The Problem with Non-profit

I recently had the privilege of speaking with a group of young non-profit professionals in Grand Rapids at the annual YNPN conference. I told them I think there is a problem with the non-profit sector. Here is the text of that short speech.

You need to know that I dislike the non-profit concept. I dislike that our economic system has evolved in such a way that organizations doing good work must obtain funding by requesting donations.  I dislike that passionate people, like you, more often than not, have limited resources.  You try to do so much with so little, while corporate America often does so little with so much.

I dislike that the mingling of Capitalism and religious theology has created a perverted system in which an implied vow of poverty is thrust onto those who are most concerned about the human condition.

I dislike that the stock market rewards companies purely by how much profit they make with little or no weighting to how their products and services consume resources or serve humanity.

I dislike that people who want well-paying meaningful work can’t easily find those jobs, because so few exist.

I dislike that our physical and virtual worlds are polluted by advertisements from companies who try to manipulate us into buying things we don’t need when our precious attention should be called to more urgent human matters.

There is no reason that the non-profit and for-profit sectors should be two separate entities. That’s bizarre. It’s like some weird science-fiction story where our economy is split into two pieces, one with a soul but no power, and one with the power, but no soul. One part is focused on doing well, while the other part is focused on doing good. We must integrate these two parts into a single, healthy whole. I propose this is the great work of this generation.

You can create an economy where doing well and doing good is the goal of every economic activity. I call this way of thinking “human-centered commerce”.

I hope my position doesn’t feel like an attack against you or the non-profit world. That is not my intent. I have great respect for anyone who takes action to improve the human condition. I also realize that even though our economy is broken, the non-profit sector has enormous positive impact on a daily basis. I’m just trying to bring your attention to the economic waters in which you swim.  In a capitalistic economy it is the entities that generate profits that lead. They are the ones that get the resources.

I imagine a future where you do not identify as “non-profit professionals”, you simply see yourself as successful professionals because you make a good living doing good work. I imagine a future where we meet at a conference on Human-centered Commerce and there we share the best business practices for improving the wellbeing of humanity, locally, nationally, and globally.

If you’d like the idea of a holistic economy and Human Centered Commerce, I invite you to consider these actions in your professional life.

Learn to be social entrepreneurs so you can create financially sustainable projects. Become economic revolutionaries. Learn to see and understand the forces of capitalism so you can help reinvent it by keeping the parts of it that work and getting rid of the parts that don’t.  Look for ways to create meaningful organizations and jobs that naturally earn profit and therefore have access to resources without requesting donations. Become economic leaders, not economic followers.

Your generation can do this.  You can change the standards of society and heal the economy.

I’ll leave you this with final thought.  In a healthy economy, it is the people who do good, people like you, who should be doing do well.  It is the people who act with purpose who should earn the profit.

  • Carl Erickson

    Seems like an excellent challenge to me, Steve. How’d they react?

    • Steve Frazee

      Very good!  We had a nice hour long breakout of about twenty people.  Of course the big question was, “how do we do this.”  I proposed the answer is to start charging people for meaning making experiences.  People pay regularly for positive experiences.  We must link customers who desire meaningful experiences, to opportunities to make meaning by helping others.  Our work, I believe, is to develop the market for meaning making. 

  • Tim Brown

    Steve, I think it is a little bit of a stretch to say that for-profit companies have “no soul.” Many of these for-profit companies already support the non-profits that take those donations and do many good things with them. In addition to money that is donated by many high profit companies, let’s not forget the amount of those profits (and personal income tax from high earners) that Uncle Sam takes and turns into social programs. Every time I go to the grocery store I stand behind many people who are using their WIC program cards. The money that pays for those cards comes from the people you suggest have no soul. As I read your bio, it appears that you made your financial mark in for profit companies. You certainly appear to have a caring soul and genuinely want to effect change in people’s lives who are suffering. I submit to you that there are many others that work in the for profit sector that do very good things as well. We also have to get those that are suffering involved in the solution. Our current system serves to keep people down and make them reliant on the system. I believe that assistance should be provided along with education and/or training. In order to receive one, you must participate in the other. Our assistance program should provide a bridge to the other side, not provide an endless, sub-standard lifestyle.Tim Brown

    • Steve Frazee

      Hi Tim.  I fear you have taken my metaphor too literally.  The reference to soul is a marker for the primary directive of the sector in question.  For the most part, the for-profit sector is focused on profit, as the name suggests.  The non-profit sector is focused on human outcomes.  The separation between the non-profit and for-profit sectors is reinforced by our legal and tax systems.  Continuing to perceive commercial activities as either profit or non-profit exacerbates the issues that drive poverty and other social ailments. 

