aside completely, we’d lose the tremendous resources (money, people, mind-share) that are being invested in that sector every day. Without its oldest component, the social innovation movement is weakened.

So instead of tossing it aside, let’s remake it, re-envision, restructure and reinvent it.

What does that mean? It means that the best and the brightest in the social innovation field need to figure out how to innovate in the nonprofit as well as private sector. It means that the social capital market that’s being created to provide financial vehicles for budding social businesses should also include support for social entrepreneurs in the nonprofit space. It means venture philanthropy funds should share investor prospects with social venture funds, and vice-versa.

What’s more, innovation requires that investors interested in a social return own portfolios that include not only social businesses, but also nonprofit deals. Foundations should invest in both for profit and nonprofit social impact organizations. At social innovation conferences, speakers and attendees should come from both sectors. Nonprofits interested in growth should have access to capital and management expertise to scale. And a nonprofit that’s solving social problems should get just as many resources, respect and mind-share as a social business that’s doing the same.

All of this will require a shift in attitudes, not to mention changed laws and accounting standards that can help social entrepreneurs look at both for-profit and nonprofit structures, incentives and restrictions.

There’s no magic bullet for anything out there, particularly social change. But by focusing all of our energy on just one piece of the social innovation puzzle, we run the risk of less change — or none at all.

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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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8 Comments to The Danger Of Abandoning the Nonprofit Sector

Kate Barr
January 6, 2011

The bright shiny penny of market based social entrepreneurs has indeed drawn so much attention and buzz that nonprofits seem to be dull and out of date. I’m glad for this call to look at the good work that’s already there and find ways to make it better. I reject the idea that the nonprofit sector has not been innovative, though. Think about the innovation required to create services that we take for granted like domestic violence shelters and supportive housing connecting social services with stable housing. These innovations came from nonprofits who saw a better way to solve community problems. The new wave of social entrepreneur seems to believe that the innovation is in the financing, not the social change.

Stephen
January 7, 2011

Excellent viewpoint…change starts with someone stepping forward and creating synergy with the for profit world with the common good as an end goal. It may take 20 years to evolve but it will never happen if no one sets the vision and takes action steps. For me, words are a way of changing peoples opinions, by changing their inner attitudes you can change the outer aspects of their lives.

“Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes… the ones who see things differently — they’re not fond of rules… You can quote them, disagree with them, glorify or vilify them, but the only thing you can’t do is ignore them because they change things… they push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.”

Steve Jobs

Nell Edgington
January 7, 2011

Kate,

I completely agree with you. There has been a tremendous amount of innovation in the nonprofit sector. Time and time again nonprofit organizations have been borne out of a recognition that a market inefficiency existed and a nonprofit entrepreneur created an entity to fix that disequilibrium, often through a brand new model or idea. My point is that there also exists in the nonprofit sector a good deal of broken models, outdated approaches and simple exhaustion. Let’s use the energy generated by the social innovation movement to reinvigorate the sector, to get back to our roots as a sector that sees a problem and invents a way to change it.

Nell Edgington
January 7, 2011

Thanks Stephen!

[...] This post was mentioned on Twitter by changefeed, Tony Martignetti, EPIC, Land of Non, Stir-e and others. Stir-e said: The Danger Of Abandoning the Nonprofit Sector: This is a post that originally appeared on the Change.org Social … http://bit.ly/g0suC6 [...]

Lisa
January 20, 2011

I agree completely! There are some great things happening in the non-profit world. See for example Nanoloans… http://www.energyincommon.org/nanoloans/

Nell Edgington
January 20, 2011

Very interesting, Lisa. Thanks for sharing the link.

[...] that with the excitement around the social entrepreneurship movement there is a danger that we are abandoning the nonprofit sector. Indeed, there is sometimes a tendency to dismiss the sector that was working on social change long [...]

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