What’s the difference between a business and a nonprofit? Hint: It’s in the name. Business are in it for profit, while nonprofits are not. However, there doesn’t have to be an iron curtain between business and nonprofit. In fact, by working together and learning from each other, business and nonprofits have a chance to solve some of our society’s most pressing problems.
This dawned on me during an interview with Jessica Lowe-Minor, executive director at the Institute for Nonprofit Innovation and Excellence (INIE) in Tallahassee, Florida. INIE provides support and resources for Leon County’s thousands of nonprofit organizations, and surprisingly, that includes helping nonprofits act more like businesses.
Why would INIE want organizations that work for charity to act more business-like? Wouldn’t they want nonprofits to act more like nonprofits? The truth is, while most nonprofits are indeed focused on solving problems like hunger, poverty, crime, and inequality, they also have operational costs just like a business.
In order for a nonprofit to be effective, it usually needs to have an office and provide income for staff. That’s on top of providing services and programming that helps achieve its goals. With government funding and private philanthropy at a recent low, many nonprofits are getting crafty with the way that they fund their operations.
This includes, wait for it, entrepreneurship.
That’s right, INIE is teaching people in the nonprofit sector how to think like entrepreneurs to find new sources of revenue that they can use to further their missions. If a nonprofit has resources that they can leverage to gain more funding to help support their mission, why not?
One great example that Lowe-Minor provided was that of the Tallahassee Museum, a nonprofit that maintains a zoo and historical museum in Florida’s capital. When they were having difficulties funding their programming and bringing in visitors, they decided to think like entrepreneurs and see how they could maximize the use of their space and existing resources.
This idea eventually manifested itself in a zip line course that the museum built in 2014. By building a fun, new way to bring in guests, the museum ensured that they would be able to sustain their funding for their conservation and educational programming. Entrepreneurial (profit-driven) thinking actually helped the museum further their fundamental mission.
“A lot of nonprofits have seen an increased demand for their services while at the same time government funding and philanthropy has either levelled off or actually decreased,” Lowe-Minor said. “So this is going to be part of the way nonprofits close those gaps.”
In that same vein, she spoke about how businesses can learn from nonprofits and “social enterprises.” According to INIE, businesses have a chance to solve real-world problems while at the same time increasing their value proposition to customers by incorporating corporate social responsibility (CSR) programs into their business model. Through CSR, companies can contribute to social causes while simultaneously giving customers another reason to choose their product.
She chose the example of Newman’s Own, a line of condiments, sauces and dressings founded by the late actor Paul Newman. Newman’s Own operates like a normal business, selling products in stores all over the country, but it donates a large percentage of its profits directly to charity. When a customer chooses their products, that customer is also contributing to a social cause.
“I think millennials are really interested in business models that are both socially impactful and profitable,” she said. “There’s a recognition that ‘business as usual’ has created a lot of negative externalities that need to be handled—things like extreme economic segregation and pollution.
Overall, there are plenty of opportunities for businesses to learn from nonprofits, and vice-versa. This new wave of “social entrepreneurs” and startups should learn from those already working to better their communities through entrepreneurial thinking. Whether in the business world or in the nonprofit sector, every organization should focus on how it’s impacting its community and the world as a whole.
Check out the full interview with Jessica Lowe-Minor, which is part of Cuttlesoft’s Startup Capital series.