Why the Nonprofit Model Stunts Growth
Nonprofit organizations dream of innovation but, often times, cannot commit to the investment. And who can blame them? Executive Directors and development staff work hard to earn the confidence of donors and grantors and the fear of risking it for growth can be paralyzing. Yet the lack of entrepreneurial risk taking in the nonprofit space is exactly what limits these organizations.
On May 19th Social Venture Partners hosted an event surrounding “Scaling and Accelerating Social Innovation”. Scaling is a buzzword flying around the startup community, but how do nonprofts incorporate the idea into their organization? Should nonprofits aim to scale profitability or social impact? The answer is simple: both. Flywheel’s Bill Tucker served as a panelist at SVP’s event and said “‘nonprofit’ is nothing more than a tax status; organizations that do good can also do well.”
Keynote speaker Nancy Heinen, SV2 Board Member and Partner, dived into the issue by addressing the blinders nonprofits wear; nonprofits exist to provide a social benefit in the community, not build an organization that grows financial returns. The nonprofit’s goal is to maximize the organization’s mission and, when all’s said and done, there is simply nothing left to use for innovation. They often cannot see the return on investment (ROI) of growing their organization and, as a result, settle for less than they are capable of. And, to compound matters, the funding community typically invests in proven results, not innovation. Ms. Heinen calls for an end to this risk adverse cycle.
Nonprofits need to act more boldly with the support of a funding community that encourages innovation. She is confident that Cincinnati has the capacity to bring more innovation into the nonprofit space. Perhaps achieving transformational growth will produce something like the ALS “Ice Bucket Challenge” campaign right here in the tri state.