Egg, Omelet, or Frying Pan: Exploring the Relationship between Business & Altruism in the Independent Sector

Nonprofits are where business and altruism intersect.

“We’re weak on business, and some of our organizational struggles are because we think about ends more than we think about how we are going to get there. In part, that’s because we were founded specifically for altruistic ends and we lasted longer than anyone expected.”

-Executive Director of a human services nonprofit

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In the United States, we call the private sector entities that do the work of meeting human needs “nonprofit organizations,” a moniker that reflects the tax-exempt status of charitable gifts.

As this status erodes with each effort at tax reform, I believe we need to adopt a new name for the work we do: “altruistic business enterprise.”

Here, altruism means charitable intent—the passion embodied by our missions. On the other hand, business means attending to a financial bottom line, with return on investment as a measure of performance for example. An enterprise bridges these two seemingly divergent elements by embodying the resourcefulness and entrepreneurial spirit that brings people together to undertake the hard work of juggling business and altruism.

Often, the difficult work of connecting business and altruism falls on the shoulders of nonprofit leadership. Nonprofit leaders are always beholden both to the communities they serve as well as their—often more financially minded—boards of directors.

Understanding the challenges nonprofit leaders encounter was part of why I went back to school to pursue my doctorate in nonprofit leadership and change. For my doctoral dissertation, I explored the idea of U.S. nonprofits as altruistic business enterprises  through conversational interviews with 20 EDs, ages 27-65, whose nonprofits were members of a statewide collaborative of human services providers.^[1] Using the diagram shown in Figure 1 as a prompt, I asked each ED to reflect on his or her lived experience in connecting these seemingly disparate activities.

In my analysis, I categorized their responses in terms of business, altruism, or a combination of the two. Here are some of the highlights of what they said (in their own words):

Being Business-Like	Combining the Two	Being Altruistic
Being fiscally responsible Managing the organization Responding to expectations set by funders and contractors	Setting goals Measuring progress Securing gifts of time, talent, and treasure Removing barriers to access	Mission Making goods and services available for free or at lower-than-market costs Appreciating gifts of time, talent, and treasure Making a positive difference for society

The EDs reported using several strategies to juggle the divergent tendences of business and altruism:

chart

[1] Rechtman, J. E. (2008). “On Being a Nonprofit Executive Director.” https://aura.antioch.edu/etds/685

• Balancing intuition with data
• Relying on the experience of others as a learning tool
• Taking an improvisational approach to problem-solving
• Being flexible and resourceful in managing subordinates
• Regarding fundraising as a necessary evil and a business means to an altruistic end

In the context of human services, these EDs tended to see business as a strategy for meeting client needs rather than as a fundamental characteristic of the nonprofits they led: the business means for altruistic ends. The tendency to stigmatize business brings its own set of challenges, largely because financial resources tend to be concentrated in the business community, where altruism is an option but not an end goal.

Where Business & Altruism Intersect in Your Nonprofit: An Exercise

With this in mind, I invite you to explore how key stakeholders (board, staff, partners, etc.) experience the interplay of business and altruism in your nonprofit enterprise. The following exercise will help you map areas where business and altruism diverge and converge within your own altruistic business enterprise.

Setup

You will need to designate a facilitator who will not participate in the discussion. Your materials should include a large-scale depiction of the framework (see Figure 1) as well as your nonprofit’s mission on a whiteboard or equivalent. Both framework and mission should be displayed so that they are visible to all participants throughout the exercise. Other useful supplies include sticky notes, worksheets featuring the blank framework (see Figure 1), dots for voting, and markers. Depending upon the number of participants, the exercise should take between 1-2 hours.

Process

Step 1:

The facilitator introduces the term “altruistic business enterprise” and definitions. As described above, altruism indicates charitable intent; business indicates attending to a financial bottom line. The facilitator then invites participants to identify aspects of altruism (mission-based passion/s) and business (measures of performance), as well as any additions, deletions, and questions regarding this content.

Step 2:

The facilitator distributes Figure 1 worksheets to each participant. The facilitator invites participants to reflect individually and write down their own expectations regarding the business means and altruistic ends in play in their nonprofit.

Step 3:

The facilitator asks groups of 3-5 individuals to share and compare the lists they have created. I suggest forming the groups by counting off to ensure more interaction among different perspectives. It is also possible to group people in advance, based on input from organizational leadership: for example, breaking up by board committees or work responsibilities.

