Monday Morning Read: Social Enterprise vs. Non-Profits. Is There Really a Difference?

Social Enterprise vs. Non-Profits: Is There Really A Difference? The social sector has seen significant changes in the last two decades; non-profits are not as sexy as their new counterparts, social enterprises. However, Atul Tandon, disagrees. He’s cracked the secret on how to artfully raise funds for a cause. For him, labels of non-profit and for-profit are merely tax differentiators. I talk with him about fundraising, and creating definitions for an increasingly complex social sector. Tandon was named by the Association of Fundraising Professionals as one of the best fundraisers in the country. He’s been behind the rise of the ONE campaign with Bono, and served as Executive Director of United Way, a global charity. He most recently served as the Senior Vice President of Donor Engagement at World Vision United States. Tandon, who started his career in the corporate banking sector, migrated to non-profits in 2000. Today, he runs his own Seattle-based advisory firm, Tandon Institute, which works with non-profits to make them more efficient and effective. What is a social enterprise? I struggle with the definition, because in my view every non-profit is a social enterprise. The tax label of an enterprise, whether it’s for-profit or non-profit, all it really is a tax label. Is it just terminology? Or do you see clear distinctions between non-profits and social enterprises? It’s a great question. Firstly, I don’t. The non-profit label in my mind is simply a label that denotes the tax system, the IRS enterprise. The word social enterprise, however, in my mind is defined differently. It’s an enterprise that is focused on building the social good, the common good. It could be for-profit, it could be non-profit, it could be a cooperative. None of us would argue that the Amul cooperative (India’s famous butter brand), which is by all recognition the world’s largest dairy enterprise – it’s larger than any for-profit dairy company on the planet – is a social enterprise. Who would argue with that definition? And if you agree with that, well then let’s examine the definition of social enterprise, and what is not a non-profit, is not a for-profit. I deliberately chose that because it’s a cooperative – it’s more of a social enterprise than TOMS shoes. It’s owned by the farmers – so how much more social are you gonna get? But it’s not small, it’s the world’s largest dairy organization for crying out loud. So your definitions start to fritter away under the force of logic. I think we’re limiting ourselves, in defining social enterprise in the current way, we actually limit ourselves in what the social sector can do for a community. But we could talk more about this. My views might not find agreement, but I’m not looking for that. You’ve worked on the ONE Campaign and World Vision – both organizations that rely heavily on fundraising. What are the lessons that you’ve learned, having done this for many years? Because in the non-profit space, I keep hearing that we’re now reaching a point of saturation, people are becoming apathetic, they’re being bombarded from everywhere. So how do you raise money? Do you get more creative, or do you target a certain audience? I deliberately changed the word from fundraising to donor-engagement. “Donor-engagement” I dreamt up one morning, at home getting ready to go to work. It came out of a realization and it was pretty simple: it’s to get people excited and engaged in my cause. As a result, funds come. But I’m not focusing on the money, what I need to focus on is engaging and exciting them, so really what a good fundraiser needs to do is to be an expert in engaging and exciting a constituency of potential and current donors. There’s no recipe, but I do believe that to be successful at engaging donors frankly what is needed is a transformative change within the non-profit industry of how does the non-profit industry look at itself. Forget about trying to look at the donors – they are who they are. We are a generous country and there are tens of millions of us in America and frankly increasingly now tens of millions of people around the world – the Chinese are generous, the Indians are generous, the Brazilians, the Chileans, the South Africans. Fundamentally when a non-profit starts to think, well, my job is actually two-sided: my job, my mission is on the one side to change the life of the beneficiary, so I’m changing lives; on the other side, I’m changing hearts. When the non-profit starts to think of itself as a bridge and a connector between the donor on the one side and the beneficiary and the cause on the other, well you suddenly find yourself not in the role of an activist – you’ll find yourself in the role of a bridge-builder. Essentially that’s what they are: they are bridges between donors and the cause and the beneficiary; and they have to get effective at building the bridge on both sides and in between. So long you keep looking at the donor as simply a cash machine, which is what the word fundraiser denotes to me, you are going to run into all the problems that you just spoke about. And there’s only incremental advance that can be made to improving techniques. People say, okay guys, you tripled the revenue at World Vision, well there’s complex reasons but I do believe that the starting point was the organization’s self-realization that they had a two-sided job, and they actually changed the mission statement to reflect it. It’s a long answer, but I’m very passionate about it. I think we are focused on the wrong thing – on changing the tactics. We have to get focused on the right thing, which is changing ourselves, within in the non-profit industry. It’s probably going to happen more in new frameworks that are being established in countries like India, China, Brazil, because they don’t have our legacy. Which organizations do you feel are going down this road and making progress? Everybody points it out, but I think Charity: Water does a very good job of doing this. Kiva, with Premal Shah, they do a very good job at constantly engaging. Clearly I came from them, but I do think that World Vision does a good job at continuously improving that interaction. It’s a long journey, regardless. Share