Three key components for non-profit and for-profit businesses.
When you are starting a business whether it is for profit and or non-profit, you must consider the following:
People, Sustainability, Profitability.
I am taking NGO and NPO studies and I see a big gap in our education system.
There is a critical importance in Non-Government Organizations and Non-Profit Organizations to be setup as sustainable systems, and the school doesn’t mention this kind of practice.
The reason why there are so many organizations that fail is simply because of the constant need for funding.
Either the organization grows too fast and cannot keep up with its increasing demand in the marketplace, or the organization runs out of funding without having sustainable practices in place.
One thing is for certain the major underlining reason why charities fail is because they are not setup as a business.
Organizations in the non-profit sector must think of themselves as a business first, helping people second.
Helping people in need is the right thing to do, but it is not the right systemic practice for the organization, and ill revert back to this later in my post.
I bring this up because in my studies I am learning about the study of societies, political sciences, and human geography, but none of these have anything to do with business.
There are some introductory level business courses, yet still, those courses teach absolutely nothing about the real-world context of business.
This is scary if you think about it.
Our education system is flawed, it is set up so people can find jobs not own and operate businesses. They may have innate talent but have zero skills for the job.
On the flip side, it is visually appealing for the employers to see that they completed graduate school.
Does this make you better than someone who has not completed graduate school? Absolutely not.
The punch line is that in order to understand NGO and NPO one must understand business. And if the school isn’t teaching how to operate a business, I really don’t see how this degree will help anyone going into this industry.
However, the main thesis is that NGO and NPO have a good potential in succeeding if they are taking at face value. And that is operating like a for-profit business.
The community accelerates the growth of the business by deploying crowdfunding. A for-profit business would have a difficult time in raising funds because the outlook is that a for-profit business is selfish in a sense that it is doing what is good for them not the community.
Let’s look at some research studies on how communities and crowdfunding shape the non-profit sector;
“The most frequently reported motivations for making donations were feeling compassion for those in need (90%), wanting to help a cause in which the donor personally believes (86%), and wanting to make a contribution to the community (80%).”
“Donors also give when they have been personally affected by the cause of the organization (62%). Some donors reported that their giving was influenced by whether the government would give them a credit on their income tax (23%).” Reported by Redbird a socially conscious marketing firm based out of Victoria B.C.
I have found this to be true in my experience with my philanthropy group.
It is very subjective, depending on the time of the season (around a holiday or not), depending which charity and depending who the person that is giving (an entrepreneur/business owner or a 9–5 person) their motives change and the amount they give for the reason they give it for differs.
Now what I have led you to believe is that; for-profit businesses are already sustainable and that NGO and NPO need to follow the FPB model. However, the FPB have to also keep in mind the practices that NGO and NPO models have.
What do I mean?
I mean that when you think of the people, business always follows suit. This goes hand in hand.
Businesses are nothing without the people who run them and the people they serve.
While the non-profit organizations have the help of the people which I stated above, the for-profit business get the same help in a different way.
The different types of organizations NPO, NGO or FPB all deliver value in different contexts, and the consumer’s neurological receptors are triggered in the same area of the brain; whether a person is buying something for themselves or giving something away to someone else, the pleasure intercepts in the same area in the brain.
A professor on Neuroscience David J. Linden after looking at a number studies describes the following;
“The main finding was that the most positive social reward descriptors activated portions of the reward circuit-most notably the nucleus accumbens and the dorsal striatum that substantially overlapped with those activated in the monetary reward task. This finding suggests that there is, quite literally, a common neural currency for social and monetary reward.”
To conclude, consider the following; whatever type of organization you are with you need to intertwine the business model of a for-profit business meaning, sustainable and profitable practices. The people in the organization and the consumers.
You can’t have people without profit and you can’t have profit without people.
Thank you for reading this post. I am passionate about business and passionate about helping others. It seems that this has been an integral part of my success in business.
“People will be interested if you can help them. The way to help them is to show them what has worked for you.” Gary Vaynerchuk
To be continued….
Originally published at karasingroup.com on February 16, 2017.
