We Are All Social Enterprises! Well, Maybe. Possibly…

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Social Enterprise

January 31, 2015; Forbes

In the words of Forbes contributor Esha Chhabra, Atul Tandon believes that the “labels of nonprofit and for-profit are merely tax differentiators.” Although Chhabra mistakenly says that Tandon was executive director of the United Way rather than executive director of the United Way Worldwide’s International Network and VP for investor relations for just short of two years, Tandon knows a lot about the world of nonprofits, having also been Senior Vice President for donor engagement at World Vision United States and now running his own consulting firm, the Tandon Institute.

Here’s what Tandon actually says about the definition of social enterprise:

“It’s an enterprise that is focused on building the social good, the common good. It could be for-profit, it could be nonprofit, it could be a cooperative.”

Remember than Tandon’s roots include longtime service to Citibank and dealing with corporate donors in his United Way and World Vision fundraising roles. It shouldn’t be surprising that he doesn’t attach a great deal of significance to the presence or absence of a profit motivation in social enterprises. In part, nonprofits don’t exist, despite their critics, to operate below the line. They also hope for financial returns, except that they reinvest their returns back into their operations rather than as profit to enterprise owners and shareholders.

Chhabara suggests that Tandon, who promotes himself as a global entrepreneur and humanitarian, was “behind the rise of the ONE campaign,” which might be a slight overstatement of his role with Bono. She also says that Tandon has “cracked the secret on how to artfully raise funds for a cause,” a secret that some other professional fundraisers might suggest that they have cracked as well. At a minimum, he is enterprising.

But social enterprise doesn’t necessarily lead to cracking the code. When Tandon left WorldVision United States in 2009, for example, the organization announced that it had to lay off between four and five percent of its U.S. workforce due to a decrease in cash donations and was going to cut between another two and three percent by not filling a number of open positions. Yet even today Tandon credits World Vision as a nonprofit social enterprise that “does a good job at continuously improving th[e] interaction” between the organization and its donors.

“There’s no recipe, but I do believe that to be successful at engaging donors frankly what is needed is a transformative change within the nonprofit industry of how does the nonprofit industry look at itself. Forget about trying to look at the donors – they are who they are,” Tandon says, regarding his shift of the frame from “fundraising” to his preferred terminology of “donor engagement.” “Fundamentally when a non-profit starts to think, well, my job is actually two-sided: my job, my mission is on the one side to change the life of the beneficiary, so I’m changing lives; on the other side, I’m changing hearts.”

That may be the ultimate definition of Tandon’s concept of social enterprise, not just fundraising, but to affect and change the hearts of donors, supporters, and partners. The question is whether or how much profit that flows to the owners and investors of a social enterprise alters and perhaps minimizes the impact on the heart.—Rick Cohen

  • Eleanor L. Brilliant

    Enthusiastic about your article. I am concerned about the intermingling of for profit and not-for- profit conceptually as if it makes no difference which kind of organization is acting, and I agree that it is more than an IRS distinction that separates businesses from charities.
    All best, keep writing,
    Eleanor Brilliant

  • Johan Matthews

    Tandon seems to embody the direct and natural evolution of the Non profit professional: That of a connecting agent between opportunity and change. Considering, the widely observable impact of the retrenchment of direct government support and strict demands for increased public accountability in non profit policy, funding and regulation, it makes sense that the agencies shift away from the traditional notion of a non profit: One where they are bleeding hearts painting the town blue.

    Now to truly make an impact it seems as though non profits have to embrace effective and pluralistic partnership development, working with both government parties and private commercial entities, to sustain their operations and to solve societies problems. As Tandon put it “fundamentally when a non-profit starts to think, well, my job is actually two-sided: my job, my mission is on the one side to change the life of the beneficiary, so I’m changing lives; on the other side, I’m changing hearts.” This is likely where we are to see a renewed and increased capacity of the non profit sector.

  • JamesMSchaffer

    I’ve followed and appreciated your career and we have mutual friends, particularly from your time at LISC, but this is the first time I’ve chosen to comment here.

    I too noticed Ms. Chhabra’s Forbes interview with Atul Tandon and found it uplifting. It was a cogent piece addressed primarily to a for-profit audience making a few points: Atul Tandon is a tax-status-agnostic when it comes to finding solutions to global issues and fundraising today is more about “bridge-building” than charity/donor transactions.

    If Ms. Chhabra missed a subtlety in Mr. Tandon’s UW title or failed to note that Mr. Tandon’s tenure at WV may have been during a time of intense struggle for that good NGO — why is this worth noting in your review? To another charge, there is much about the formation of the ONE Campaign that the general public does not know — Mr. Tandon was indeed integral. That Mr. Tandon began his career at Citibank only adds strength to his credentials, especially as an advocate of impact investing and social entrepreneurship. You may find issue with the motivations of “impact investors,” but I can assure you that the beneficiaries are agnostic as to how solutions to global issues are being financed.

    LISC serves as a tax credit syndicator for low-income communities, Citibank being one of LISC’s longtime partners. Did the “impact on the heart” ever come up as a conversation piece, let alone as a requirement, in the deals being made with Citi during your tenure there?

    As you are given to quoting great writers, here’s a quote from Shakespeare. King Henry: “Forbear to judge, for we are sinners all.”

  • John Godfrey

    Rick, I think this piece puts its finger on an important point which goes toward distinguishing social investment from philanthropy proper. If your heart ain’t in it, how can it be love for humanity?