Competitive Practices of NPOs

Perhaps the dominant force shaping the non-profit sector at the present time is the widespread commercialization or “marketization” of social and economic life. While commercialization is nothing new to the non-profit sector, in recent years the sector has not only reacted to the market but also embraced it on a scale not previously seen, integrating market impulses into non-profit operations in often creative ways, though with consequences that are not completely clear.

Sources of Market Pressures. the pressures propelling non-profit organizations towards greater engagement with the prevailing market system are multiple. They include declining government financial support, slow growth in private giving, increased service demands from widely disparate population groups, growing competition from for-profit and non-profit organizations, increased accountability demands, and the increasing presence of potential corporate partners.

Growth of Fee Income. In response to this combination of push and pull factors, many more non-profit organizations seem to be reaching out to the market, and on a much broader front. Perhaps the most obvious evidence of this is the growth of non-profit reliance on fees for service charges. But non-profits are also deriving money from the sales of ancillary goods and services, such as merchandise in gift shops and facility rentals.

Social Purpose Enterprises. Non-profits are also integrating the market more directly into the pursuit of their social missions through the formation of “social purpose enterprises,” or “social ventures.” These hybrid organizations use market means to pursue non-profit objectives. Here the market is not simply a source of revenue but a preferred vehicle through which to achieve a social purpose.

Corporate Partnerships. Non-profits are being drawn further into the commercial orbit by alliances with the corporate world. Businesses have found that teaming up with non-profits adds respectability and trust to their images while cultivating new markets, new sources of employees, and new pools of research and expertise. In exchange, corporations donate money, form employee volunteer programs, sponsor events, loan out executives, and provide equipment, space and contacts.

Incorporation of the Market Culture. As they have come to operate in an increasingly competitive, market-oriented environment, non-profits have also increasingly absorbed the culture and manner of the market into their internal structures and operations. Non-profits are no longer bashful about aggressively advertising their services or competing for charitable contributions. Indeed, they have become increasingly “entrepreneurial,” worrying about their “market niche” and engaging in “strategic planning.” Agencies are increasingly adopting performance measurement techniques, adopting smaller, corporate-style boards, and building more elaborate organizational structures.

A New Enterprising Social Sector. Emerging from these various developments is a new picture of the “social sector,” a picture of a self-propelled set of organizations loosened from their original moorings in charity or as a passive agent of government and much more closely connected to the market system, while still somehow tied, however tenuously, to the pursuit of public benefit. Unquestionably, the non-profit sector has gained many advantages from this closer association with the market. Marketization has offered the non-profit sector access not only to an enlarged resource base but also to the energy and creativity that the market system has long represented. Armed with earned income, non-profits may become more fully independent than either government support or private charity has made possible. Engagement with the market also opens possibilities for leveraging enormous private resources and talents for social purposes, and for erasing widespread images of non-profit ineffectiveness, establishing instead the image of a set of organizations that has learned how to bring the most efficient means to the service of the most valued ends.

But if the potential advantages of the non-profit sector’s embrace of the market are considerable, so too are the risks. Market pressures can undermine non-profits’ commitments to their core values, to doing what is right as opposed to what is popular or commercially viable. They can also threaten the sector’s public support if efforts are not made to keep the public engaged and informed.

The solution to these problems may not lie either in restricting the commercial involvement of the non-profit sector or in relying blindly on the restriction on distribution of profits to ensure appropriate non-profit performance. Rather, more direct mechanisms of control may be desirable—performance measurements and mechanisms that empower key stakeholders, such as donors or the users of non-profit services. Under any circumstances, while it is essential to keep the challenges posed by the market clearly in view, it would be foolhardy to let the opportunities it presents to the non-profit sector go unexplored.

