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charity

Leave Your Charity at the Door

charityI hate the word “charity.” Don’t get me wrong, I’m not big on semantics. But “charity” is more than a word, it’s a destructive mindset that keeps the work of social change sidelined and impoverished.

“Charity” harkens back to the beginnings of philanthropy, which was largely the purview of women and as such was viewed as tangential to and less valuable than the more important “business” of the male-dominated world.

As social problems mount, we must shift from the “charity” of our predecessors to an understanding of social change as part of everything we do.

And here’s why:

Charity Lives Beside the Economy, Social Change is Baked into the Economy
While charity was just an afterthought of the real work of the world, social change is rapidly becoming an integral part of the economy. The number of nonprofits grew 50 times faster than for-profits in the last 10 years and nonprofit revenues grew at double the rate of GDP growth in the same period. And its not just the size and resources of nonprofits that contribute to an emerging social change economy, the Millennial generation actually thinks about social change as part of every aspect of, not separate from, their work and life. The work of social change is ubiquitous.

Charity Addresses Symptoms, Social Change Addresses Systems
Charity is about remedying the immediate and direct symptoms of a larger problem. It is about feeding the poor, sheltering the homeless, clothing the naked. But as very real structural challenges grow (like the widening income gap) we can no longer just stick a finger in the dike. We must come up with approaches that solve the underlying issues causing those problems.

Charity Requires Spare Pennies, Social Change Requires Significant Investment
Charity existed on the largesse of the profiteers of the last centuries. Once they made their millions, they sloughed off a portion of the excess to the charities who cleaned up the messes they made. But you can’t do much with the dregs. Because social change is about changing larger systems it takes real, significant investment of resources.

Charity Employs Volunteers, Social Change Employs Experts
Charity was always the purview of the wives who didn’t work. As volunteers they devoted their time to helping the needy. But as our social problems become increasingly complex and entrenched, we must employ experts – not volunteers – who through education, knowledge and experience know exactly how to approach the problem and how to solve it. And we must pay them what it takes to keep them working on those solutions.

Charity Apologizes, Social Change Demands
When you are voluntarily acting on behalf of a charity and asking others also to act voluntarily on behalf of the charity, you are often apologizing for the interruption to their “real work.” But social change is very necessary work, and social changemakers must demand the investment, mindshare, time and effort required. There is absolutely no space for apology.

Sometimes words and the baggage of the past really matter. When we stop thinking of the work of social change as “charity” we start demanding and creating real investment, real attention, and real change.

Photo Credit: Library of Congress

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Losing the Nonprofit Charity Mindset

handsNote: While I’m off during the holidays I wanted to provide some archive blog posts that you might enjoy. A version of this post originally appeared on the Social Velocity blog in November 2010.

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

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The Rapid Evolution of the Nonprofit Sector: A Podcast

I’m delighted to announce that I was interviewed last week for Georgetown University’s Social Strategist series. The Social Strategist: A Conversation on Cause Based Communication is an audio project of Georgetown University’s Center for Social Impact Communication that aims to create a dialogue on effective cause based communication while showcasing best practices of the most successful organizations, companies and people working in the field today. The series aims to ultimately answer the question: what are the traits of an effective social strategist? Past interviewees include Jane Goodall, Beth Kanter, Katya Andreson, to name a few.

I am honored to be part of this exciting series. In my podcast, John Trybus (series curator) and I discuss the current state of the nonprofit sector, what social innovation really means, financing social change, the future of social impact and much more.

Here’s John’s preview of our podcast discussion:

  • The rapid evolution of the nonprofit sector is happening now. “Our economy is going under a fundamental restructuring and that’s affecting nonprofits as well,” Nell explains. “If [nonprofits] don’t dramatically change the way they do business they’re not going to be able to survive and thrive.” The status quo where nonprofits can hide behind the benevolent shield of charity no longer exists. Nonprofits “have to make some significant changes if they want to survive in this new reality,” she adds.
  • A new type of ROI is fundamental to prove value. Forget the traditional ROI and think about a social return on investment. Says Nell: “It’s not enough to say we are doing good work and we’re helping people. You now need to start to prove that. That’s a real movement in the sector and I think that’s exciting.”
  • Financing and not fundraising is necessary to ensure sustainability. The hamster wheel of galas, dinners and other traditional forms of raising money for good causes no longer works. “The system is broken,” Nell proclaims. To truly create sustainable sources of funding “it starts with taking a much bigger picture view and creating an overall financing strategy,” she adds. “So it’s starting with ‘what do we want to accomplish in the world?’ and how do we create a financial model to do that?” 

