Comments on: Why do we call them non-profits?

By: Jonathan

Jonathan — Fri, 30 Jul 2010 14:43:34 +0000

I agree a term such as ‘social enterprise” is more useful. Some for-profit firms have a ‘mission’ which keeps them focused on serving the poor and also may keep the impulse to grab profits down.

I recommend Henry Hansmann’s “The Ownership of Enterprise” as a great place to read about this topic. He traces the heterogeneity and evolution of ownership forms in the US and gives clever and convincing theoretical explanations for why it is often strategically useful (and hence in a deeper sense ‘profit maximizing’) to commit yourself to not distributing profits. This helps understand the dominance of non-profits in health and education and why, until fairly late into the 20th century, mutuals dominated the insurance industry.

By: Sarah

Sarah — Fri, 09 Jul 2010 20:58:43 +0000

I think you are misunderstanding why people say “non-profit.” In my experience, “non-profit” doesn’t make it less important… Many charities boast that they are “non-profit” to show that the reason they are doing charitable work is simply to help people, and not to get some benefit for themselves out of it.

By: Cam King

Cam King — Sat, 03 Jul 2010 20:55:18 +0000

Thanks Dave for the great post! Thinking of ‘for benefit’ really creates a positive mind shift in how I look at these organizations.

By: Leigh Buchan

Leigh Buchan — Tue, 29 Jun 2010 00:01:52 +0000

I’ve almost finished Jacqueline Novogratz recent book, The Blue Sweater. She is president and CEO of Acumen Fund which lends money to entrepreneurs/ organizations that help to bring the very poor out of poverty. In her summaries at the end of the book she mentions a beautiful partnership between for profit and non-profit. Her take on it is that the for profit can bring a product to market, understand the market and work in the economic aspect of lifting people out of poverty, but it’s the NGO’s the non-profits that know the community and will continually advocate for the poor to be sure they are not taken advantage of by the for-profits. She sees more of a marriage between the two groups working on behalf of the poor. Interesting.

By: Donna S Mathwig

Donna S Mathwig — Sun, 30 May 2010 19:05:11 +0000

Agreed Dave – language matters. As a long-time, small “for benefit corporation” leader who consistently champions the need for communities to recognize the value of essential services to pregnant and parenting individuals, I regularly encounter the ‘second class citizen’ feeling. This decidedly unhelpful language posturing perpetuates the us vs them model, and often keeps us at the bottom of the funding food chain. (Attempting to procure funding from the gov’t is even more challenging due to the inordinate admin requirements!)

As a “for benefit” corp, we have a direct-impact upon the overall health of our communities families. New language to reflect such a fundamental need in our society would potentially release more resources to meet increasing need.

However, I also agree that confusion would surface with the term ‘for benefit’ – but I love the conversation toward a more helpful, and in turn, more hopeful way of communicating the mission of organizations doing crucial work.

Language play is a good start.

By: Kate Cochran

Kate Cochran — Sun, 30 May 2010 15:47:51 +0000

It’s a good point–although “for benefit” organizations will get confused with the new “for benefit” companies that are gaining steam. These are for profits with social missions. Social enterprises have sort of been coopted by the movement to embed businesses within nonprofits.

I’ve been hearing rumblings about this for 20 years. Maybe Dan Pallotta’s new org, the International Charity Defense Council, will get some traction. I’ve been talking with him about it and am delighted that he’s not just complaining about the current status–he’s trying to change the environment.

By: John Badgley

John Badgley — Sat, 29 May 2010 11:55:02 +0000

A terrific topic. May the best term win! Philosophic lawyers and accountants will have to pitch in as we worry the subject through Congress to come up with an appropriate designation. I’m lunching with a U.S. District Attorney on Memorial Day. He may be just the right guy to advance a solution.

By: Neal Myrick

Neal Myrick — Fri, 28 May 2010 17:29:41 +0000

Dave – wow, the history of the non-profit mandate really helps make some non-profit cultural characterisitcs make sense.

It would be interesting to have a discussion about the terms at some future SVP event where grantees could participate. I gravitate toward “social enterprise” but I can just hear some of the arguments against it.

It would be great to talk more about the for-profit / non-profit business model ideas we talked about. Let me know if you have some time in your schedule.