Flourishing in a Not-for-Profit World
* Book: Donnie Maclurcan. How On Earth: Flourishing in a Not-for-Profit World by 2050.
"Donnie explains ways that organizing business activities under the framework of not-for-profit enterprises can make meaningful change in the face of a seemingly intractable situation wrought by immense private wealth accumulation and slowing global growth."
* The Tyee: Why do you think not-for-profit businesses will increasingly outcompete for-profit businesses over the coming decades? Why would for-profit companies lose their competitive edge?
Jennifer Hinton: The system built on for-profit businesses is falling in on itself because it requires constant growth. Businesses need growth to compensate for the extraction of profits by investors. The need to generate ongoing financial surplus requires the broader economy to grow.
However, the world is experiencing slower growth from the inequality created by the for-profit system. The goal of this system is to accumulate as much wealth as possible for capitalists. It has been successful in achieving that goal. But this has resulted in enormous inequality.
The working classes in many countries are struggling just to make ends meet, and they certainly can’t sustain the sort of consumption necessary for economic growth that’s fast enough to provide the financial surplus capitalists expect. That’s why this system is faltering. However, alongside this systemic stagnation, we see more demand for ethical business.
A lot of that demand is coming from workers. The next generation really wants purpose-driven work with more meaning. This demand is also coming from consumers who are more aware of social and environmental issues. Consumers want companies providing ethical services and products. Supply and demand is starting to shift the market in a direction that benefits not-for-profit enterprises. Over time, this will create a stronger competitive edge for truly ethical companies: we see that trend continuing.
* The Tyee: How do more traditionally minded for-profit business owners react to your ideas?
Jennifer Hinton: A lot of for-profit business leaders really get it. We’re talking about a switch from the mindset of profit maximization, into thinking about how to become a successful company that can still generate profit.
Profit can be more generative when it’s kept within the company, and when it’s all used to further the mission of a company. That message resonates with everybody, especially successful business leaders. To them, it makes sense as a lean business model that’s efficient. A successful not-for-profit enterprise includes paying employees, managers and CEOs fair salaries. This idea is not a sacrificial business model.
* The Tyee: There are many emerging ideas in the world of social enterprises that work at what you discuss. In British Columbia, we have something called a Community Contribution Company (C3) which builds on the concept of Benefit (B) corps. Each of these new legal structures for companies are attempting to reframe business around solving social and environmental problems, while reducing the impact of profit on everyday operating decisions. Why would not-for-profit enterprises improve on the for-profit, mission-driven models in the social enterprise world?
Jennifer Hinton: That’s a question we get a lot: why don’t you just advocate for social enterprise or for Benefit (B) corps? We think those business terms don’t tell us about what happens to the profit, and they don’t tell us about the ownership of the company.
These are essential questions going forward in the 21st century with the crises we’re facing: Is the profit being extracted from companies? Is it contributing to the ongoing removal of financial surplus from the economy to the hands of a few individuals? Are the shareholders still distracting from the purpose of these very well meaning, less for-profit business models?
Social enterprises still have shareholders. If they have private owners that expect dividends or some portion of the profit at the end of the year, that still puts pressure on the staff. When certain tough decisions are needed between generating profit, and the mission of the company, this is going to weigh on the decision. B corps and C3 companies are steps in the right direction, but we think not-for-profit enterprises will have even more success in the long run. Not-for-profits can be purely purpose driven, and not distracted by any need to maximize profit." (http://thetyee.ca/News/2016/08/26/Flourishing-in-a-Not-for-Profit-World/)