Duke University: The Future of Non-profits is Social Enterprise


6,380 views


(Photo credit: Businessweek)

What will the future of the nonprofit sector look like in four years, ten years or twenty years? According to a Duke University professor and author David Rendall, social enterprise could be the future of non-profit funding.

Recent studies point out there is a Non-profit worker Burn Out and emerging leader deficit. “Low salaries, long hours and never-ending to do lists plague the non-profit sector.”

Harvard Business: New Landscape for Non-Profits:

Today the U.S. government no longer considers nonprofits to be entitled–or even best qualified–to provide social services. Profit-seeking companies like Lockheed Martin are now winning contracts for such services (…) The change raises fundamental questions about the mission and future of nonprofits. Because nonprofits now find themselves sharing territory with for-profits, sometimes as collaborators and sometimes as competitors, the distinctions between these organizations will continue to blur.

A response to a 2006 report that found 75 percent of nonprofit executive directors were planning to leave in the next five years. The 2008 report surveyed 6,000 emerging leaders in the nonprofit sector, and found 69 percent of them felt underpaid.

The reaction to the Meyer Report have shook the non-profit world and caused many blog discussions, including the emergence of Non-profit 2020, a conference to engage emerging leaders in a discussion on the latest reports on the leadership deficit, and a very interesting discussion of Nonprofits of the Future on Social Edge.

There is a growing desire from the non-profit sector for self-reform.

What are the proposed solutions?

Derwin Dubose, a fundraising professional with eight years of experience in development with non-profits, writes on his blog:

As of 2006, there were nearly 1 million 501(c)(3) organizations in the US — a nearly 70% increase from the 536,000 there were ten years earlier — and I’ve heard that number currently grows at a rate of 1,000 per month. As the number of non-profits grows, inefficiency within our field goes up while the pool of available donors shrinks. Competition will be high for donations, and only well-oiled organizations will be able to thrive in the super-saturated market.

Professor David Rendall, makes the following suggestions:

1. Organizations should combine service with business: Given the conditions of the market for non-profits, how can non-profits protect themselves for the future? One way to look at becoming a social enterprise: a non-profit organization that generates earned income to support its social purpose. Earned income is revenue that’s received in exchange for products or services.

2. Social enterprise should participate in the Experience Economy. More and more, consumers are paying top dollar to have unique experiences. Non-profits should consider eco-tourism, travel, direct service opportunities, and experiential events as new fundraising mechanisms.

3. Don’t take on business models that have been rejected by the private sector. In the age of eBay, we don’t need another thrift store.

4. Consider other audiences for our organization. Too often, groups dismiss social enterprise because the people they serve can’t afford to pay.

5. And finally, don’t start a non-profit, start a social enterprise that can make money and then fund charitable pursuits. Starting a business is far, far easier than starting a non-profit. All of the forms, legal information, reporting, and liability with a non-profit added to the super-saturated market for non-profits is reason enough to concentrate on social enterprise.

What are your thoughts? What will the future of the nonprofit sector look like in four years, ten years or twenty years? Retweet/Share. Leave a comment below and share your thoughts.

Resources :

Study: Nonprofit Burn Out. 75% of non-profit executive directors plan to leave in the next 5 yrs. (Some work 3 jobs.)

http://np2020.org/ Non-profit 2020. Engaging emerging leaders in a discussion on the latest reports on the leadership deficit.

Nonprofits of the Future, a discussion on Social Edge

Engaging emerging leaders in a discussion on the latest reports on the leadership deficit.
Share and Enjoy:
  • Print this article!
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google Bookmarks
  • Share/Save/Bookmark
  • Assessing 226 children aged 9 to 17, researchers at Duke University Medical Center said the findings could explain genetically why some children in problematic families manage to maintain enjoyable relationships with their parents while others are ...
  • Offering donors special tours, unique experiences, opportunities to have more control over what their money does. Sometimes it's not always possible, but it's worth trying to reach new donors.
  • Diane M12
    Many not-for-profits in Canada already have a "travel" or visit your sponsored child as part of the component of the organization to ensure credibility and accountability. The last thing one needs however in the field (or in a developing country) is a group of individuals who as one New Zealand colleague called them, are "poverty gawkers". If there is a purpose to the trip, a hands-on component, a bring back the story and advocate...that is one thing. People living in poverty or situations that we hear about on the news do not need to be treated as zoo creatures for donors to come and stare at. So I agree with you, offer the opportunities (which are already being done) but let it be done with an attitude of we are here to learn, to partner with you.
  • walkeruhlhorn
    Where is John Galt?