  • Tim Brown

    Steve, If your argument is that the tax laws need to be overhauled, I completely agree. I would love to see the portion of taxes paid by individuals and companies that are earmarked for government social programs be privatized. My issue is not with companies that are successful and making a lot of money, My issue is with wasteful government spending. There is enough money for everyone to be taken care of without vilifying corporate America, who by the way employs tons of people. I am not saying there are not large companies that are just flat greedy. Big oil comes to mind. But there are also big companies who make tons of money and do the right thing. Microsoft comes to mind.
    Let’s not vilify the greatest profit generators. Let’s take all of the tax money that is currently going into social programs and turn it over to those very people.
    A recent Tweet…..
    “One of the best things you can do to drive social change is build a successful business” ~Fred Keller #BALLE2012.  

    • Steve Frazee

      Hi Tim.  It seems you are still
      missing the subtly of the post.  The post is about economic systems.
       There is no blame being assigned.  The point I’m making is about the
      current architecture of capitalism. 
      Profit maximization is destructive force in our world.  Certainly there are well run organizations working within the confines of a profit maximizing economy, but the point is that until profit maximization is replaced with a more holistic approach, we are going to have problems.

      • Tim Brown

        Steve, I thought your post was anything but “subtle”  I thought it was rather strongly opinionated. I respect your opinions, but you very much do assign blame. You blame companies…  “who try to manipulate us into buying things we don’t need when our precious attention should be called to more urgent human matters.” You blame…”the mingling of Capitalism and religious theology that has created a perverted system in which an implied vow of poverty is thrust onto those who are most concerned about the human condition.”
        Don’t get me wrong, I have no problem with you assigning blame. I think one has to identify where the problem is in order for it to be fixed. We just differ on where to assign the blame. I don’t blame Capitalism. I don’t blame companies that try and improve their financial bottom line. That creates more tax revenue which used correctly could ensure everyone does “well” as you say. I think getting that money into the hands of people that are already in place to make real change is the answer. Believe it or not, this is not an “us or them” political position. I don’t have a hard-line political position other than being aggravated that over the past 50 years our country has put its finances in the hands of selfish, special interest politicians who have spent very wastefully. If our country was run like a successful business, we could ensure “doing good and doing well” for all of us.

        • Steve Frazee

          Thanks for the continued conversation Tim and your clarification.    

  • Tim Brown

    Also unsustainable is a government system which enables instead of educates.
    This from the the New York Times on line ……..
    Published: February 11, 2012
    “The government safety net was created to keep Americans from abject poverty, but the poorest households no longer receive a majority of government benefits. A secondary mission has gradually become primary: maintaining the middle class from childhood through retirement. The share of benefits flowing to the least affluent households, the bottom fifth, has declined from 54 percent in 1979 to 36 percent in 2007, according to a Congressional Budget Office analysis published last year.
    Almost half of all Americans lived in households that received government benefits in 2010, according to the Census Bureau. The share climbed from 37.7 percent in 1998 to 44.5 percent in 2006, before the recession, to 48.5 percent in 2010.
    The trend reflects the expansion of the safety net. When the earned-income credit was introduced in 1975, eligibility was limited to households making the current equivalent of up to $26,997. In 2010, it was available to families making up to $49,317. The maximum payout, meanwhile, quadrupled on an inflation-adjusted basis.”
    The government’s answer to these problems has been to increased taxes on those that actually make enough to pay taxes. I think that is when your concern comes into play which is…cut cost and maximize profits, as we are now paying more out to the goverment to spend inappropriately. I think nothing changes until the goverment mentality changes.

    • Tim Brown

      By the way….Could not agree more with your recent Tweet…
      Steve Frazee ‏@SteveFrazee
      Give them a fish, feed them for today. Teach them to fish, feed them for life. Help them build fish ponds, empower their society.

      And we are stuck in a Government system that continues to only give fish.