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Nonprofit Career Seekers Blog

Myth # One - Nonprofits Don't Apply Business Principles and Are Less Capable Than For-Profits

Nonprofits attract individuals from all walks of life, educational backgrounds, and skills. Additionally, the distinctions between the for-profit and nonprofit sectors are becoming far less recognizable. The merging or blending of the two sectors is a trend that is gaining attention and traction due to its success applying solid business principles to solve large scale social problems. Many of the individuals paving the way have significant experience in the private sector.

Let us look at the emergence of this new type of entrepreneurial, aggressive, scale-oriented, disciplined nonprofit. The origins can be marked to 1997, when the Harvard Business Review’s article, “VirtuousCapital: What Foundations Can Learn from Venture Capitalists,” kicked off an era of so-called “venture philanthropy” in which business principles were applied to social sector organizations. HBR revisited the subject in 2013 with Alan Grossman’s piece, “Venture Philanthropy: Its Evolution and Its Future,” and found that many of the most effective nonprofit organizations in recent decades were hybrids, nonprofits that merged their altruistic missions with the culture and organizational principles and practices we see in the private sector. Many of these hybrids were led by professionals with for-profit experience.

In the past three decades, we have seen hybrid nonprofits achieve breakout rates of growth, influence, and impact. Organizations like City Year, KIPP, Teach for America, charity: water, and, most recently, Treehouse have proven that, with experienced leadership, the right strategies, and disciplined execution, altruistic organizations can truly move the needle on our most serious social challenges (Source: The For-Profit and Nonprofit Sectors are Converging: What Are the Implications for You? Donald Summers; March 14, 2018; BoardSource Blog).

Nonprofits are asked to solve some of the world’s most intractable problems. When considered from this vantage point, it is understandable that the myth that nonprofits are “less than” their for-profit counterparts is dangerous and unjust. The above examples aptly demonstrate that the nonprofit sector both needs and desires professionals – as staff and board directors – who have business acumen and a passion to serve. To believe otherwise belies the truth, creates missed opportunities for individuals and nonprofits, and most significantly, constituents and communities who benefit from nonprofit services.

How can you apply your skills to solve societal problems and create community impact?