Why traditional non-profit frameworks make changing the world hard


Sometimes tradition is good.

For many people, these social norms provide a visible link to a shared history and a connection to an experience that offers a culture to celebrate and an identity to embrace.

However, at other times, tradition can be toxic and even debilitating,  In those instances, an unyielding adherence to archaic points of view can blind us from recognizing evolving opinions and truths.  Even more, our creative capacities become crippled and we resort to simply doing things the way they have always been done because . . . that is simply the way they have always been done.  Unable to identify unique opportunities to innovate in the face of dynamic market change, we fall in line with the status quo and continue to turn our wheels, wondering why we are moving forward so slowly.

Fear of change impairs growth in a countless number of industries – from education to philantrhopy to politics.

However, when it comes to addressing the most pressing social issues facing our communities, I believe Dan Pallotta poignantly illustrates how the growth of many non-profit organizations has been crippled by an outdated mindset and a decision to employ more of the same.

We have been trained to believe that charities and non-profits should operate solely through donations and focus exclusively on the issues at hand, not on scaling activities like advertising, marketing, risky and innovative experiments or income-generating models.

Encouragingly, many emerging social entrepreneurs are exploring new approaches to charitable giving that prove that we do not have to sacrifice doing well financially to do good in the world around us.  Many have realized that a for-profit venture might drive change faster than a non-profit vehicle.  Jim Fruchterman in his article in the Stanford Social Innovation Review says,

“Policymakers are responding to the changing times by embracing new forms of social action that fall between the two poles of tradional business and traditional charity. Expect to see new organizational forms exhibiting these increasingly hybrid characteristics….Both business and the social sector are going to change in these directions, and society will be the better for the change.”

This is encouraging because the challenges are only getting bigger.

The sad truth is that many of the social issues that non-profit organizations and charities seek to address are not getting any smaller.  As Pallotta points out in his TEDtalk, poverty remains stuck at 12% of the U.S. population and charitable giving has remained stagnant at 2% of GDP, unable to wrestle market share away from for-profit entities.

Pallotta asserts that the traditional non-profit fundraising model fails because it discriminates against (1) compensation, (2) advertising and marketing, (3) risk taking, (4) investing time into new ventures and (5) using profit models to help programs scale.  He argues that the traditional framework was derived from Puritan beliefs – early settlers in our country that were capitalists but also believed that self-interest was a sin – and suggests that our mindset needs to evolve with the times.

Charities were created as a penance for Puritan’s profit making ventures in America.  But they have evolved drastically – organizations today offer more than simply a penance.  They are mission driven and infused with passion and meaning.  Although charities and non-profits have often been traditionally viewed as antithetical to capitalism, we should not confuse morality with frugality.

Taking risks on bold and innovate ideas can lead to innovative new fundraising models and change how people view social impact.  Just take a look at TOMS or Warby Parker, which boldly challenge the way we think about addressing issues of poverty and health around the world.

As Pallotta suggests,

“When you prohibit failure you kill innovation.  If you kill innovation in fundraising you can’t raise more revenue and if you can’t raise more revenue, you can’t grow.  And if you can’t grow, you can’t possible solve large social problems.”

Movements like FAILFaire and Admitting Failure recognize that an instance of failure in the field of social change is an important part of the innovation process and, ultimately, help stimulate progress.

Organizations that are afraid to fail are simply less likely to innovate.

New models that challenge the norm.

Fortunately, many new social innovation ventures are challenging the normal approach.

They demonstrate that you do not have to choose between doing well for your family and doing good in the world – a mental battle that often sways many of the brightest minds to choose paths in the corporate sector upon graduation over opportunities in social good organizations with missions they are passionate about.

You can create a social venture that produces profit while generating a benefit to society and impacting an issue you care deeply about.  You can incorporate social impact driven initiatives into existing corporations too.

For example, Sevenly donates $7 for every apparel product sold to a social cause every week and has raised over $2 million dollars to date.  Activyst is a new social enterprise that creates bold and functional athletic bags that generate funding for girls’ sports organizations worldwide.  Panda and Waveborn are two companies that use popular sunglasses to raise money for health organizations focused on vision.  Cole and Parker makes socks that start businesses – 20% of proceeds from each pair of their bold, creative, luxury socks goes towards micro loans for entrepreneurs.  The list goes on and on.

These growing companies demonstrate that there are many ways to provide innovate and unique channels for people to support non-profit organizations and donate directly to communities that need help the most.  Pallotta claims that if charitable giving grows from 2% to 3% of GDP, we will have $150 billion more dollars to target important issues that truly matter.

My hope is that this wave of social impact focused companies can start new traditions we can all celebrate.

[Photo: Flickr]