when I tell people that I've spent the
past decade working in nonprofits a
surprising number of them ask me for
advice on how they can start a
nonprofit I understand where they're
coming from they want to do good in the
world and they have this genuine belief
that the way to do that is in
nonprofits typically I give them the
same advice which is please just don't
we already have too many nonprofits and
anyway they simply aren't a good
solution to whatever the problem is that
the person is trying to
solve here's what I wish everyone
understood about the nonprofit sector
the business model is
broken I have helped raise millions of
dollars for Susan G Coman which is a
National Breast Cancer charity and I am
incredibly proud of the work we were
able to do with those funds especially
in supporting underserved women
but the truth is that the only reason
that Coman and a lot of other nonprofits
like it even exists is that the
government is failing to provide the
health care we should have as a human
right I left the world of donor funded
nonprofits because I came to believe
that it was a totally inadequate
solution to 21st century
problems let me give you some context
the nonprofit world as we know it is not
that old it was started in the 1960s in
response to the civil rights movement
and the 501c3 designation was created in
1969 today Believe It or Not There are
1.5 million 501
c3s what started out as a principled
response to a moment in history has had
some really unfortunate negative
consequences let's start with the fact
that fully 70% of those 1 .5 million 501
c3s have annual revenues of less than
$50,000 a
year with those tiny budgets their
impact is inevitably also tiny plus they
compete with one another for donor
dollars to solve essentially the same
problems in essentially the same
ways take Coman if you go to guar which
is a registration website for nonprofits
you will find nearly 7,000 breast cancer
Charities all of that competition for
donor dollars is pure inefficiency which
is paid for by those very same donor
dollars look at it another way imagine
those 1 million tiny nonprofits have
annual budgets of $25,000 a piece that's $25
$25
billion or put another way the annual
budget for the Environmental Protection
Agency now nobody is suggesting that we
should all donate our money to one
gigantic multi-headed Hy driven
nonprofit but it's pretty clear that if
there were fewer entities there'd be
less duplication less inefficiency and less
less
waste nonprofits are a significant
employer in the United States about 10%
of Americans work in the nonprofit
sector unfortunately those jobs are
problematic in a variety of ways start
with wages nonprofit salaries are lower
and sometimes a lot lower than the
salaries for those very same jobs in the
for-profit sector and one of the drivers
of that is that donors don't like to
fund what they call Overhead by which
they mean computers offices salaries all
the things you need to actually run an
organization that means that nonprofit
workers are underpaid underresourced overworked
overworked
and that leads to burnout and high
turnover another consequence of these
low wages is that the nonprofit
Workforce is typically women who look a
lot like I do and who have spouses or
families who support them financially so
they can even afford to take these
jobs as a result the voices of the
population that nonprofit is set up to
serve is often missing from the
conversation and that leads to
inappropriate poorly designed programs
which is more
waste and did you know that as a
nonprofit employee you're expected to
donate back to your employer or at the
very least fund raise on their behalf in
your spare
time imagine saying to a for-profit
employee that they need to give back
some of their wages just because the
company they work for is trying to make
the world a better
place so I imagine you're now with me
that working in nonprofits not so great
but what about their impact which is of
course the reason they even
exist unfortunately I don't have good
news there either despite all of the
money that has been poured into the
sector over the last six decades we have
depressingly little
progress look at climate change with all
the organizations working on this issue
we are all experiencing the inequitable
and increasing impact of global
warming or look at the gender pay Gap
despite the dozens of organizations
working on this issue in the United
States a woman earns 82 cents for every
dollar that a man earns and at the
current rate of change we will hit
gender wage parity in
2067 so nonprofits simply aren't the
solution what about government policy
listen I think regulations are a hugely
powerful tool and a lot of the problems
we see today would be solved with a
stroke of a
pen that said I don't know about you
personally I don't have a lot of
confidence that a lot of action is
happening in that sphere these days and
we simply do not have time to
waste so the answer has to come from
for-profits and that makes sense because
capitalism is the engine that is driving
a lot of the problems that we see today
we're not talking about the for-profit
world that flourished in the industrial
revolution the cycle of take make waste
that characterizes too many companies even
even
today we need for-profits that
understand that if we continue to
deplete our finite resources not only
will they be out of business we will all
be out of
business we need for profits that
evaluate their success based on what is
sometimes called the triple bottom line
which is people planet and
Profit the B Corp certification movement
is a step in this direction they
actually uh give certification for
companies that hit high standards for
environmental and social responsibility
accountability and
transparency and we do see increasing
number of shareholders that are trying
to hold big public companies accountable
for their impact on the world but there
is still so much more work that needs to be
be
done if we want a world where we can
both earn Fair wages and make the world
a better place we need a new paradigm
and that is where the small for profit
for good social Enterprise comes in
there's a magic in small businesses
they're Nimble they're creative they're
Innovative they are evaluated on their
ability to deliver value to customers
not like the small nonprofits on their
ability to attract
donations plus they can provide
incentives to attract and retain top
talent small businesses are a surprising
contributor to the American economy
almost half of Americans work in a small
business and that number is growing in
2023 there are a record 5.5 million new
small businesses
started imagine if all of those
entrepreneurs centered the well-being of
people and Planet when they were
building their businesses we would
really see some
change I invite you all to be part of
the solution here's what you can do
educate yourself about the social
Enterprises in your community and
patronize them when you can learn their
inspiring stories I promise they will
give you reasons for optimism and then
share those stories and that optimism
with others become an evangelist for social
social
Enterprise to get you started I want to
tell you about a company called
bopi they have created a product out of
the waste from banana crop that is an imitation
imitation
leather this product
looks feels even smells like leather and
it uses much less water and none of the
toxic chemicals that are in the
traditional leather tanning process plus
they use fibers that would otherwise go into
into
landfill they have created a true
for-profit for good business with a
product that people want to
buy so the next time somebody says to
you I'm thinking about starting a
nonprofit I hope you will encourage them
to instead think about a for-profit for
good business maybe you'll even join
them to help them and be part of the
change you want to see in the
world if we do this right eventually we
won't have to talk about social
entrepreneurship because all
entrepreneurs will Center the well-being
of people and Planet as a matter of
course really hope that happens soon
because our Collective future depends on
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