So what does the future hold for social innovation?

“I think we are at a critical point where so many people want to see social change and they’re willing to change structures and systems [to make that happen],” Nell says. “This kind of momentum is really exciting. It remains to be seen where it’s going to take us but it’s going to be an exciting ride.”

You can listen to the podcast here.

Photo Credit: faungg

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Losing the Charity Mindset

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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A False Dichotomy: Non-profit vs. For-profit Solutions

In a recent blog post, Tony Wang, a brilliant researcher at Lucy Bernholz’s  Blueprint Research & Design, a strategy consulting firm for philanthropy in the Bay Area, makes a thought-provoking, yet ultimately flawed argument about the social impact of nonprofits (which he calls charities) versus social businesses. Tony and I have sparred before on PRIs and mission-related investing, and I had to take up the cause again with his argument that poses a false dichotomy.

Tony’s underlying argument is that a for-profit business model is better able to deliver social impact per dollar than a nonprofit one.  He gives many reasons for this:

  1. Dollars for charity are limited. True the nonprofit sector is undercapitalized, but that is changing, and will continue to change as the public, private and nonprofit sectors continue to converge and the social capital market, for both for-profit and nonprofit social impact organizations, grows.  The mere fact that nonprofits are undercapitalized is not a reason to dismiss nonprofit solutions out of hand.
  2. Charity is often inefficient because of its lack of accountability to the people who are the primary beneficiaries of aid.”  This has been true in the past, but I think it is changing.  An increasing focus on metrics, brought on by the venture philanthropy movement and others, has encouraged nonprofits to track and demonstrate outcomes.  These aren’t perfect by any means and there is much work still to be done, but why not work to encourage better accountability rather than simply say nonprofits are inefficient?
  3. Charity is often harmful and insulting to its recipients.  I agree that Western solutions to third world problems can sometimes be full of hubris, but this is no less true in social businesses than it is in nonprofits.  Read my post on the “missionary” nature of some social business solutions.
  4. Business has a much easier time scaling: “it will be difficult for domestic nonprofits to scale when the federal government is the only viable answer and that international nonprofits will still struggle mightily with the issue.”  Government isn’t the only viable answer.  Some great organizations have been able to scale without government assistance (Teach for America, KIPP, Citizen Schools). And the beauty of nonprofit organizations is that scale doesn’t have to mean just the expansion of a single organization.  Rather, scale can mean the dissemination of a solution that works.  Because nonprofits worry less about competition, they are more likely to want to share best practices, models that work, and allow local adaptations of a solution from another area.

Because of all of this, Tony believes that “a lot of young social entrepreneurs…are starting to realize that business solutions and not charity solutions can be more ideal when it comes to maximizing impact (and philanthropy’s impact would be multiplied if it leveraged its capital to fund social impact businesses with true potential).”

I’m sorry, Tony, but I really disagree with this.  Why does it have to be either, or?  Why is one model inherently better able to create value than another? Rather, I would say that it depends on the problem and what the best solution is.  Yes, there are problems and inefficiencies within the nonprofit sector, but there are also some pretty major problems, and inefficiencies in the for-profit sector (dot-com bust, financial crisis, anyone?).

Rather, we need to take a holistic approach to social impact.  There need to be multiple tools available to social entrepreneurs, whether they be for-profit or nonprofit  (different business models, various financing, etc).  And let’s remember that there are some inherent problems with for-profit social impact models as well.  When a solution requires the appearance of impartiality, a nonprofit model might be more effective.

I think the whole point of the convergence and “resetting,” to quote Lucy Bernholz, that is going on is that the old dichotomies and definitions don’t work anymore.  We have to break out of the notion that the way we used to categorize things doesn’t apply anymore.  Structures are changing, new models are emerging.  We need to be flexible and analyze the best solution to each problem that faces us.  “One or the other” thinking just won’t cut it anymore.


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