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 on it for decades. We can’t dismiss an entire sector that has been working on social problems for years. However, I do think that there are some things that nonprofits can learn from social entrepreneurs. The most important is how to lose the Charity Mindset.
Nonprofits are sometimes referred to as “charities,” and it is a real misnomer and does a real disservice to nonprofits. A charity mindset is when a nonprofit, its board, 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.
Photo Credit: wolfgangfoto
For the nonprofit sector to truly climb aboard the social innovation train, as opposed to being abandoned by it, nonprofit leaders need to move past the reactive toward the strategic.
But is that possible? Have nonprofits been stuck in a resource-constrained, charity mindset for too long to be made strategic, bold, big thinkers? It’s been a vicious cycle. Nonprofits lack adequate resources so they become very protective of what they have and wary of any actions which might threaten those resources. Therefore they become exceedingly risk averse and fearful of innovation. They focus more often than not on keeping the doors open as opposed to investing time, energy and resources in long-term strategy.
But that’ s just not going to cut it anymore. These times demand a radically different mindset and approach. The nonprofit sector must move from the reactive to the strategic. So how does a reactive approach differ from a strategic one? It looks like this:
When a financial crisis hits the organization, the reactive approach is to focus on keeping the doors open and staying afloat. But a strategic approach focuses on what caused the crisis and how to fix the underlying problem, model or system so that they never return there again.
When a funder wants to award a significant sum to an organization for new programs that detract from, rather than bolster, the organization’s theory of change, a reactive approach focuses on the increase in revenue, but a strategic approach recognizes the misalignment and turns the money down.
A reactive approach allows program staff to continue with a status quo method of program delivery, but a strategic approach constantly asks hard questions, tracks results, pushes outcomes, restructures inefficient processes, gets underneath the surface to make programs better, stronger, more impactful, more sustainable.
A reactive leader arrives at board meetings with reports, charts and status updates, gets a rubber stamp on day-to-day activities and breathes a sigh of relief that the board didn’t ask too many questions. But a strategic leader analyzes the unique contributions each individual board member and the board as a whole can make and leverages those contributions effectively, engages the board in meaningful discussions and actions around where the organization is going and trends in the external marketplace, and focuses board work on big picture issues and opportunities, creating key external networks, and building a strong financial future.
A reactive approach helps the board recruit new members that fit narrow definitions of experience, gender, ethnicity, and size of pocketbook. A strategic approach compares the long-term goals of the organization to the competencies, networks, experience and resources required and creates an intentional board recruitment strategy to get there.
A reactive leader crosses things of their daily to do list and feels satisfied because the trains ran on time, crises were avoided, and everyone got a paycheck. A strategic leader is rarely satisfied and constantly works to build key alliances with external partners, learns new skills, pushes their staff harder, evaluates their work, continually refines their model and responds effectively to a constantly changing environment all in the name of greater impact.
A reactive leader allows the natural uncertainty of running a nonprofit to cause fear and inaction. A strategic leader, like a true entrepreneur, recognizes the opportunity for innovation that uncertainty offers and embraces and uses that opportunity to continually mold the organization’s solution to the external market of need and funding.
It remains to be seen whether a reactive leader can transform into a strategic one. I would bet that the success of the social innovation movement as a whole rides on it.
Photo Credit: Loren Javier