Article In Brief:
- The Problem: The term nonprofit organizations has outlived its usefulness to describe the work that charitable organizations in the independent sector do, argues the author, former co-leader of the Fanning Institute’s nonprofit leadership development and capacity building practice.
- Why it Happens: The difficult work leaders of charitable organizations do to connect business with altruism is crucial to our communities but unappreciated. Leaders of the independent sector see business as a strategy for meeting client needs rather than as a fundamental characteristic.
- The Solution: By categorizing charitable organizations as altruistic business enterprises, the embodiment of both entrepreneurial spirit and passion for mission, the value these organizations offer becomes self-evident and perhaps more clearly recognized outside of the sector.
“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
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. 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 |
Securing gifts of time, talent, and treasure
Removing barriers to access
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:
 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.
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.
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.
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.
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.
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.
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?
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.)
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
- 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|
Figure 2: Illustration of the framework as applied to a generic nonprofit
|Altruistic Ends||Blend||Business Means|
|• 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
|• Logic Models |
• Staff development
|• Third party contracts|
|• Gifts of time, treasure, and talent||• Technology and staff to support |
development and cultivation of resources
|• Market priced goods and services|
|• Committed, resourceful |
board leaders and members
|• Strategic Planning |
• Partnership with ED
|• Fiscal and operational accountability|
Until retirement, Janet Rechtman co-led Fanning Institute’s nonprofit leadership development and capacity building practice. Janet has a doctorate in the field of Leadership and Change from Antioch University, a Masters from York University in Toronto, and a BA from Emory University in Atlanta. Her dissertation, “On Being a Nonprofit Executive Director,” documented the lived experience of nonprofit executives and is the foundation for her work in leadership development in the sector. Janet lives in Chico, California, where her poetry, fiction, and nonfiction continue to appear in a variety of publications.
Articles on Blue Avocado do not provide legal representation or legal advice and should not be used as a substitute for advice or legal counsel. Blue Avocado provides space for the nonprofit sector to express new ideas. Views represented in Blue Avocado do not necessarily express the opinion of the publication or its publisher.
Lloyd Gardner says
Interesting article. Is it likely that the term “altruistic business enterprise” would create more confusion by creating the impression that the re-branded entity is more like regular business; that is, the private sector. Besides, that construct already exist. It is generally referred to as a social enterprise
In fact, the following statement in the article already creates some confusion: “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.”
The statement is inherently incorrect. Simply because nonprofits are not governmental entities does not make them private sector entities. Most countries recognize the distinction between governmental organizations, private organizations, and non-governmental organizations established primarily for a public purpose. In most of the world, the non-governmental organizations established for civic purposes are called civil society organizations. And, in most of the world civil society organizations are recognized as a third sector, distinct from the public sector and the private sector.
More importantly, the work of civil society is not simply altruistic. It is in fact one way that society organizes itself to to take care of its business. Government is another (at least in democratic countries). The work of the civic sector is distinctive by being highly focused on the needs of communities.
Maybe the change that is necessary is not to make community organizations a distorted version of “altruistic” practices of the private sector but to recognize the distinct nature, purpose, and value of the civil society sector.