Non profits have unique markets

There are some markets only non-profits can reach.

In my quest to discover ways to build a for-profit business with a quadruple bottom line, it can be easy to disdain the influence of non-profit organizations. Why would anyone run a non-profit organization when they might accomplish as much with a for-profit company, and retain more flexible control? To me, a non-profit organization is like a for-profit except that it has more financial restrictions and only a two or three point bottom line, i.e. sans profitable and possibly spiritual. But Elkington and Hartigan’s view challenges that bias. They describe the non-profit as a pioneer that, “operate[s] where the market air is too think for mainstream businesses to even think of venturing (Elkington, loc. 607).” Could this be accurate?

Before I consider, it’s only fair to note that Elkington and Hartigan describe non-profit business on a continuum. They use a helpful modeling structure as follows:

• Model 1 - Pure non-profit. Motivated by the public good in areas profit is not expected or pursued. Fills the social gaps of government.
• Model 2 - Hybrid non-profit. Still motivated by public good, but recognize profit may make the business sustainable.
• Model 3 - Social for-profit. Pursues profit, but it is all funneled into social benefits to the community. The structure of the business is intended to be socially transformative also (Elkington, loc. 593-879).

The question I pose and will attempt to answer is, “Are there social opportunities only a model 1 or model 2 can reach?”

Yes, this is true. Although social business (model 3) can make an impact, and all for-profit business has a responsibility to be socially beneficial to their communities, there are sectors of society which cannot be monetized. The homeless, the phyisically or mentally disabled (not handicapped - Colon’s model 3 business demonstrates a way to monetize their work(Elkington, loc. 832)); none of these will be helped without outside donors. They cannot pay the entire price for any service, and require more help than they can offer, at least for a period of time.

Upon consideration of non-profit business' role in society, I have a new respect for them. While my ideal is that for-profit businesses would alleviate much of the weight of societal need, I recognize that non-profit organizations have a niche that cannot be replaced.

The way I see this played out is in the relationship a business has with the local church, mosque, or temple. While a business owner should not demand these organizations undertake all the social efforts in their community, he must realize his business is dependent upon their non-profit service to build a healthy society. Likewise, the local church may benefit from partnership with business to satisfy the community needs together, where business leverages the sustainability of profit and the church serves those unable to be monetized.

References

• Elkington, John, and Pamela Hartigan. (2008) The Power of Unreasonable People: How Social Entrepreneurs Create Markets That Change the World. Harvard Business Review Press.