Advertisements

Social Trading Platform India

The idea is to provide a capital market for social good. This can bring about social consciousness to the global financial markets. It holds the potential to increase access to capital for enterprises with a social mission. On a bigger scale, it will help social enterprises further develop the professionalism of their operations and create a whole ecosystem around it to support social enterprises. This will become India’s first social trading platform, providing a trading platform and an efficient capital raising mechanism for Indian Social Enterprises (SEs), including both for-profit and not-for-profit entities with a social mission. The Platform will connect these SEs with impact investors seeking to achieve both a social return and an economic return on their investment while providing capital to fund innovative social businesses. This platform will also enable philanthropic donations.

Such an exchange will bring all the relevant players in the ecosystem together, speaking the same language and assisting one another in creating greater social good. It will encourage the governments, civil societies, academics, investment banks, research companies, auditing bodies and social enterprises to agree on a framework to measure social value, common terminology, transparency, and social and financial goals.

Social enterprises seeking to list shares or bonds on the exchange will go through proper social and financial auditing (third party validation) and report regularly to investors on both their social and financial results. Investors purchasing shares and bonds on the exchange will be attracted by the transparent disclosure of social returns and will evaluate companies based on both their social and financial returns. They will understand that a social enterprise may not maximize its earnings due to the cost associated with fulfilling its social mission. And they will be willing to accept a limited financial return in order to support this mission. Of course, given the current dismal state of the market for profit-maximizing businesses, any economic return topped with a social return may feel like a windfall to an investor.

The Platform will push the envelope on the existing socially responsible investing, bring forward social enterprises and social purposes companies (in addition to microfinance) in energy, water/sanitation, media, fair-trade, health, education, and cottage industry and bring to the attention of these investors a whole new set of enterprises which would not have been noticed otherwise.

Such a platform/exchange cannot be created overnight. It will take years before The Exchange is a robust trading platform. However, with the proper assistance and support from other members of the social investing ecosystem, it can become the cornerstone of a potentially very large social enterprise economy.

Note: I am working on its operational model, and will post it once am done.

Story of a startup: Part 4

Once we decided upon the name of the brand for our green products, and were happy with the sleek and unique name, we invited couple of our friends over momos and coffee to share our ideas and get their feedback as potential consumers. In the meantime, D had designed a brilliant logo for our brand, which further enhanced the name. M & L were our sounding board for the evening over yummy roadside momos [bootstrapping has its own unique flavors], we talked at length about our branding exercise over GreenFlip. We even talked about some tag lines, and L came up with ‘Fashion Flip to Green’, which won by 4:1 vote then and there, and we accepted and adopted the tag line. We finally had a cool brand name, brilliant logo and an excellent and tasteful tagline, all in sync. Read the full post HERE

Story of a Startup

This is a story of a real time start-up whose genesis began in June 2009. I was bored with monotonous and boring work of being an advisor on tech project consulting for the government, and wanted to experiment. I had past ten years of international experience working in cross-functional roles in various domains [http://www.stratessence.com/team/] , had thought of several ideas for converting into businesses, but was yet to do a formal bootstrapped start-up. It was around this time I had met a brilliant and out-of-box thinker guy who was 8 years younger than I was, already few start-ups old and we used to discuss plenty of ideas over cups of cappuccinos everyday and strategy to convert them into $$$$ earning enterprises. Read the full post HERE

Social Entrepreneurship Quadrant

The Social Entrepreneurship Quadrant desrcibes the orientation of a social entrepreneur. Each of the Quadrant offers a different approach of business and can help an entrepreneur model his/her social enterprise accordingly. Moreover, the Quadrant can also help impact investors, grant making agencies, and several other stakeholders options to consider the form of models before making a decision. Therefore, this Quadrant can also be used as a decision making tool.

Read the full article HERE

Social Innovation & Enterprise

All innovation involves the application of new ideas – or the reapplication of old ideas in new ways – to devise better solutions to our needs. Innovation is invariably a cumulative, collaborative activity in which ideas are shared, tested, refined, developed and applied. Social innovation applies this thinking to social issues: education and health, issues of inequality and inclusion, and environment.

Read the full article at: http://www.stratessence.com/blog/social-innovation-enterprise/

%d bloggers like this: