In civil society, non-profit organisations currently face a number of challenges, including governments retracting financially from a large number of areas. At the same time a new generation of philanthropreneurs want to respond to societal problems by investing in non-profits, using their capital, expertise and network assets. The returns envisioned are partly societal, symbolic and financial which fit within the current zeitgeist. Non-profit organisations want to respond to these shifting powers, but do not always feel familiar with an entrepreneurial approach. Consequently, this unfamiliarity may lead to a Tower of Babel speech confusion when they want to align a partnership with a philanthropreneur.
How can non-profits and philanthropreneurs better align their strategy for stronger impact? Below are four suggested strategies.
Enterprising non-profit organisations
Non-profit organisations seem more complex than businesses. They tend to having multiple bottom lines that enable the means to fulfil their mission and not a profit as a goal. Both non-profits and businesses engage in planning, budgeting, and marketing. They are contend with arguments of governance, personnel and information management, and must raise capital. But all these activities are carried out in markedly different ways. There seem no natural price mechanisms that accumulate the consequence of clients, staff, volunteers or other stakeholders that match costs to profits, supply to demand and goals to actual achievements. Unlike the management issues in the for-profit sector, which tend to correspond to specific economic measures, issues at non-profits are more ambiguous because they are related to the somewhat abstract public services. The challenge lies in developing new models that identify the true impact components in an effort to establish alignment between leadership, strategy and culture in an entrepreneurial philanthropy partnership.
When two worlds meet
The traditional objectives may challenge the priorities of both non-profits and philanthropreneurs, when they want to engage. Non-profits appear different from entrepreneurial philanthropy because of their multiple funding streams and the fact that they may carry unique commitments in the civil society. They are dedicated to ‘doing good’ and have a clear mission that drives everything the organisation does. However, the upward trend of bringing about beneficial social impact among philanthropreneurs is matched by a comparable, converse trend of economisation among non-profits. Striking changes have taken place within non-profit organisations since the 1980s, which can be encompassed by the denominator of ‘economisation’. For example, business practices are brought to scale and the overhead ratio is denounced as a valid indicator of their performance. Conversely, non-profits generally do not base their strategies on money. It may subsequently be the case that entrepreneurial philanthropy drives non-profits, or vice versa, to adjust behaviour to embody the new partnership which is prioritised to create societal values as well as corporate values. However, the claim that business thinking will save the world can be a convenient myth for those who occupy positions of power, but can be a dangerous distraction from the public work of finding solutions. It appears challenging for non-profits to communicate effectively about their business-worthiness and what they can offer to philanthropreneurs in return.
Aligning leadership, strategy and culture
There are recognized benefits and advantages to develop entrepreneurial philanthropy partnerships where both partners have common ground and a purpose that everyone has a stake in. However, establishing effective partnerships takes time, and it is expected to be important to review the process of alignment on an ongoing basis to measure its success or its failure. Partnerships will imply a shared leadership among respected individuals who are recognized and empowered by their own organizations and trusted by partners to build consensus and resolve conflicts. Also a common understanding of the leadership, strategy and culture values of partner organisations needs to exist. Management practices and resources are expected to achieve partnership goals to complement the intended purpose of entrepreneurial philanthropy. Specifically, the partners should demonstrate accountability for the output – or outcome – and take ownership for the delivery of the targets for which they are responsible. Fundamentally, in the partnership process, alignment involves the optimal matching of leadership characteristics with a known approach of strategy and culture.
Bridging the gap
Philanthropy is traditionally known as a ‘voluntary and unconditional redistribution of wealth, by the private sector.’ There seems a natural connection between entrepreneurs and philanthropy, and their level of contributions given depends on the frequency and intensity of participation, volunteering, and being asked to contribute. An entrepreneurial philanthropy partnership however, is not about the unconditional redistribution of wealth or about supporting the most effective and trustworthy non-profit. Rather, it is a mind-set that constantly seeks opportunities to build lasting impact out of informed understanding. The same models for success in business are applied to philanthropic endeavours, disrupting the status quo, drive philanthropy at scale, and develop long-term societal impact through investing. In these aligned partnerships there seems an unique correlation between fulfilling philantropreneurs’ needs as an entrepreneur, and as a philanthropist.
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