Blurring the lines between profit and not-for-profit

For decades the traditional perspective has been that businesses are there to make money – the Milton Friedman theory – and charitable organisations exist for the purpose of solving social problems. This is all starting to change. Globally a new generation of philanthropists is driving change. These people are highly educated, often with an MBA or equivalent, they understand how business functions and they have witnessed the speed with which contemporary businesses such as Amazon, Ebay, Microsoft, Apple, Intel have grown and generated wealth.

Not only is this new generation of people running the worlds largest and most successful businesses, they are moving into leadership positions in national charities and philanthropic funds. This phenomenom is not restricted only to the self-title developed nations either; Asian and Indian businesses are generating immense wealth and some of that wealth is finding an outlet in philanthropy.

The new generation of business leaders and charity executives are not held back by tradition. They understand how to utilise technology and the power of mass communication. They are prepared to take risks and to fail in the short term – they believe it is okay to lose a battle, so long as the war is won. Don’t misunderstand me, they understand the need for businesses to make money, they dont necesarily believe that money should be stored away, it should be invested where it will do some good. It is these experiences, beliefs and values that will drive future relationships between the corporate sector and the not for profit sector.

Recently it has been suggested to me that the gap between the corporate sector and the nonprofit sector is created by a lack of understanding by each sector of the other sector. That may be true but I wonder if that really is the issue. I wonder if this is a hangover from the traditional perspectives of the role of each sector?

Surely both sectors want the same thing! Both for-profit and not-for-profit organisations needs to operate in a sustainable manner if they are to create an impact on society. Both sectors need a healthy community. It appears to me the so called gap between the two sectors may be more perception than reality.

Generational change will also help challenge some of the misperceptions that exist. Like the one that suggests management skills are better in the for profit sector. I have never believed this. During the past decade I have worked with some very talented people in nonprofit management.

I sense the future for the nonprofit sector is bright. I sense there will be a blurring of the lines between the two sectors – even between Government, business and the charitable sector. I have no doubt there will be less not for profit organisations in the future. If current trends remain consistent the future conversations will not be about the differences between the two sectors, rather how the two sectors can work together to deliver solutions to social problems that impact upon everyone.

Those are my thoughts for the day

Let The Journey Continue

John Coxon


About John Coxon

Principal consultant for John Coxon & Associates, a management consultancy working with boards and management teams in healthcare, aged care and not for profit organisations to develop effective strategic planning processes and social enterprise business plans
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