The progressive community, slowly but surely, is discovering the power of business. This isn’t entirely new. Groups like the Social Venture Network -- organized by Ben Cohen of ice cream fame, Body Shop founder Anita Roddick, and others -- along with BALLE, another alliance of socially responsible business groups, have long celebrated the fusion of capitalism and consciousness. And a growing army of alternatively minded companies exhibiting at the annual Green Festivals in San Francisco and Washington, D.C. fill cavernous halls to fire-marshal-alarming capacity. Most of these organizations and events are comprised of for-profit businesses whose missions, in part, is to promote and support environmental or social issues.
And then there’s the rising tide of social enterprises -- nonprofits that fund at least part of their do-good mission through fee-based products and services. An association of such groups, the Social Enterprise Alliance, defines social enterprise as: “Any earned-income business or strategy undertaken by a nonprofit to generate revenue in support of its charitable mission.”
That’s the wave of the future, say Michael H. Shuman and Merrian Fuller, writing in a recent issue of The Nation. In fact, they say, such enterprising nonprofits can be the saving grace of the progressive political community:
We believe that the spread of social entrepreneurship, and the positive alternative to conventional fundraising it provides for raising resources, offers a fundamentally new and powerful strategy for progressives to expand their power and their voice in the United States.
Shuman and Merrian are hardly the first to recognize this, but the argument they make for a shift in the nonprofit mindset is compelling -- especially when compared with the perpetual fundraising treadmill on which most nonprofits exert a great deal of energy. In some cases, the effort spent on fundraising can cripple the mission of even the best-managed group. Write Shuman and Fuller:
Most progressive nonprofits have engaged in a kind of fundraising arms race in which our best leaders focus more time, energy, and resources not on changing the world but on improving their panhandling prowess to capture just a little more of a philanthropic pie that actually expands very little from year to year.
You may be tempted to laugh at the notion of a nonprofit somehow making a killing as a business entity: nonprofits are notoriously poorly run and rarely excel at core entrepreneurial capacities: understanding the market, being nimble and flexible, thinking outside the box, and all the rest. Many are bloated with middle management.
But there are a few decent role models. The Rocky Mountain Institute, for example, which focuses on energy efficiency and sustainable business activities, created E Source, a consulting service for utilities, which it sold off for a princely sum, then launched a for-profit effort called Hypercar, Inc., which works on next-gen automobile technologies. It hasn't fared as well, but hasn't necessarily dampened the RMI entrepreneurial spirit.
(GreenBiz.com, the nonprofit I founded, recently created one small but meaningful model: an environmentally responsible printing service, GreenerPrinter, which offers a unique combination of services, and which helps support the nonprofit’s mission. So far, it’s generating pennies on the dollar in terms of our annual budget needs, but it’s a start . . . and I would have been remiss not to plug it.)
It will be no mean feat for a generation made cynical by dot-com excesses and Enron-scale corruption to get a jones for the business world. But it could happen . . . and perhaps it should. I envision a day when would-be donors, pressed by a nonprofit to write a check, will ask not just “What’s your mission?” but also “What’s your business model?” Some may see that as a bittersweet day -- when pure charity gives way to the dog-eat-dog world of the marketplace. But it also could sharpen the focus of many nonprofit organizations -- and help to foster a new generation of creative and conscientious capitalists.
As for Shuman and Merrian, they see this is anything for a rallying cry to a raison d’etre for the progressive community.
Those of us serious about social change increasingly must get down to business, figuratively and literally. Every nonprofit may not be able to generate all its funding through revenue-generation, but every nonprofit certainly can generate a greater percentage than it is doing now. According to an IRS sampling of charitable filings in the year 2000, fees for service already account for two-thirds of all nonprofit budgets, yet relatively little of this is being done by progressive nonprofits.
It may be high time to change that.
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