they are “for purpose” organizations, not nonprofit organizations

April 28, 2014

Good morning!

One of the challenges with the term nonprofit (a legal tax designation) is that it communicates many things incorrectly and creates a certain stigma both within and without the organization. First of all “nonprofits” actually need to make a profit or they cease to exist, just like for-profits except it is usually a longer and more painful death.

Secondly, thinking like a “nonprofit”, especially ministry-based nonprofits, causes them to devalue good business practices as if they were somehow morally wrong. The result is that the “business” side is not done well which causes the ministry / service side to eventually implode.

Now, there is a new, and better, way in my opinion, of looking at “for-purpose” organizations. Following is a lead statement from an article on Forbes entitled, A New Nonprofit Model: Meet The Charitable Startups

Startup companies are traditionally for-profit enterprises, but in recent years philanthropic ventures have begun adopting the technological know-how and scrappy mentality of startups to develop a new breed of lean nonprofits.

Adam Braun, founder of Pencils of Promise who “refers to Pencils of Promise as a for-purpose organization rather than nonprofit, insists they remain focused on a bottom line – but instead of gross profit, its gross efficacy.” Braun believes that nonprofits can learn from big business.

Braun said. “Across both startups and the not-for-profit sector, people are driven by intense passion around purpose and mission – they’re there because they believe the company is doing something that wasn’t there before.”

“Entrepreneurs have a ludicrously large vision to change the world but have the humility to be solving very clear painpoints,” agreed Ted Gonder, founder of Moneythink, a nonprofit which teaches financial literacy to inner city students. “All these things are also true of nonprofits.”

So, if you lead a nonprofit maybe it is time to step back and change the way you think about how you operate. Is it time to start learning from startup businesses, learning from big business, and maybe partnering with for-profit organizations in more ways than simply asking for donations?

Maybe it’s time for a new way? Maybe “for purpose” organizations?

One last quote from the article that I think is worth all of us keeping in mind:

“Startups test new innovations and are always evolving – I think that that’s really, really important for any organization.”

Have a great week – I know our team has an exciting week ahead of us!

BG