More in common than you think. What for profit and nonprofits have in common.
When you live in the world of nonprofits, you can begin to think you have little in common with for-profit companies, but truth be told…the two types of organizations have far more in common than most people think.
Photo by Corrie Strommen
Both organizations need startup capital. While our for-profit brethren get it through investors who provide seed funding, our nonprofit leaders find their own angel investors (aka donors) who provide that same needed seed funding. Both organizations need to create a budget, stretch resources to meet mission, and use marketing to convince other groups that they bring unique value to the world around them. In fact, more and more for-profit companies are being founded as social ventures, creating a continuum of mission-driven venture structures and further blurring the lines.
This then begs the question, why does anyone assume nonprofits are not also thriving businesses with a goal of meeting the needs of their customers and providing value in the world? The answer is simple. Nonprofits have felt and acted as if they were different. With a focus on philanthropy and fundraising…and (let’s just go ahead and get it out there) a sometimes subtle distain for making money…. that created a different vocabulary around revenue, there has been a desire to differentiate based on mission.
Can we stipulate that generating revenue is needed in order for the mission to happen? If so, then the difference comes down to who is paying for what. In nonprofits the goal is often for donors and grants to cover the cost of the product or services, while for-profit organizations strive to have a product or service that people are willing to pay for. More nonprofits are beginning to see that the commercial freemium model can be applied to nonprofits. In that case the free service is provided for those who cannot (or should not) pay, while the same service can be offered and paid for by those who can. In the end, it comes down to finding the right customers, breaking them into the correct groups, and knowing what to offer to them.
So, why consider nonprofits differently? Well, because no matter how amazing they are, or how popular their service is, at the end of the day, the profits are not going back to an owner or shareholder. They go right back into the mission. Thus with no profit motivation, they are uniquely positioned to make sure they put the needs of the “customer” before all else. That type of focus can lead to wonderful discoveries and innovations in customer engagement.
With so much in common, perhaps it is time to value our commonalities and celebrate how we can learn from each other. Applying concepts like ideation, design thinking, business modeling, and user experience to our nonprofit business practices can serve our mission and expand our organizational capacity. Conversely, for-profit businesses can apply the principles behind nonprofit mission-driven models and customer focused delivery to improve their on-ground application of values in the workplace. They can use philanthropy models to appeal to for-profit investors, and run lean marketing efforts and rely more heavily on the public to support their message.
At the end of the day, it turns out we all bring assets to the table, and being open to learning from others is what will drive us forward. Entrenching in our old ways of doing business will only end up hurting the mission while those around us learn to leverage the best of both worlds.
Christine Beech
