Can For-Profits and Nonprofits Both Serve Social Causes?


Despite how nice it  sounds in theory, the idea of “Caring Capitalism” drips with a tad too much innate irony to capture the hearts and minds of columnists, bloggers and catchphrase trendsetters.  Fair.  BUT: slap a term on it that assuages the tree-hugginess of “caring” and the 1%-ishness of “capitalism” juuust a tad (say, a term like, oh, I dunno, “social enterprise” or “sharing economy”), and all of a sudden you have a roadmap of the new normal.

The profile of our three-sector economy is changing.

Social enterprise and genuine efforts at corporate social responsibility (on both the supply and demand sides) are blurring the hardline between nonprofit causes and for-profit companies.  The sharing economy seems to be here to stay, whether the jobs it creates are good or not.  Even the red-tape shackles of government bureaucracy are loosening, thanks to the rise of all things open data.

Young professionals are working (and investing) differently.

Proof of merging sectors can be found, along with proof of most things, by following the money.  Investment in social enterprises and socially conscious companies is way up.  2014 saw $6.6 trillion in socially conscious investments, compared to $3.7 trillion in 2012 and just $.6 trillion in 1995 (to be fair: we millennials were all busy investing in POGS and Tickle-Me-Elmos in 1995).

Young adults in the first stages of their professional careers may have good reason to be the most pissed about the economic meltdown of 2008.  We’re now the Crash Generation, suffering from stunted transition to adulthood, and an extra scary investing environment.  As a result, we try to fight the greed they associate with all things “Wall Street” by investing in, working for, and building startup versions of companies that benefit causes we believe in.

In short, millennials are shifting the tectonic plates of our economy.

Cross-sector competence is King.

Interesting that the same time we have the Dan Pallotta perspective on the fundamental flaws of the nonprofit sector gaining traction, we also have an increase in young professionals applying to graduate programs in social entrepreneurship.  Students are pursuing MBAs and MPA/MPPs, but the content of both degrees is moving closer and closer together.

“What is new is the content of the courses, many of which have gone from being about exploiting loopholes to incorporating regulation into your strategy, or from doing business in domestic locations to the regulatory challenges involved in doing business overseas.”  -Francesca DiMeglio, Bloomberg Business

This is our key issue: we’re moving more and more toward a model of integration and incorporation: incorporating public policy into business strategy, social good into financial investments, causes into marketing.  All of this cross-pollinating means being fluent in each language is essential.  Moreover, the ability to navigate across and through multiple sectors is becoming more and more critical to industry leadership of any kind.  The most successful ventures these days serve social and business purposes, which means businesses will be moving more and more in the direction of social responsibility and, if nonprofits hope to remain (or become more) relevant, they need to move too.