June 12, 2019; Philadelphia Citizen
Nonprofits have been challenged to become more “businesslike” and adopt the practices of the modern corporation. Executive directors become CEOs, measurable outcomes become standard features of elaborate strategic plans, and boards and funders expect to see immediate progress and positive ROI when working on complex issues. One nonprofit leader, Jay Coen Gilbert, cofounder of B Lab, thinks we may be following a false trail. The corporate attributes being pushed at nonprofit organizations are weaknesses, not strengths, and they will compromise the future of both nonprofit and for-profit organizations.
In a recent op-ed published in the Philadelphia Citizen, Gilbert, whose work has focused on supporting the development of benefit corporations, challenged the ethos of the modern corporation. From his perspective, the current “system is broken because it is dominated by an ethic of hyper-individualism and profit maximization, which together represent an ‘exploiter mindset.’” What’s needed are businesses that see themselves as connected to their communities and concerned about their impact on their environment. They’d prize long-term sustainability more than short-term profits that benefit some but not all. In other words, they’d have values aligned with the historic perspective of nonprofit organizations.
GuideStar founder Buzz Schmidt recognized the same themes for modern corporations and their implications for social progress:
After all, it is commercial enterprises, both large and small, that employ most of us, generate the great preponderance of our financial and intellectual capital, and impact our environment, communities, and governance in ways—both positive and negative—too numerous to count and too great to ignore.
Gilbert suggests that viewing our organizational function as nurturing, rather than exploitative, will better guide us to building a viable and productive future. The work of Wendell Berry, author of The Unsettling of America, posits a stark picture of what we are missing in our rush to corporatization:
The standard of the exploiter is efficiency; the standard of the nurturer is care. The exploiter’s goal is money, profit; the nurturer’s goal is health—his land’s health, his own, his family’s, his community’s, his country’s. Whereas the exploiter asks…how much and how quickly…the nurturer asks a question that is much more complex and difficult: What is its carrying capacity? (That is: How much can be taken from it without diminishing it? What can it produce dependably for an indefinite time?)
Bowing to pressures to demonstrate immediate impact undercuts the reality nonprofit organizations must deal with. The problems of poverty, homelessness, nutrition, and education are not ones that can be solved easily. The need to show quick results undercuts the ability of a nonprofit to create a meaningful response and to build the necessary alliances to attack a multifaceted problem.
The nonprofit sector is often attacked for its inefficiency and waste. Gilbert cautions us to think more clearly about what “efficiency” means and whether it is a goal to be perpetually pursued: “Always aiming for more with less inherently squeezes someone or something….Quality is set aside in favor of creating more and earning more, while working faster all the time.”
Sustainability requires an economic model that can provide the resources to keep an organization viable and able to adapt to changing conditions and needs. In this dimension, Gilbert cautions, for-profits and nonprofits differ. “Businesses must continue to be profitable—after all, without income, a business can’t generate positive impact over time. But, by ‘working well,’ by supporting worker health, caring for the planet, the business is also ensuring a positive future for all, including itself.”
For-profit enterprises must generate revenue from their services and products, and they’ll need compatible bankers for those times investment needs exceed internal resources. For nonprofit organizations, economic sustainability requires funders, private and public, who share a common perspective on the organization’s ethos. This means a sea change in the funding sector—recognition that they have been pushing in the wrong direction, and replacing the search for the next innovation with commitment to longer-term investment in entities that are growing and adapting. Without this, nonprofits will continue to follow a model that may be broken, and the problems the sector is tasked with helping solve will not be addressed as effectively as they might.—Martin Levine