    The fact that entitlements compose most of our federal spending has been true for some time: Of our federal budget, roughly 42%, goes to Social Security: 23% , Medicare: 12% , Medicaid: 7%. In Memphis, above these entitlements, more than 4000 non profit agencies, receive roughly five billion dollars from the government, and one billion from private donations not including churches.

    One of the gravest perils facing our country is the enormous expenditure for public assistance that is going on below our radar and is achieving very little in the way of intended results. Non profits, educational institutions and government agencies are receiving grants and other funds and are providing very little leadership, oversight or information on their outcomes. Fraud, duplication and using these funds for political purposes is common.

    You pick up the morning paper and see an article about a major non profit agency that has been funded to help train community health leaders on proper diet and health care matters, a government agency is paying a dollar a tire for old tires picked up in neighborhoods, a middle aged woman is tired of drug dealing and violence in her neighborhood and is going to do something about it, a major non profit is going to increase it's delivery program to shut in's in the inner city neighborhoods, a small non profit agency is going to buy and remodel some dilapidated homes in an inner city neighborhood, a non profit group is going to visit neighborhoods to determine the number of derelict homes that need to be razed or remodeled, ...... you turn on the television and hear about a man that needs assistance gathering clothing and mattresses for the homeless that his small agency wants to help, that a non profit agency received a grant of four million dollars to help reduce crime in neighborhoods, a non profit group that is going to clean up an inner city neighborhood, a University has a program that is going to work with an inner city neighborhood to improve their lives, a family needs emergency help because their home burned, a major non profit has a grant to visit neighborhoods to determine what assets are available to assist the residents and fraud is occurring in disability pensions ..... you then get a call from your church and they ask if you can volunteer to work in a food pantry, serve as a tutor in an inner city school or be a mentor for an inner city child, and they also want to update you on a program they have for improving the lives in a downtown neighborhood area .........you get a phone call from a non profit that wants to pick up any old clothing or other usable equipment that you don't need, ........you get a phone call from a friend who tells you that a few minutes ago in the grocery store, she observed people swapping part of their food stamp total for cash so that they could buy beer, .....you go to your non profit board meeting and ask if they have a list of all of the other non profits that offer the same services, if it would be possible for their assets, ie, gym, indoor swimming pool or office space, to be used by neighborhood residents or another agency, during those hours their clients are not using it, if they work with the neighborhood association in finding out which neighborhood children are deserving or eligible for a private school scholarship, would like participate in team sports, receive computer training, could use a mentor, or need food, you then overhear the receptionist taking phone calls asking where the caller can go for job training, marriage counseling and literacy classes, the answer to all of the above is no!!!!.......you turn on your car radio and you hear a discussion admitting that billions of dollars of fraud is occurring the national Medicare program, and then a discussion about the five million dollars a year that is being given by the government for help for the 2000 Memphis homeless. .......You call a government homeless agency for more details and they will not take your call, give you an appointment or see you when you stop by, ....You are invited to a two hour evening meeting called by a major university leading a neighborhood program that has invited all neighborhood leaders to apply for two $1500.00 grants that will go to the best plan submitted by them to improve their neighborhood, nothing else is discussed. The attendees are very disappointed.

    Commercial Appeal quote "45,825 tires with funds for a total of 55,000, at a rate of $1 a tire. The remainder of the $100,000 will be spent to administer the program, including the cost to have the tires hauled to a recycling facility in Mississippi". Math????

    Note how often "neighborhood" comes up and none of these agencies work together to coordinate to set up an infrastructure that all agencies can share. Note how few of these organizations even know what other agencies are doing.

