Monday, July 15, 2013

Monday Musing: On Blurring Boundaries

Monday musings are my way of sharing brief, off-the-cuff thoughts about something I have read recently, both to help clarify my thinking an in the hopes of generating discussion and response. I give myself 15 minutes to jot down a summary of the article(s) stuck in my brain, and outline why I think they may be important.

Two recent articles in the New York Times are fueling my thinking about the future of nonprofts:

Article #1: A Social Entrepreneur's Quandary: Nonprofit or For-Profit? from last Wednesday's Case Studies column invited business experts to weigh in on the decision faced by Saul Garlick, founder of ThinkImpact, a nonprofit that encourages entrepreneurship in third world communities. Garlick is frustrated by the nonprofit hamster wheel of low salaries, uncertain income, and onerous expectations on the part of funders. Also, he has ambitions to scale up and increase the organization's impact, and raising nonprofit capital is extremely difficult. So he posed this question to the Case Studies advisers and to readers of the column: does it make more sense for him to 
  • Remain a nonprofit
  • Close the nonprofit, form a for profit company to buy the assets of the old nonpo and pay off its debts, take on debt and raise equity from investors
  • Keep the nonprofit but start a for profit subsidiary. The nonpo could pursue grants and donations, the for profit could take on debt and use traditional sources of business financing
Later this week, the NYT will share what Garlick decides to do (check in at nytimes,com/boss) 

Article #2: A Six-Figure Salary? They'd Rather Make a Difference looks at the "Venture for America" program, which recruits recent college graduates to serve as fellows at companies in cities that need to build a stronger business infrastructure--places like Detroit, Cleveland and Providence--that are not the usual magnets for young entrepreneurs. The article highlights the mindset that drives talented graduates from some of the top schools in the country to choose this high-risk route rather than the traditional job tracks into business, finance or technology. "I want to be in a position where I could have a huge impact on the community" said one VA fellow. This choice has immediate costs--Fellows take a salary in the mid-30's, compared to the six figures referred to in the headline, which someone with a good GPA from a top university could typically expect on Wall Street or in Silicon Valley. The executive director of Duke's career center, interviewed for the article, notes  that in recent years, “students have become more interested in exploring the intersection of entrepreneurship and social enterprise."

Hmm, forgoing the earning power that comes with a good education, and choosing instead to find a job that lets you do social good and have a big impact on the community. Sounds a lot like the reasoning that has lured people into nonprofit work for decades, yes? 

Pair this with the take away of article #1--that a for profit business might be a more sustainable and scale-able way to tackle a social need--and you have my Monday Musing: Are we entering a time when the traditional distinction between a nonprofit and a for profit career is blurring? Will Millennials see for profit social enterprise as an attractive way to fill their desire for mission-driven work, and will that affect the nonprofit workforce? And, most intriguingly for me, is there a future out there for the for profit museum that takes on debt and leverages capital in order to scale up the good it does in the world? 

Your turn to weigh in.

Ok that took a little more than 15 minutes, but it was worth it. 

Update: On Monday, July 15 the NYT reported on Saul Garlick's decision to turn ThinkImpact into a for profit enterprise. You can read about the advice he received, and his reasoning, here.  The take-away quote from Garlick, for me: "I think people make the mistake of distinguishing for-good vs. for-money. The notion that nonprofits are the right — or even, better — vehicle for doing good in the world is no longer true. That may have been the case at one time, but today, ethical, well-run businesses with products that make life better are remarkable at improving lives at scale."

3 comments:

Albert Nonymous said...

everyone should see this ted talk

http://www.ted.com/talks/dan_pallotta_the_way_we_think_about_charity_is_dead_wrong.html

The Alliance's Center for the Future of Museums said...

Thank you for the link, Albert. I will queue this TED talk up to watch.

The Alliance's Center for the Future of Museums said...

Posted on behalf of Karen Coltrane,director, Children's Museum of Richmond (Virginia):

Elizabeth,

I love that you are musing about my favorite topic: the blurring of the nonprofit/for profit line. I suspect the line is going to get very messy in the coming years. Already, we are seeing states adopt legislation to create a new hybrid corporate structure called “B” Corporations (B for Benefit) that try to take the best of both worlds. I dream of the day my organization can afford to buy a for profit business, the proceeds from which will benefit the children’s museum. It would act essentially like an endowment, but with a much better rate of return. We’ve proven down here in Richmond that managing multiple museum locations and different nonprofits (we took over the region’s children’s book bank last year and are planning on acquiring a nonprofit that provides parent education programs this year) can be done with a strong museum management team. So managing a for profit shouldn’t put us under!
Keep musing!