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Social Enterprise & Hybrid Models

I was elated to read Alexa Clay’s and Jon Camden’s article, It’s Time To Start Judging Nonprofits Like For-Profits, back in January when the article was published on Fast Company’s Co.Exist platform and, although the article is a few months old now, the points that the authors make it far from outdated. Although I am glossing over some of the article’s subtleties, the basic argument is that Americans have a skewed view about what is required to run an effective nonprofit organization and how crucial overhead is for nonprofits to be able deliver on their social mission objectives. Sadly, our culture of philanthropy in America has lead so many donors to think that every penny that goes to cover overhead costs is actually at odds with or somehow takes away from achieving social impact. This perspective fails to consider that high overheads (relative to program budgets) may in fact be critical to achieving social impact and that these overhead costs are actually investments in the long-term success, efficiency, and impact. The article elaborates on this point with the following: This constant pressure that nonprofits feel from both their mission-driven world and the donor landscape toward minimizing anything that could be counted as “overhead” is destructive and efficiency-killing. Low overhead means burning staff out at an alarming rate, and having trouble sourcing or retaining skilled workers. It pushes organizations toward duplication over cooperation to attract and maintain funding. Worst of all, it forces a short-term view on what should be a long-term mission.