Are nonprofit groups dead?

Is the non-profit dead?

Sure, maybe “dead” is a bit dramatic for the trusty nonprofit organization. But activists doing good inside and outside the box are increasingly wondering: Is this old way of thinking about doing good works still relevant in the tech-savvy, hyper-cyber world of social change we see today?

For starters, it’s clear that whatever you call them, nonprofits aren’t going anywhere. In 2010, there were 1.6 million nonprofit organizations registered with the Internal Revenue Service. Notwithstanding its size, the nonprofit sector hasn’t been averse to the changes that technology bring.

Organizations such as Kiva or Vittana, which facilitate micro-loans for business or college education, connect donors directly with the people to whom they give.

Bulk mail fundraising solicitations are giving way to like “Twestivals” – galas or gimmicks for giving, depending on your perspective – where users of the online micro-blogging site Twitter use the power of their cyber-networks to organize offline fundraising events.

Foundations like Echoing Green or Draper Richards offer grants and training to young change agents they call “social entrepreneuers,” a term that’s suppose to denote the savvy and efficiency of today’s 2.0 charities.

But if doing good is getting more efficient, does the old-fashioned nonprofit have a future?

A panel of distinguished nonprofit leaders recently took up this question at the Aspen Institute, in Aspen, Colo. Alumni of the Aspen Global Leadership Network met for four days in July to brainstorm and debate about the world’s most-pressing challenges. Yours truly was invited to eavesdrop (with expenses paid by the institute) on those debates, under one condition – I can tell you what was said, but I can’t tell you who said it.

So without naming names, I can tell you that there were about 20 nonprofit leaders, from major funders that you’ve probably heard of, if you read this blog, to small community organizations trying to make change neighborhood by neighborhood, both in the United States and around the world.

Here are three ideas on the future of the nonprofit:

Hat-in-hand funding is a thing of the past

For decades, nonprofits looked to donors – private foundations, individual philanthropists, governments – for most of their expenses. The argument, perhaps a good one (at least for awhile), was that there’s simply no money to be made in, say, running a domestic violence shelter or feeding the poor during a famine.

No profit motive means no investment, and no investment means no money to save or change lives.

One Aspen leader from the US put it this way: Some nonprofits, he said, are stuck on “the philanthropy dole.”

But, as one Aspen leadership fellow from Latin America observed, “There’s been literally trillions and trillions of dollars given through nonprofits, with limited results.” As a businessman turning toward social change ventures, that nonprofit model baffles him.

“If you give me money, I produce results,” he said of his primary field. “If I don’t produce results, I don’t get more money.”

Enter the world of social-impact investing, or socially responsible investing. In this world, investors are willing to trade some – or perhaps all – of their possible return on investment (ROI) for achieving some social change, or “social return.”

But that begs another question:

What’s the ideal 'Return on Investment' on charity?

And how do you measure it? Donors have become increasingly demanding of data to help evaluate how well donor dollars are being used. As one guy in the trenches observed, “Anecdotes are not going to cut it anymore.”

At the same time, not every change can be turned into a number, much less a return on investment. One woman who runs a nonprofit abroad asked, “How do we get measure right? Our ‘profit’ is, we’re changing lives somehow.”

Making that change happen, she insists, requires that “the helper” – donor or investor – “needs to listen to the doer.”

Is “social entrepreneurship” the best way to create social change?

True, not all social entrepreneurs are businesspeople trying to make money with ethically responsible or socially targeted investments. Sometimes, “social entreprenuer” describes a person with a creative or unusual vision for solving long-standing social problems.

But whatever the context, the word also implies something else. “It has a capitalistic individuation,” said one Aspen leader.
Not that “nonprofit” is any better as a word.

“It describes tax status,” she said. “It doesn’t describe what you’re doing.”

But the word has been around long enough to be bundled up with an ethos of “communalism,” she conceded. "And it’s important not to lose that.”

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