Each group should come up with 3-5 areas where its members agree. Groups should also note areas of disagreement in the space outside the diagram. Write these comments on sticky notes. Through this discussion, the group should begin to articulate what’s most important in the specific nonprofit context and identify items needing more discussion or exploration.

Step 4:

The facilitator calls for a representative from each group to join him/her at the wall chart, bringing along the sticky notes from their group. S/he asks for a volunteer to place a first sticky note in the appropriate place on the wall chart. S/he then asks whether others have a similar note and invites them to place their notes where their group thought the notes belonged. Repeat until all the notes are posted on the wall.

Step 5:

The facilitator invites all participants to reflect on the postings on the wall. The facilitator should help guide this reflection. Here are some prompts the facilitator might use:

• Is everything in the right place, or does something need to be moved?
• Is anything missing? Check your own lists and add at will.
• What does this tell you about what is going on in our organization?
• Where might we need to make changes?
• Where are things going really well?

Step 6:

The facilitator should look for areas of disagreement posted the side of the diagram. For each area, the facilitator should invite the group as a whole to reflect on the item. Here are some questions the facilitator can ask:

• What is this about?
• Is it already shown somewhere else on the wall chart?
• Does it really fit the discussion? (*If not, discard the item.)
• How might we pursue our consideration of this item outside of this session? (*This approach might be especially useful if the item seems important, but the group is not sure where to place it.)

Step 7:

The facilitator invites feedback and comments from the group about a) how this information might be used and b) the experience of the exercise. Questions to explore might include:

• How can we us this information to sustain our mission?
• How might this information apply to the following areas:
  • Fundraising appeals
  • Staffing
  • Board development
  • Program development
  • Other important areas

Do the ends justify the means?

The insights and experience of this exercise can help to educate board, staff, and other stakeholders about the challenges and opportunities inherent in this complex and challenging structure. Indeed, the reflective exercise can support potentially fractious conversations between the diverse stakeholders in any given nonprofit. Starting from the assumption that both business and altruism are integral to the enterprise offers a platform for innovation and creativity that can sustain the mission for the long haul.

For example, Figure 2 imagines how a group of human services providers might have completed the exercise. You can see that while some activities clearly belong under either altruism or business, the center of the diagram also features areas where the two are inextricably intertwined. Tools such as logic models and staff development express the integral nature of business and altruism by honoring the intentions of stakeholders while also holding them to account.

However, when we take a deeper look at a presumably clear businesslike proposition—take, for example, offering competitive wages and benefits—we might begin to see the ways that even seemingly clearly categorizable items might have some crossover. That is, offering competitive wages and benefits is a businesslike proposition which would remove the invisible tax that keeps many talented individuals from working in our field. Personally, I never understood how we came to believe you could fight poverty by paying poverty wages, yet that seems to be a core mode of approach for many nonprofits.

At the end of the day, assuming the best intentions from volunteers and donors can be challenging in our highly monetized economy. We can easily become corrupted by our own business skills (as fundraisers, for example) if we fail to celebrate the altruistic foundation of gifts of time, talent, and treasure

Figure 1: Framework for exploring attitudes towards business and altruism

	Altruistic Ends	Blend	Business Means
Altruistic Ends				Business Means

Note: Additionally, discussion generated by this exercise may clarify key elements in fundraising appeals, foundation proposals, and contractual relationships with government and partners.

Figure 2: Illustration of the framework as applied to a generic nonprofit

Altruistic Ends	Blend	Business Means
Operations
• Energy and commitment of staff and volunteers	• Strategic Planning • Ethical oversight	• Competitive wages and benefits • Accountability structures • Volunteer coordination
Programs and Services
• Free Goods & Services • Harm reduction approaches • Volunteerism	• Logic Models • Staff development	• Third party contracts
Resource Development
• Gifts of time, treasure, and talent	• Technology and staff to support development and cultivation of resources	• Market priced goods and services
Governance
• Committed, resourceful board leaders and members	• Strategic Planning • Partnership with ED	• Fiscal and operational accountability

You might also like:

• Innovative Leadership — Culture Doesn’t Have to Eat Strategy: Tending to Human Factors During Strategic Planning
• Insider Newsletters: An Easy Way to Keep Your Board in the Loop and Engaged
• Five Years and Growing: How One Nonprofit Built a Sustainable, Collaborative Mission
• Measure What You Value: Designing a Values-based Performance Appraisal System
• The Critical Role of Cultural Responsiveness in Today’s Nonprofits

 

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