Entering the false divide: social enterprise and ‘traditional’ nonprofits

A lot of the blogs that I follow (Tactical Philanthropy, Dan Pallotta, Acumen Fund, Social Velocity) deal with themes related to the changing nature of the nonprofit sector (there was even a rather heated discussion on another blog about what term to use in describing this sector–“community benefit organization”, anyone?), and about the power of social enterprise to change the world.

These conversations often take on a kind of back and forth. Those critical of the status quo in nonprofits argue that only market mechanisms have the power to produce real results, and that nonprofits’ failures are evidence that the ideologies that underlie them need to be scrapped (sometimes sounding straight from Wall Street); those who defend nonprofits point out (sometimes a bit self-righteously) that there are jobs that need to be done that markets don’t exactly embrace; and so it goes, on and on and on.

And I’ve been watching all of this, reading and thinking a lot about innovations in solving social problems, and finding myself swinging back and forth between the two pendulums.

And, then, some paragraphs in The Blue Sweater (written by the founder of the Acumen Fund, a very pro-social enterprise perspective) and a Facebook exchange with a former boss of mine have brought me to a point where I think that we’re really asking the wrong questions and focusing on the wrong variables in this debate.

Because, really, it’s not what your organization is called or even whether it makes a profit that matters most: it’s whether you solve problems, and, precisely, how well you solve the problems you set out to solve (which, to be fair, is really the premise behind Tactical Philanthropy). And both ‘traditional’ nonprofits and social businesses have proven that they can solve problems. And both have been proven not to be successful, too.

So, as my favorite part in The Blue Sweater highlights, we need to ask not whether we should employ X microlending or social marketing or social enterprise strategy; or whether a nonprofit is dedicating a high percentage of its revenues to programming or keeping costs down…but whether social justice is advancing, lives are being improved, problems are going away. And it’s not about what’s the best version of X program, either, because it just might be that what we need is Y. To the extent that social businesses can bring us these innovations, we should figure out ways to support their efforts–with what Acumen calls ‘patient capital’ and with a legal structure that accommodates their unique role. And to the extent that traditional nonprofits rally people around proven ways of helping, they should be celebrated.

And, ideally, we should focus this terrific energy among people who collectively care a lot about promoting justice and alleviating suffering to blending the best that both approaches have to offer: the built-in feedback of markets that make many social enterprises nimble and customer-focused, and the commitment to mission and spirit of solidarity that characterizes the best nonprofits.

As the author states in The Blue Sweater, “philanthropy alone lacks the feedback mechanisms of markets, which are the best listening devices we have; and yet markets alone too easily leave the more vulnerable behind” (p. 247).

For social workers, I see parallels in all this to the debate over whether to call those with whom we work “customers” or “clients”. More than just semantics, this language reflects a difference in how we see these folks, and how we see ourselves. And so, for our profession, as we contemplate the changing shape of the organizations and fields in which we work, our challenge is to think of our clients/consumers as our allies in a shared struggle, those with whom we have to, together, figure out the best way to get to our shared vision of a better tomorrow, in whatever vehicle is going to take us there. And be ready to jump ship if we find a better way. And not worry too much about what it’s called.

2 responses to “Entering the false divide: social enterprise and ‘traditional’ nonprofits

  1. Great post! Interesting to hear your analysis of the conversations on the various blogs. I agree completely with your conclusion that ” it’s whether you solve problems, and, precisely, how well you solve the problems you set out to solve.”

    • Thanks, Sean. I learn so much from Tactical Philanthropy and so appreciate your efforts to focus our collective attention on results. I’m especially interested in how those of us who work in the ‘social benefit’ sector, or however it’s called, experience these different structures and their approaches to solving problems, and in the potential to bridge the sectoral divide, similarly to the challenge facing the social work profession’s “split” over methods. Thank you for all that you do.

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