Fighting the Business Takeover of the Nonprofit Sector

Monopoly

Read Michael Edwards’ book, Small Change: Why Business Won’t Save the World. It’s his response (critical, fortunately) to the philanthrocapitalism movement. It’s his challenge (come on people, let’s wake up) to society. It’s an invitation (a much-needed battle cry) to you and me to fight. Edwards’ book gives us some history and good explanations of key concepts. He dissects, questions, and compliments. He offers specific steps for reforming philanthropy and assuring social transformation. He makes us think—and that is good and necessary. Like me, Edwards wants to “provoke a conversation” so there’s public discourse. And through public discourse, we can hear each other, learn from each, and ensure a stronger future for philanthropy and its results.

In sum, philanthrocapitalism claims that the “traditional ways of solving social problems do not work, so business thinking and market forces should be added to the mix.” Or, in other words, “business thinking and market methods will save the world.” (And make a lot of money for a limited number of people, too!) Now that’s where I get stuck, and so does Edwards: the excessive admiration for business thinking and market methods. Let’s see…would that be General Motors’ almost-bankruptcy and the 2010 BP oil spill? I guess all those philanthropic responses to natural disasters, civil rights, poverty, education, the arts—from NGOs and millions of people—don’t count for much? Weren’t sufficiently efficient? Didn’t produce meaningful and long-lasting results?

It’s human to want quick solutions and facile answers. But nonetheless, it reflects a dangerous naïveté and an insulting lack of awareness and understanding about what is required to make change. For example, this philanthrocapitalist approach hopes to fix the problems caused by capitalism. Honestly, I’m not trusting that. This approach fixes problems but doesn’t change the underlying systems like racism or sexism. I want more than Band-Aids; I want real change. Moreover, philanthrocapitalists represent only a small portion of our society, but hold a disproportionate amount of control. That doesn’t work for me. I believe everyone should and must have access.

Philanthropy—and the value of the nonprofit sector—is about social transformation. Edwards justifiably asks, “Can these new approaches transform societies, or do they simply treat the symptoms of social problems in more efficient ways?” I know my answer. What’s yours?

Sure, philanthrocapitalism can make a difference. It can find cures for various diseases and produce jobs. But that doesn’t fix the systemic issues that confront our society—things like greed and inequality, fear and prejudice, privilege and disadvantage. Edwards notes, “Few areas of business expertise translate well into the very complex social and political problems where solutions have to be fought for and negotiated—not produced, packaged, and sold. And, so far at least, there aren’t many philanthrocapitalists who are prepared to invest in the challenges of long-term institution building, the deepening of democracy, or the development of a different form of economy in which inequality is systematically attacked.”

Economic growth doesn’t fix racism, sexism, homophobia, and the fundamental inequities of our world. Economic growth doesn’t fix poverty, either; just look at the growing disparity in income over the last few decades. As Edwards says, “no great social cause was mobilized through the market in the twentieth century.” And I don’t believe that the market will ever mobilize any great social transformation.

But that’s okay. That’s okay as long philanthrocapitalists quit promoting their excessive value and societies stop looking for quick fixes. Business thinking is different than nonprofit sector thinking. Capitalism—even philanthrocapitalism—focuses on the financial bottom line first. The bottom line in the nonprofit sector is different. The bottom line is mission, not money. The bottom line is the common good, not the marketplace’s good. The result is social transformation, not reinforcement of the status quo. Certainly, nonprofits need to follow some good business practices to stay healthy, but the bottom line is fundamentally different.

Edwards defines civil society as, “the things we do together, not because we want to make a profit or earn a material reward, but because we care enough about something to take collective action…. [Civil society] provides a space free of government control and the pressures of the market, a space in which private citizens can organize for public work…. It’s that independence that enables civil society groups to hold government and business accountable for their actions and to act as crucibles for new or unpopular ideas, for democratic politics and the birth of social movements, and for speaking truth to power…”

I think Michael Edwards’ book Small Change is a must-read for anyone working in the nonprofit sector. Read it. Read it now. Share it with your organization’s leadership. Also read Jim Collins’ monograph Good to Great and the Social Sectors. As Collins writes, “We must reject the idea—well intentioned, but dead wrong—that the primary path to greatness in the social sectors is to become ‘more like a business.’”


 

This column is derived from Simone Joyaux’s Strategic Fund Development: Building Profitable Relationships That Last (3rd edition), published by John Wiley & Sons. Visit the author’s website to learn more about this book, considered a standard in the field.