Is there different generation of non-profits coming?

Images This past Thursday night I met Fred at a panel he was on discussing social entrepreneurship.  I came a bit late to the party but caught enough of the event to hear what everyone had to say.  Needless to say, Fred and I have been having this conversation at home for a while. 

In basic terms, there are two kinds of companies.  Profit and non-profit.  I have had the opportunity to work in both.  Truth is, as much as I love the giving back mission of the non-profit world, it has always left me semi-frustrated.  Most non-profits work at a much slower pace.  There is a different mentality to the work.  The board members are all volunteers so they don't focus as much as they would if they had a piece of the equity. 

When I chaired MOUSE, we were always trying to think more like a profit oriented company.  I'd have board members, who were entrenched in the non-profit world, get frustrated with me because I wanted to do things that were not the way things were done in the non-profit world.  Years later, MOUSE is still run more like a profit business than a non-profit business.  They have been extremely lucky because both Executive Directors are visionaries in their fields.  There isn't a person in the organization that doesn't pull serious weight.  Also, the overhead compared to the earnings is relatively low. 

I am chairing MOUSE's $13 million expansion campaign.  This campaign has many directives.  Most important, to bring what we do to every state in the country.  We also want to ramp up the website so that anyone can share in our knowledge for their schools, choosing from different models.  All paid for but at different levels hence at different depths.  In essence, MOUSE, can be a profit organization if it had to be.  So why doesn't it become one?

Many non-profit organizations spend a ridiculous amount of their time raising money and preparing for the annual event that insures next year's operating budget.  Not so different than politicians.  I'd love to see Bloomberg, create a small commission to literally analyze every non-profit organization in the city.  Annual income, impact, numbers of employees, percentage of salaries to operating budget, how much they raise annually, who they get money from, etc.  Certainly some of the information isn't easy to quantify but guaranteed there are 6 organizations that do the same thing in NYC that could merge.  The commission would help them navigate the role of being one organization and in the end they would make more than likely make a bigger impact with the funds they are all receiving.  Also, perhaps they could look at different models such as profit non-profits. 

I am not sure what else to call these models.  Maybe they only have to raise money every ten years.  Maybe they never have to raise money every again.  The biggest problem with this, as I see it, is the taxes.  If you are a non-profit in the eyes of the Government, you don't pay taxes and are treated differently than a profit organization.  If you are a social entrepreneur with a mission of giving back, doing social good and only wanting to raise a large chunk of cash once.  Not making a profit but not losing a profit and perhaps having to raise money at one point down the line for growth.  What are you?  How does the Government look at you in terms of being taxed?

After the discussion the other night, I do hope that there is a different generation of non-profits coming down the line.  The profit non-profit. 

Comments (Archived):

  1. Adrian Bye

    i agree completely, and apply this same concept to developing countries. i am convinced many developing countries (eg haiti) partially stay that way because they are trained to keep recieving aid, rather than get out there and make real a side note, a pilot friend who just got back from port au prince told me that the red cross and us military are not very active in the airport in haiti anymore. so its a little unclear where all the aid money to haiti is going anymore.i wrote a blog post a few weeks ago on this general topic:

    1. Gotham Gal

      I like the analogy of developing companies. MOUSE charges every school forusing their knowledge base. Some schools only pay $500 a year but bypaying, they are more likely to really use the services.

      1. Adrian Bye

        that makes sense. and if schools won’t pay, there clearly isn’t value so it should be shut down.i think a major fault lies with the donors. donors give money to feel good and don’t follow up with results. rather than a bloomberg commission, i’d suggest aggressive, well funded investigative journalism to uncover where NGO fraud and mismanagement is happening and bring it to the eyes of donors.

        1. Gotham Gal

          Good idea. Donors definitely give to feel good. Not sure any media outletcould afford to put a group together for this project but it would befantastic.

  2. Tanya Monteiro

    makes me think there might be room for a “profit non-profit act” something like the ‘start up visa act’ started by Brad Feld and others?

  3. rebeccastees

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