A Nonprofit-For Profit "Mashup"

Highlighting the continuing mashup between the nonprofit and for profit sectors, an article in the April 13 edition of the New York Times said that a “new style of ‘hybrid’ technology organization is emerging that is trying to define a path between the nonprofit world and traditional for-profit ventures. They’re often referred to as 'social enterprises' because they pursue social missions instead of profits. But unlike most nonprofit groups, these organizations generate a sustainable source of revenue and do not rely on philanthropy. Earnings are retained and reinvested rather than being distributed to shareholders.”

Such ventures, also called for-benefit, low-profit, fourth sector or b corporations, among others, “…can make money; they will just never make enough to provide venture capital rates of return,” according to James Fruchterman of Benetech, a social enterprise incubator.

Several technology companies have been working at the intersection of the for-profit and nonprofit worlds for some time now. The article highlights TechSoup, which it says, “stumbled upon its business eight years ago after it began sending a truck around San Francisco to pick up donated commercial software to distribute to nonprofit groups. Today, the organization distributes products from 32 commercial companies, including Cisco Systems, Microsoft and Symantec, to roughly 50,000 organizations annually, for a small administrative fee.
‘We were just trying to meet the needs of nonprofits,’ said Rebecca Masisak, co-chief executive of TechSoup.”

As anyone who is venturing into the fourth sector will tell you, the experience is rife with unanswered questions and challenges. But the need for better technology, more business acumen and better efficiencies in the nonprofit sector combined with the desire of folks in the for-profit sector with dollars, experience and expertise to do work that benefits society sounds like a win-win if given the chance to succeed…

Caroline Heine

Posted at 1:00 AM, Apr 23, 2008 in Cross-Sectoral Strategies | Social Entreprenuers | Technology | Permalink | Comment