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Seth Godin and Non-profit Failure

November 30, 2012

Seth Godin believes the biggest, best-funded nonprofits have an obligation to be innovators. I agree. I quibble with how he arrives at this conclusion. Godin writes,

The thing about most cause/welfare non-profits is that they haven’t figured out how to solve the problem they’re working on (yet). Yes, they often offer effective aid, or a palliative. But no, too many don’t have a method for getting at the root cause of the problem and creating permanent change. That’s because it’s hard (incredibly hard) to solve these problems.

The magic of their status is that no one is expecting a check back, or a quarterly dividend. They’re expecting a new, insightful method that will solve the problem once and for all.

Two quick points: 1) Solving seemingly intractable problems requires far more financial resources than what is provided by private philanthropy and government and 2) Developing new, insightful methods to solving these problems once and for all requires more resources than funders have provided – so I question whether anyone has a reasonable expectation that some of these problems will ever be solved.

We should also acknowledge that funders play a large role in fostering–or impeding–nonprofit innovation. As Paul Schmitz, CEO of Public Allies, tells the NY Times, “[Y]ou have donors who took major risks in their own fortunes, but are very risk averse when giving to charity. People rightly want their dollars to have the maximum impact, but don’t apply the same logic model that they give to their private sector investment.”

Nonprofits can and should be leaders in innovation–but, institutional funders, individual donors and the public must also accept and acknowledge that without risk and failure, there is little chance of innovation.

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One Comment
  1. I ran across this same post earlier tonight Rodney and enjoyed your response. Creating a culture of innovation where the focus is on doing more with less is critical for nonprofits. My take is that money alone cannot buy innovation as defined in this manner. Some nonprofit leaders do believe a direct relationship exists between the amount of financial support they receive (or do not receive) and their ability (or inability) to accomplish their mission. Although the necessary monetary resources are clearly essential, this belief discounts the value of the organization and the potential of its people. Serious social problems- like hunger, housing, education, employment – will likely never be eradicated for all. Today your neighbor may be without food and tomorrow- – – well, it may be you or I. The revolving doors will never stop turning nor the quest for better solutions ever end. And, as you pointed out, risk and failure are inherent parts of the process of innovation. Donors will always take issue from time to time with nonprofits regarding the effective use of their funds. By focusing on innovation from within, however, the proper resources can be attracted like a magnet. Funds will then flow more readily into the nonprofit as the risk reward relationship improves.

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