eric johnson

Since my recent post encouraging would-be nonprofit founders to think again before converting their passion and ideas into a 501(c)3, I have been excited to see the great conversation around this issue. Thanks to everyone who has weighed in thoughtfully on entrepreneurship, innovation and replication - those who gave me an amen, gave me a strong rebuttal and, last but not least, gave me a raise. Since this issue seems to have struck such a nerve and it's not as black and white as to found or not to found, I think there's still more conversation to be had about how we can achieve a balance that benefits society.

Geoff Livingston suggests rather than discouraging entrepreneurs, who we're not going to be able to stop anyway, we should help them be successful by providing education and resources. That was my thought with suggesting people pursue incubation or fellowship programs - so that new ideas and models can flourish with help - but the existing programs obviously will not accommodate all the innovators ready to start up. I agree that smart innovation and unique entrepreneurial ways of addressing social problems makes the sector stronger and keeps established organizations on their toes by challenging the status quo. But can we encourage the social innovators we need while redirecting people who have passion and ideas, but who would be more effective as part of an existing initiative?

I will also concede Colleen Dilenschneider's point that even if the new nonprofits fail, there's nothing like hands on experience to teach leaders what it means to run an organization. She cites a 2006 Bridgespan Group study, which says the upcoming leadership deficit in the nonprofit sector will require about 640,000 new senior managers in the next 10 years. No doubt experienced young people will be in high demand. But is there another way these Millennial leaders can capture this learning experience without spending charitable dollars to no other end than knowledge of how to do it better next time?

My colleague Eric Johnson added his thoughts as well, comparing the nonprofit and for-profit sectors. He suggests that as a nonprofit startup, it can be more difficult to know if you're making progress because we don't have great established metrics for success, market valuation, and other mechanisms of the for-profit world. And while many nonprofit leaders are starting to recognize that you have to treat donors like consumers, the structure is complicated because the people who are funding your work are often different, and may have different interests than, the people you are serving.

So what are some possible solutions? As Geoff and I talked more about it, we tossed around one idea. If nonprofits are charged with looking after the social health of our communities, like doctors are charged with looking after our physical health, why shouldn't nonprofit leaders have to be certified to operate? If we require something more of doctors than just a desire to make us well, should we require something more of nonprofit executives than just a desire to make a difference? People have to get licenses to do our taxes, to drive our cabs, to cut our hair, and apparently to collect our rags (see photo), but we are going to give them our extra income without having any guarantee they know how to use it effectively to make the world a better place?

In an ideal world, we would all do thorough research to see how effective organizations are before we give our hard-earned money to them, but the reality is most of us don't. The average person does not have Guidestar bookmarked and is not motivated to break his piggybanks because he sees a tightly run NGO. We don't check nonprofits' 990s, what executive salaries are or how much goes to overhead. Research has indicated that including that financial information in an appeal actually makes donors less likely to give than if they receive an emotional appeal alone.

I know increased regulation sounds like a big Debbie Downer, but it can protect and benefit both donors and nonprofit founders. Is it better in the long run if someone spends two years in a program learning how to run a successful nonprofit than if they spend two years wasting money and time, jumping in before they're ready? If we have a nonprofit version of Bill Gates, Steve Jobs, or Mark Zuckerberg, who have all achieved amazing success and benefitted society without even a college degree, it may not serve us to delay their brilliant innovations, so exceptions would have to be made, but most people fit the rule and not the exception. Maybe a license requirement is just another roadblock, but it's helped me to trust my dentist, my accountant and my stylist as professionals. I think we should brainstorm and consider ways to help steer and encourage people with entrepreneurial passion and ideas toward the smartest choices and the greatest social good.