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Crossing the Divide: Evolving For-Profit and Non-Profit Models

Recently, The Atlantic asked a provocative question: Is For-Profit the Future of Non-Profit?

The article answers the question posed in its headline mostly in the affirmative. The issue with the article is that it assumes the principle of the excluded middle, an argument of either/or. The fact is, non- and for-profit organizations have their place, but they both must evolve. While many already are, the answer to the question is more multifaceted and less binary.

The myth of the “divided marketplace”

There is only one marketplace, and we all partake in it. Yet, in an increasingly fluid, fast-moving environment, we cling to dichotomies that are quickly becoming meaningless: B2B vs. B2C; analog vs. digital; non-profit vs. for-profit; ‘pure’ philanthropy vs. ‘marketized’ philanthropy; donors vs. consumers.

While non-profit and for-profit continue to be the only two legally accepted organizational structures, there are now many organizations that fall somewhere between the two.

Defining “benefit”

This is not to suggest that non-profit no longer has a role in serving the marketplace and consumer, but there are new, more current models – combining non-profit and for-profit practices – that reflect today’s social issues and evolving consumer expectations. The Harvard Business Review calls it the era of the “for-benefit” enterprise: “For-profit businesses are tackling social and environmental issues, nonprofits are developing sustainable business models, and governments are forging market-based approaches to service delivery. Out of this blurring of traditional boundaries, a different model of enterprise is emerging, driven by entrepreneurs who are motivated by social aims.” Hence, the emergence of Certified B Corps and Benefit Corporations. Think Patagonia and Method. Or, the rise of social-commercial brands like Beautycounter, StandUp, and the Ben Cohen Standup Foundation. There is an increasing confluence of for-profit and non-profit models, driven greatly by the consumer.

Serving the non-bifurcated consumer

Nobody wakes up saying they will have a digital vs. an analog day, a non-profit vs. a for-profit day or that they intend to be only a consumer today and only a donor tomorrow. That said, we do navigate the marketplace in different ways, places and roles every day based on our momentary needs, passions, values, and affiliations. Our consumer expectations with each and every interaction are very high; we expect increasingly more of the organizations with whom we interact. Those that don’t keep up are bound to lose, non-profit or for-profit. Change is inescapable.

Is the act of giving a higher, purer calling?

The Atlantic claims: “…when charitable giving gets folded into market activity, the very space that philanthropy is supposed to provide as an alternative way of dealing with money shrinks. Traditional motivations for philanthropy, such as concern for mankind, creation of social capital, and responsibility to give back are subsumed into consumerism.”

To suggest that philanthropy is somehow a higher calling, devoid of the many all-too-human motivations, such as seeking self-fulfillment, reputational benefits, return on investment and more has been refuted by many, including naturalists Edward Osborne Wilson and Charles Robert Darwin who wrote in “On the Origin of Species”: “…I do not believe that any animal [term includes human beings] in the world performs an action for the exclusive good of another of a distinct species.”

Is the “emotional buy-in” reserved for non-profits?

Professors Angela Eikenberry and Patricia Mooney Nickel, who are quoted in the Atlantic article, may also miss the broader context, when they say, “…marketized philanthropy’ destroys ‘the transformative potential of philanthropy – its potential to represent the need for and bring about social change’ in favor of ‘consumption of products…as the basis for benevolent human relations.’”

To suggest that there is “no profit,” “no trade off,” “no consumptive quality” for the individual in non-profit, is an opinion not based on fact. Whether it is an individual’s name on a building, exclusive behind-the-scenes access, the appeasement of the good ol’ conscience, or a branded membership tote bag, human relations and emotional buy-in, even for the greater good, are often based on trade.

Furthermore, there is an increasing body of scientific work, ranging from neuroscience writer Jonah Lehrer’s “How We Decide” to neuroscientists’ Jaak Panksepp’s and Lucy Biven’s “The Archaeology of the Mind,” that deal with emotions. Lehrer describes convincingly how every human decision is a complex mix of rational, emotional/instinctual brain functions, not an either/or. Panksepp/Biven are in the process of confirming that the instinctual-emotional systems of the mammalian brain, to which they refer as “the seeking system,” extends to human beings. While their work is ongoing, they have good evidence that it does.

What’s interesting about the seeking system, more commonly known as the brain reward system, is that the thrill of exploration and anticipation is entirely different from the pleasurable release of consummation. The seeking system provides the excited, euphoric anticipation that occurs when we look forward to eating a meal, not the pleasure while we eat it or the satisfaction we feel afterwards. So, to apply this idea to “philanthropy” – marketized or not – it is possible that consumers experience a greater emotional buy-in as there three stages of emotions – the anticipation of doing good, the act of doing good and the satisfaction of receiving something we covet.

The imperative of the triple bottom line

Two of the greatest barriers for an organization’s success are indifference and distrust. The reasons for both are manifold, but some of the key factors are a result of human nature combined with world events – most recently the 2008 Great Recession.

In the past decade, consumers have become increasingly distrustful of organizations’ motivations and their role in addressing social issues. Simultaneously, consumers believe organizations have a duty to serve a triple bottom line: people, planet and profit.  The 2013 Cone Communications/Echo Global CSR Study states that one in three global consumers believe businesses should change the way they operate to align with greater social and environmental needs.

However, consumers expect organizations to contribute in ways and places where they can make the greatest impact. The organization’s cause now is fully integrated with its business strategy and focus. Cause marketing – an affiliation of a non- and for-profit for pure image and awareness purposes – has made room for social agenda marketing – a social cause fully integrated into a business and based on its ability to make a real impact due to real expertise.

The good news for non-profits is that consumers continue to trust them the most, ahead of government, business and media. But consumers are tricky. As author Joan Vinge points out: “Indifference is the strongest force in the universe.”  To break through, any organization that wishes to succeed – non- or for-profit – needs to be part of what interests consumers. To do so, organizations must embrace two principles: 1) give more than they take, and 2) “take a position” not simply “have a positioning.”

Traditionally, both principles are core to any non-profit. But in our purpose-driven time, non-profits better take notice, because a new generation of for-benefit enterprises and brands are doing well by doing good.



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