Nonprofit entrepreneurship in action
Credit to Author: MARIA ADIEL AGUILING| Date: Mon, 28 Oct 2019 17:21:25 +0000
ENTREPRENEURSHIP is commonly defined as an activity of an individual, or group of associated individuals, in setting up a business and taking risks to earn profits. Nonprofit organizations are institutions that are barred from distributing profits to the board or those in control. With this backdrop, how can one marry entrepreneurship with nonprofits?
Joseph Schumpeter discussed in 1934 that an entrepreneur is an individual who is propelled toward change. He need not be a risk-taker, a capitalist or investor. Rather, an entrepreneur is one who introduces new combinations in the form of new products or services, new markets, new materials, new methods or new ways of organizing. Dennis Young picked up the change-agent notion and applied it to sectors outside the commercial domain. Young elaborated nonprofit entrepreneurship in his book If Not for Profit, For What? that was published in 1983. It was re-printed in 2013 with supportive commentaries of seasoned scholars. His masterwork is said to have planted the concept of social enterprise.
Nonprofit entrepreneurship does not invoke commercial entrepreneurs to turn nonprofit organizations to businesses. Nonprofit organizations could be business-like in terms of formulating goals, observing an organizational structure, maximizing resources, and delivering services on time, among many others. Nonprofit organizations need profit, which is income in excess of expenses, to cover salaries, rent, supplies and other operational expenses. Besides, many donors expect the donee institute to be sustainable. However, businesses exist for profit while nonprofit organizations aim at a social value. Entrepreneurs are innovative and self-driven. Nonetheless, what distinguishes commercial from nonprofit entrepreneurs is that the latter finds joy and success in obtaining a social mission rather than gaining monetary earnings.
Nonprofit entrepreneurship is manifested through the creation of a new nonprofit organization, innovation of a new social or economic value by nonprofit agents, or entrepreneurial behavior within existing nonprofits. Henry Dunant, a Swiss entrepreneur, founded the Red Cross that extended internationally. Gina Lopez expanded the ABS-CBN Foundation’s services and catalyzed the country’s first hotline to rescue children from abuse and a regional campaign to rehabilitate Manila rivers. Small nonprofit organizations in Toronto would delegate their administrative functions to a central hub. This shared platform allowed the nonprofits to efficiently focus on their respective social programs. Stanford University graduates from different courses have established 30,000 nonprofit organizations by 2018. Four Stanford students founded Embrace, a nonprofit organization that offers low-cost incubators to prevent the death of premature babies in rural areas of developing nations.
Nonprofits go through a process of development. As they go through the different stages, they may encounter challenges in soliciting licenses, raising funds, hiring personnel, and sustaining beneficiaries. For example, there are local schools that offer scholarship yet have unfilled slots. Why are there no takers of this free education? Are these schools tapping the right market? Does the product offering match the interests of the youth? Incidentally, the 2017 Annual Poverty Indicators Survey released by the Philippine Statistics Authority revealed that about 3.6 million Filipinos from six to 24 years old were out-of-school. The top two reasons for out-of-school children and youth were marriage/family matters (37 percent) and lack of personal interest (24.7 percent). Confronted with such scenarios, the entrepreneur gathers new information, evaluates the situation, discovers opportunities and introduces new combinations. Nonprofit entrepreneurs drive the transformation from idea to implementation to attain the social value.
Many individuals and groups desire to actualize change and make a difference. They channel their passion to help people and communities by creating nonprofit organizations. For these organizations to be effective and dynamic, nonprofit entrepreneurship is the way to go.
Maria Adiel H. Aguiling, CPA, has worked with foundations as board trustee and management director. She is currently a coach in People Engaged in People Projects Foundation Inc. She is pursuing her doctorate in Business Administration at De La Salle University, Manila. Email: maria_adiel_aguiling@dlsu.edu.ph