    No list exists of all non profits, government agencies and educational institutions providing services in Memphis. It has been speculated that these institutions do not want this information available to their donors. This list is not difficult to compile and an individual has made one that is fairly complete at www.improvememphis.org. This list needs to be maintained by an independent organization that is not involved is the public assistance area. The Memphis library has not been cooperative in helping with this effort.

    A list of all neighborhoods and their leaders is needed. A governmental organization exists to support neighborhoods and maintain this list, but no effort has been made to ask agencies working in neighborhoods to provide this agency with updated information while they are working in neighborhoods. The data assembled by the governmental agency is not in a very usable format and not much improvement has been made in the list in the last few years. No effort has been made to help neighborhood groups set up websites, though a private program exists on line for this purpose. We hear about "Neighborhood Organizers" but what neighborhoods are they organizing?

    We need a list of all of the funds coming into our community from all sources. The city government says that they are going to make a list of this sort available, but I have not been able to find one. I have accumulated a lot of this information.

    I believe that all of these lists could be made and maintained for less than $120,000 a year. An independent group could take over these lists and provide information on line for all donors, users and agencies that need to know about all of the services and studies currently being conducted. We must take control of our public assistance programs.

  • More resources: http://www.wiserearth.org

    WiserEarth helps the global movement of people and organizations working toward social justice, indigenous rights, and environmental stewardship connect, collaborate, share knowledge, and build alliances.
    All tools and content are free to use. The site is commercial-free too.
  • El futuro de las non-propits puede ser la empresa social? Makes sense
  • Omotlani Sulu
    You have said it all without mincing a word, I know all about the burnt out and emerging leeders deficit from personal experience.
  • I couldn't agree more. After 17 years of running my own international consulting business I am now starting a new enterprise principally aimed at helping people. I've seen so much poverty I wanted to do something but didn't feel confident in the models I had seen before.

    Dreamaid (www.dreamaid.com) is a socio-economic business that donates to the Dreamaid Charity (dreamaidcharity.org) to help the poor have access to the internet so they can become growing businesses selling artisan products online.

    I've come to the conclusion that Charity alone will not cure the world's problems and we have to work symbiotically between business and Charity.

    I started this three years ago and it is tough going but the best thing I ever did.

    Best regards,

    Peter McAteer
    CEO Dreamaid
  • I think too many non profit are stuck in old school marketing. They could grow a lot bigger if they went web 2.0 and got into social marketing, seo, pay per click advertising etc.
  • I left the nonprofit sector nearly a decade ago, for many of the reasons surveyed here. There were some excellent points in this article; I especially thought David Rendall's five suggestions were right on point. Thank you for sharing.
  • DT
    To survive, non-profit should look for profit out of their services... make oneself self sustain...
  • Absolutely couldn't agree more. As luck would have it, we have a case study on exactly this in action right now. We have been working with a local non profit group here in central Florida to build "affordable" housing for about a year now. It takes about a year to secure funding - which is now in place. ($ 12 M annual budget). We will start on the first round of 10 homes 1st quarter 2010.

    During the past year we have had continuous discussion about how to shift into a new paradigm - away from "non profit" to "social enterprise". All of this has been & is being filmed for an educational participatory documentary/reality show. There are many different layers to this & we feel this is a blueprint that will be implemented on a large scale once the concepts have been proven in action. Everything about this is literally the polar opposite of the subprime mortgage crisis that triggered the current global recession. We're talking about a new building methodology for super energy efficiency below conventional construction costs in combination with a completely new financial structure & business model.

    The point we are at right now is testing/engineering the new building method & finalizing strategic partnerships with several subcomponents thereon. This method has been developed from several other projects we currently have under construction so this is by no means theoretical.

    The 10 lots are closing in January 2010 & we expect officially going public with everything around that time. Another high profile demonstration model deal is also getting finalized.

