4 Reasons Human Potential Can Make Nonprofits Profitable

25 Aug 4 Reasons Human Potential Can Make Nonprofits Profitable

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Her husband beat her repeatedly.

She had no college degree and no money. I am not sure if she was a U.S. citizen. I was in my early 20s and did not ask many questions. I just wanted to do a good job at my internship at a nonprofit in New York City.

After the woman left our office, I thought of a few ways that we could help her get a job and shared the ideas with my supervisor. She listened and then said, “What’s important here is that we fill out as many intake forms as possible. Our funding relies on it, so let’s just bring back the next person now.” Even as a naive 20-something, I remember thinking this was not a pathway to effective change.

Many nonprofits do great work, important work. I have worked at some of them. I have many friends who started nonprofits. Running a nonprofit is brutal. You have to fundraise, get grants, meet quotas, beg and plead to keep the doors open. Is this, in and of itself a bad thing? Maybe not. But once the doors are open and the lights are on, most nonprofits have to appease funders so a year from now they can go back to the same begging and pleading they just completed a few months before. This mentality keeps the priority on meeting quotas instead of innovative solutions that bring about radical, yet sustainable change.

Call me crazy, but I think the era of nonprofits will come to an end in the near future. I am not saying they will disappear, but rather will turn into for-profits. Maybe not all of them, but some of them. Here are four reasons for believing this will be the case.

1. Free education on demand. For the first time in history, you can get the best education in the world online, for free. Harvard, MIT, and Stanford all put their courses online at no cost. The on-demand access to this information will allow the abused woman to start to learn. She does not have to enroll in an expensive college or take out $100,000 in loans that she may or may not be able to pay back after graduation. She can open her computer, connect to Wi-Fi and learn. This was not an option until the last few years. When people can educate themselves, they can find work and don’t need to rely on the services nonprofits provide. Once this happens, it creates a new hundred trillion dollar business opportunity to leverage all human potential, as pointed out by David Nordfors, CEO of i4j Innovation for Jobs

2. The democratization of computers and internet. This piggy-backs off point number one in some respect. The abused woman can’t learn if she has to pay thousands for a computer and rely on a slow modem to connect to the internet. Neither are the case. Today, you can get a computer for a few hundred dollars, and internet connections are only becoming faster and more reliable across the globe. What’s more, the democratization of the computer and its connection to the internet marks the end of the “unemployable outcast.” Twenty years ago, there were hundreds of professions that would never have appeared when you did a google search. Had anyone heard of a professional ethical hacker 20 years ago? No. How about an app developer? Nope. This is funny to even write, considering I meet a new app developer every time I go out in San Francisco. The computer and the internet allow people to not only learn the skills needed for these professions (online, for free) but also provide access to others looking to hire these specific services and skill sets from every corner of the world. Age does not matter. Your physical location does not matter. If you have a computer and the internet, you are in business.

3. Nonprofits can profit from and leverage corporate financial interest.  A corporation wants to make a profit and acquire customers. Non-profits can accelerate those two goals if the right partnership is created between themselves and for-profits. Let’s look at an example. Last week, I wrote about Samaschool, an NGO that offers a 10-week online training course for women to develop basic skills needed to be hired for jobs that exist in the growing online economy. Samaschool offers its course to students at no cost, requiring Samaschool to rely on grants to keep the doors open. This model does not allow them to profit. But there is another way. Imagine a non-profit like Samaschool sold their courses to banks, and the banks offered it to their potential customers as a service. What if Chase Bank said, “If you sign up with us today, we will give you a free 10-week training at Samaschool so you can develop the skills needed to get meaningful work.” The bank’s incentive here is to increase their customers’ earning power. The more money bank customers make, the more they invest. When they have made enough to buy a home, they will need a loan from their trusted bank. The same bank that gave them the tools needed to earn the money that allowed them to fulfill their American Dream in the first place. David recently suggested this to the bank world, encouraging them to invest in innovation for jobs. Once the banks start competing to find the best “nonprofits” to partner with, then we are on the right track. And once companies (in this case, banks were our example) start contracting nonprofits for these types of services, the shift into a for-profit mode will follow.

4. Elimination of vertical silos in government. I worked in New York City’s local government after law school. The Agency I worked for only had a handful of events with other government agencies. Most of them were a waste of time. A photo opp here, press conference there (and mine was one of the most productive and visionaries of any of the others across the city). Across most government agencies, this seems to be the case. Agencies tend to be focused exclusively on the work they are doing. They stay in vertical silos, which are preventing innovation worldwide. Governments and their funding structures are set up to be this way. X amount of money to this organization, Y to this agency, Z to this group. Everything is separate, each department is competing for their budgets. This makes it, it very difficult to use innovation policies against unemployment and exclusion from jobs. Sven Littorin, another co-founder of i4j, was Swedish Minister for Employment when GM told him (and the Swedish newspapers) they were selling SAAB Automobile to the government or they would close it down and fire all the workers. He managed to create an innovation for jobs package together with the Minister for Enterprise. They had become friends, but “Even with the best partnership in a large crisis, obstacles, such as bringing different ministries to work together and overriding public perceptions that keep them apart, will challenge the collaboration between ministers.”

The good news is there are ways for governments can break down the walls of separation. One solution would be to use a tiny percentage of the billions of dollars of unemployment funds to invest in startups that create jobs for people. ‘Every year, the U.S. spends over $30 billion to keep unemployed people off the streets,’ says David. ‘If the U.S. government took only 1% of the unemployment cash spent in one year, and used it to match private money to create seed funds for start-ups ‘disrupting unemployment,’ the size of the funds would equal all the seed investments made in the U.S. in one year.’

For just 1-2% of what is currently spent to keep people barely surviving, we could create viable and thriving business models that could employ millions. This would be a good start to innovation that takes a horizontal approach to the untapped interplay of government, nonprofit, and for-profit entities.

Will nonprofits ever truly disappear? I don’t know. I think most of them have good intentions, but lose energy or funding before they can do the work they set out to achieve. Perhaps this article sheds some light on the first step to helping them do the work they want without the burnout. And perhaps this is the first step to helping the woman that visited our offices in Manhattan leave her abusive husband and start her own life. One that is free of long welfare lines and people who need her to maintain the quotas their funding requires. Maybe she can walk out onto the streets of New York City with a life that is sustainable and vibrant and most importantly, hers.

Brian Rashid is a writer and speaker on how to leverage innovation and technology to create meaningful work around the world. To contact Brian, please email connect@brianrashid.com

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