Should a nonprofit operate more like a business? Young people seem to think so. And, amen to that.
Despite arguments I have made and will make in this series about nonprofits embracing earned revenue strategies and employing for-profit talent, let’s not forget that the real power of the nonprofit model is in our collective ownership of them. It’s the nonprofit’s superpower.
The Founder Generation
I’m a trend guy. I love trying to understand the future through analysis of present-day data points. It’s kind of my thing.
One big trend that is right around the corner will be the impact of Generation Z, which MTV dubbed the “Founder Generation.” Most experts agree that disruption to societal norms caused by Millennials will pale in comparison to the vast amounts created by people born between 1995 and 2010.
Born into a world of technology and social media, the potential of Generation Z is amazing.
And, sort of scary.
They’re called the Founder Generation because of their passionate interest in entrepreneurship. These young people don’t want to join your thing, okay, old folks? They want to make their own thing, and its often going to focus on improving the world in which they live. As Forbes notes, “social entrepreneurship is one of the most popular career choices for this generation.”
The term social entrepreneurship gets used a lot these days, but methinks not everyone knows what they mean when they say it. The term has come to stand for private sector efforts to improve our world … which is not exactly true.
Social entrepreneurship is when the principles of start-up enterprise are applied to addressing societal challenges. And yes, that often results in for-profit businesses that seek to “do good.” But social entrepreneurship should not be held up as an alternative to a nonprofit structure. In fact, some of the best social entrepreneurship companies are nonprofit organizations.
Giving Away Your Babies
I operate an incubator for emerging nonprofit organizations called CULTIVATE. Our goal is to make an investment of knowledge into the social cause champions near the very beginning of their nonprofit’s journey, helping them avoid some of the pitfalls while thinking ahead to the impact they want to make.
Some of the first words out of my mouth at the initial workshop are to thank the founders in front of me for giving away their good idea to the world. I often get blank stares – “Uhhh, ‘scuse me … what?”
Yeah, you heard me. You gave your idea away.
When you establish a 501c3 nonprofit organization, you are placing it in the public’s trust, not unlike government. A board of directors is drafted into the governance of the organization to manage it on behalf of all of us as taxpayers. The founder effectively hands their baby over.
“Why would anyone do that?” I envision myself having this conversation with a teenage Gen Z’er. “Mr. Jacobson, why would someone give away their good idea to the world only to see it dragged down by the challenges of the nonprofit structure with the inefficiencies of a volunteer board, the unrealistic expectations of donors, the expectations of efficiency from day one and the burdens of ongoing transparency?” Huh. Why, indeed?
It is this central question that causes me concern when contemplating the future of social good. Will future generations see for-profit enterprise as an easier route to addressing the challenges that face us? Will anyone have the patience for the typically slow progress of change that results from the nonprofit model?
I hope they do, because the nonprofit structure has something for-profit social enterprise does not – collective ownership. It is our combined efforts as a community to move the needle on issues like social justice, economic mobility, environmental protection and community health that makes systemic change stick. While a for-profit social enterprise may be able to address a component of a problem, it is poorly positioned to make that outcome an expression of community resolve because the community has no ownership stake.
Turning Charlotte Inside Out
Since we all own the nonprofit model, it also empowers the people served by the nonprofit to have an ownership stake in their intervention. For-profit social enterprise can make the mistake of setting up an outside-in instead of inside-out model, seeking to remedy a symptom of a societal challenge from the outside rather than working from within to affirm buy-in and empowerment.
In Charlotte, a great recent example of how collective ownership leads to big change is the effort to end chronic homelessness. In 2015, a group “with representatives from homeless and housing organizations and corporate, government, law enforcement, education and faith communities” set an ambitious goal of ending homelessness for 450 of the city’s most vulnerable individuals.
Defined as people who have been homeless for more than one year or have been homeless multiple times over the past three years, chronically homeless individuals represent just 10% of the total homeless population but use about 50% of resources dedicated to helping this population.
The Urban Ministry Center has really led this charge. According to the Center’s Executive Director, Dale Mullennix, bringing the community together has been an essential component of ending chronic homelessness.
“We have learned over the years that partnerships are crucial to the achievement of our mission,” Mullennix said. “We also have learned inviting the community to be a partner in this work not only expands our resources, but new ideas, strategies, and leaders emerge which we never expected.”
The result? The launch of the Housing First Charlotte-Mecklenburg Initiative, a dramatic decrease in chronic homelessness, and an upcoming merger between Urban Ministry Center and the Men’s Shelter of Charlotte. It’s powerful stuff made possible by collective ownership.
Mullenix, who recently announced his upcoming retirement, would never be confused with a member of Generation Z. However, his approach to setting an ambitious vision and working through a human-centered lens to reinvent the way Charlotte addresses chronic homelessness is closer to the emerging generation’s approach than it might appear on the surface.
“Mr. Jacobson, do you really think nonprofits will be extinct someday?”
No, Timmy, I do not. But I do think we have a rocky road ahead. And addressing that starts with eliminating some of the barriers holding back the nonprofit model to keep it from being set aside by the dynamic generation just coming of age. And, that may mean nonprofits of the future need to look and operate more like tech start-ups than the fuddy duddy charities of yesteryear.
This article is the fifth installment in the “Breaking Good” series by Josh Jacobson. Read the OVERVIEW and parts 1, 2, 3 and 4 here.
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