    PS: the Facebook connect login did not work so I logged in under my Twitter account where I have not been quite as active.
  • Intriguing and useful, Brice! I'm looking into doing more non-profit consulting, and your article gives me new energy and information about doing so. The experience economy does make sense for where we are now. For the next 5 years, with the job shifts that will be needed, it remains to be see what our economy will evolve to be. All good food for thought. Thanks!
  • Deb
    Intriguing and useful, Brice! I'm looking into doing more non-profit consulting, and your article gives me new energy and information about doing so. The experience economy does make sense for where we are now. For the next 5 years, with the job shifts that will be needed, it remains to be see what our economy will evolve to be. All good food for thought. Thanks!
  • Some cool ideas Brice. We strongly believe that a change is coming. How would Non Profits look like 5 years from now? probably MUCH different, leaner and hopefully open and adopting technology to tap into this HUGE audience of their future supporters. Everyone wants to be President Obama in terms of self sustainability, but out of the 100s of NPOs we met over the last 28 months, only a few would have his Charisma, and non of them have the kind of budget he brought in. Still, GREAT stories and very worthy causes out there. So, can't tell what's gonna be in 2020, but i'm confident that 2011 will be a tipping point for the sector
  • mechellemmm
    I think it's a good possibility that this may be the future of non-profits. New generations are more about what they get for their dollar. Just a "good feeling" doesn't always work, especially with new donors. Generational gaps call for looking at how we do business in new ways. Yes - nonprofits are a business so you have to think like one. Perhaps it isn't so much selling "items" as much as experiences. Look at your current offerings and how you can bring something to the table. Offering donors special tours, unique experiences, opportunities to have more control over what their money does. Sometimes it's not always possible, but it's worth trying to reach new donors.
  • Rick Stein
    I'm troubled by the concept that a nonprofit should create a non-mission-related business with which it's totally inexperienced in order to earn money for its core business. Even within the core business, it's easy to push aside the mission to make money (ostensibly to support the mission). One of the best examples of this is how more and more regional professional theatres have allowed commercial work to take over their stages. We're not talking about an annual "Christmas Carol" or "Nutcracker" to support a season of work, but a season of commercial work to permit a single meaningful work during the year. It's truly the tail wagging the dog, and the social enterprise model that's now all the rage is enabling boards to abdicate fund raising responsibilities. I say, let businesses be run by people doing what they do best--making lots of money--and let the nonprofits do a better job of encouraging their philanthropy.
  • This is a great post.Its an idea i had ,and now it seems its fact.As i set out to be part of making a difference ,my aim was to transform the traditional way of fundraising ,and to have a self sustaining non-profit.Operating in Africa ,where the competition is even tougher ,i devised an approach that allows would-be-donors to donate in a way that makes them want to be part of the grassroots.With this in mind,i think its time we start sharing more information and strategies.

    The Non-Profit sector needs to be innovative !
  • Could not agree with you more, Brice. I think another possibility that we will see in the future are Non-Profits incubators. There are many Non-Profits that would do well to spread their overhead expense by teaming up with "like minded" individuals.

    Great post!!

    AJ
  • I posted a link to an article titled Disrupting Philanthropy 2.0 on my blog at http://tutormentor.blogspot.co...

    I think that until people begin to look at the sector from a needs perspective, and a geographic perspective, we'll continue to spend too many resources competing with each other to survive, instead of working together to thrive. I use maps to show where tutor/mentor programs are most needed in Chicago, based on high poverty. I cut the database of tutor/mentor programs by age group served, time of day, and type of program, to create a better understanding of the types of programs currently available, and the distribution of such programs in poverty areas.

    With this, we can ask "are we reaching all of the kids who need to be reached?" and "are we providing enough of the right supports so that kids born today are in jobs in 25 years".

    If we can get enough of the right people thinking this way, I feel it will change the way non profits might be supported in the future.

    Because of the internet, small groups like mine have the ability to place ideas where others might find them.
  • David
    Great post, Brice. Will retweet.

    I'm struck by how often survival, rather than serving the public good, seems to be the driving force behind many nonprofits, but it makes sense since infrastructure and human resources are often undervalued.
blog comments powered by Disqus