Management
Purpose

Sector Blurring: How businesses and nonprofits are learning from each other

Burgess COMMENTARY
As I see it, the fundamental purpose of all economic activity is to enable a better life. In a decent world that would result in a better quality of life for everyone, but we are stuck with a system of laws and a system of metrics that has replaced this fundamental purpose with one that has put creating profit as the central focus of all economic activity.

There is all sorts of 'push back' to get the purpose of economic activity to have social purpose and to be build on environmental responsibility. This is being done by the not-for-profit sector and by some big for-profit organizations ... Paul Polman at Unilever is an example.

I don't see this as a blurring as much as I see it as an appalling lack of a workable system of metrics that is as rigorous for impact on people and society and on the degradation of the environment as it is rigorous about money transactions, profits and financial wealth. Hopefully such a system will emerge soon at which point it should be a game-changer for those who want to engage in responsible impact investing.
Peter Burgess ... http://truevaluemetrics.org

Good essay, but I don't see this so much as a blurring but rather an appalling lack of a workable system of metrics that is as rigorous for impact on people and society and on the degradation of the environment as conventional accounting is for money transactions, profit reporting and financial wealth. Effective metrics apply everywhere, not for profit and for profit ... and for place and products. Hopefully such a system will emerge soon at which point it will be a game-changer. The trends are in the right direction but the pace of change not enough. I argue value metrics will help ... it keeps me optimistic!
Peter Burgess http://truevaluemetrics.org
Peter Burgess

CONTRIBUTOR Sector Blurring: How businesses and nonprofits are learning from each other

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Similar to trending nonprofit phrases like “mission creep,” “strength-based” and “values driven” – the phrase “sector blurring” is gaining more traction. It is an incredibly important idea and should be seen less as an idea but more as a best practice in both the for-profit and nonprofit sectors. Most people generally like the idea that nonprofits should learn from the for-profit sector, and vice versa - but what does that actually look like?

Most successful nonprofit ventures today have included a social enterprise program or fee-for-service model to bring in additional income to their organization. Likewise, many effective businesses are investing in their marketing and community investment departments. Businesses are launching corporate responsibility campaigns, encouraging employees to volunteer and developing formal foundations that have a legal obligation to donate annually.

The distinction between a business and nonprofit was once very defined. Now with a growing number of social enterprises, B-corporations, impact investing and cause marketing campaigning this line is blurred - the line is as wide as a football field. The blurring of these boundaries is seen by some as generally positive but also a confusing era in business. Whether your goal is to maximize stakeholder value or maximize graduation rates in the community, there are some underlining lessons that each sector can learn from each other.

Lessons to learn:

• Let your mission guide you. Whether it is to make a profit or serve the community, both play a role in our economy, communities and working environment. Every idea starts out with a goal. Stay focused on that goal, your dream and keep refining your vision. As you grow and develop, make sure your mission stays forward facing. Pivoting your goals and innovating your programs is great, but always keep your vision in mind, as it will guide you and define your venture.

• Create a community. Develop your stakeholders, respect them and empower your supporters. Whether you are selling a product or providing an afterschool program, you need a community of supporters. These supporters will become your base, keep you accountable and keep you informed. Your customers or clients are the most import piece of your puzzle. As you build your community of supporters, they will support you.

• Build your Board and Bench. In both sectors the Board of Directors influences the work, drives funding and develops policies to create a solid business model. Similarly, in both a nonprofit and business, your team is important. Fostering new leadership, management and a hard-working and trusting team is essential for success. Strengthening both your bench and your board are critical to making a profit and making a positive impact.