What Non-Profits Can Learn from For-Profit Corporations

One of the greatest advantages of capitalism is that it makes corporations accountable to consumers. The success of a company depends on the happiness of its customers—companies that meet the needs of their customers survive and ones that don’t go bankrupt.

The ultimate “customer” of a charitable, non-profit is the people they aim to help. It’s the people being helped who should have the loudest voice, but instead the loudest voice has often been granted to the funding source—which, in terms of aid relief, has often been outside governments.

Economist William Easterly in his book The White Man’s Burden: Why the West’s Efforts to Help the Rest Have Done So Much Ill and So Little Good emphasizes how backward this is. In the process, he cites a really positive example of a non-profit being influenced by market forces:

“The nonprofit organization Population Services International (PSI) … gets rewards for doing things that work, which enables it to attract more funding. This makes it act more like a Searcher [for the right thing for those in need] than a Planner [who decides what those being helped need, for them]. … PSI sells bed nets for fifty cents to mothers through antenatal clinics in the countryside, which means it gets the nets to those who both value them and need them. … The nurse who distributes the nets gets nine cents per net to keep for herself, so the nets are always in stock. PSI also sells nets to richer urban Malawians through private-sector channels for five dollar a net. The profits from this are used to pay for the subsidized nets sold at the clinics, so the program pays for itself.

PSI’s bed net program increased the nationwide average of children under five sleeping under nets from 8 percent in 2000 to 55 percent in 2004, with a similar increase for pregnant women. A follow-up survey found nearly universal use of the net by those who paid for them. By contrast, a study of a program to hand out free nets in Zambia to people … found that 70 percent of the recipients didn’t use the nets. The ‘Malawi model’ is now spreading to other African countries.”

The non-profit sector is rapidly changing, partly due to necessity, but primarily due to a recognition of the best ways to help others. Jesus’ Economy is part of a new type of non-profit: one that aims to be sustainable and aims to make those being helped the primary voice in our work. In the first phase of any project, we listen, learn, and analyze. And the success of our projects will be measured by the results for the communities we're working with: Have they experienced life transformation for the better? We also work directly with church planters and entrepreneurs who are native to the region, which makes their voice primary in our work.

In addition, by going about our work utilizing market forces, like selling products, we have also added a further level of accountability: we're accountable to those we're helping and those whom they are creating products for. Without an awesome product, we are unable to fund our work, because people won't keep buying; by making this move, we're adding a new component to microloans. The component of market forces helps strengthen the position of the entrepreneurs we're helping and results in a fantastic product for the Western world. Both the developing world and the developed world wins in this scenario.

Also, we have full reporting and transparency on the results of our work, so that anyone can monitor our successes, and any failures, every step along the way.

Easterly is right about who should be the primary voice in the non-profit sector, but wouldn't it be great if all voices were heard? That is the type of non-profit we're creating.

(This post is part of the blog series, “What I Learned from William Easterly.”)




John Barry
John Barry

Author

CEO, President, and Founder of Jesus' Economy. John is the author/coauthor of 12 books and General Editor of Faithlife Study Bible and Lexham Bible Dictionary.



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