By Pamela J. Oakes
The Profitable Nonprofit
I have made a career in the nonprofit industry. I join the other 12.3 million Americans that, as of 2016, were doing the same thing. When I talk to people about nonprofit careers, their first response is usually something like, “There’s no money in nonprofits.” Considering that nonprofits account for roughly 1 in 10 jobs in the private workforce and contributed an estimated $985.4 billion to the U.S. economy making it the country’s 7th largest industry…I beg to differ, but that’s a conversation for another time! What I think is most interesting about that statement is the implication that more people would chooseto do good if there was more of a financial incentive to do so.
Hence, the emergence of the Social Entrepreneur. According to the dictionary, a ‘social entrepreneur’ is a person who establishes a FOR-PROFIT enterprise with the aim of solving social problems or effecting social change. The perfect combination of ‘doing-good’ while making money. Social entrepreneurship is not a new concept. In 2006 Bangladeshi banker and economist, Muhammad Yunus, was awarded the Nobel Peace Prize for the concepts of microcredit and microfinance. His belief that providing financing/credit to individuals who were too poor and would otherwise have no other access to financial services, would enable them to lift themselves out of poverty and lead to self-sufficiency.
While social entrepreneurship is not new, what is new, is the emergence of social business multi-millionaires, like Blake Mycoskie, founder of Toms Shoes. At age 29, Blake realized that many life-threatening diseases in developing countries could be prevented by having access to shoes. In 2006, he founded the Toms Shoes company. His one-for-one business model delivers one free pair of shoes to a child in need for every, one pair of shoes sold. Today Blake is 42 years old and has a net worth in excess of $300 million!
That sort of “hybrid” for-profit/charitable business model is here to stay. The traditional models of charity where the “Haves” give to the “Have-Nots” is going by the wayside. Inherent in that traditional model is a paternalistic tendency. While it solves an immediate short-term need, it is not sustainable in the long-term. Once that charitable gift (clothing, food, medicine, money etc.) has been consumed, the beneficiary must come back again and again and again to receive support which creates a vicious and unnecessary cycle of dependency.
While one could argue that the one-for-one business model does not adequately address the underlying causes of poverty, I still applaud the innovative thinking that conceived it. Several other “social business” models have emerged, since. The point being, that effectively eradicating world crises such as poverty, food insecurity, financial access, etc. will require the charitable sector to seek out and implement more sustainable models of assistance.
I believe the most innovative social business concepts have yet to be seen. Culturally relevant designs where communities decide what they want, not nonprofits deciding for them. I see an explosion of unique hybrid social businesses that harness the entrepreneurial spirit of individuals to empower themselves to alleviate their own conditions and become self-sufficient.
And yes, in case you were still wondering, there IS money to be made in nonprofits!
Pamela J. Oakes, Managing Director of The Profitable Nonprofit, is a funding consultant helping small and emerging nonprofits achieve funding sustainability. Pamela previously worked with the Bill & Melinda Gates Foundation.