As many as 100,000 nonprofits could go under if current economic trends prevail, says nonprofit management expert Paul Light, a professor at New York University’s Robert F. Wagner School of Public Service. In an interview with Cause Global, Light says he thinks the most vulnerable are small-to-midsized arts and social service organizations that consistently operate at the margins. Light’s prediction comes as the Center on Philanthropy at Indiana University today released a new study showing that nonprofits think they’re facing the worst fundraising climate since 1998. The center’s Philanthropic Giving Index, similar to a Consumer Confidence Index for charitable giving, is now 64.8, a 21.7 percent drop from just six months ago and a 27 percent decrease since December 2007. “Winnowing is going to occur [in the ranks of nonprofits],” says Light, “but the question is this: is this a random shooting or deliberate? Is most money now going to stronger institutions, the ones that don’t really need it as much?”
I caught up with Light today to discuss these trends, the rise of social media in advocacy, and his new book, The Search for Social Entrepreneurship, about the traits that distinguish social entrepreneurs. Light says they tend to be more tech-savvy and optimistic than others but urges leaders in this new field to start focusing less on its charismatic personalities and more on which ideas work—and which don’t. “You don’t find—and there hasn’t been—a good investigation of failure,” he says. What follows is an edited version of that conversation:
Why did you write this book?
I’ve been monitoring management reform in nonprofits and government for some years now and the concept of social entrepreneurship is pretty visible through organizations such as Ashoka and Echoing Green; more and more of our students at the Wagner School are interested in starting their own nonprofits and solving big problems rather than ameliorating them. I wrote an article for the Stanford Social Innovation Review in 2006 that said there appeared to be a cult of personality surrounding the concept of social entrepreneurship; we have become fascinated with these individual heroes and we have been putting the focus on finding these sparkly charismatic leaders and funding them to pursue pattern-breaking change. I wrote that it’s not the hero we should be focused on. I said that social entrepreneurship can come from existing organizations and big old organizations as well as fresh startups. It provoked a pretty instant response from the field. I then continued to do research and then wrote this book to summarize what I was seeing.
What did you find?
The more I read, the more was I able to unpack the underlying broad assumptions that define social entrepreneurship as an effort to solve a tough social problem through innovative or pattern-breaking ideas. I have come to agree that there is something different about the social entrepreneur. But I also found plenty of examples suggesting that social entrepreneurship is not a singular—but a plural. By that I mean that many organizations pursue social entrepreneurship through partnerships and teams and through networks, and our tendency in conferences and fellowship programs is to reward the individual when, in fact, we might be better off rewarding the idea or the organization along with the individual. In fact, the lone wolf entrepreneur is fairly rare and they’re often less successful in bringing their ideas to fruition than groups and networks and even communities of individuals. At the same time, I no longer feel there’s this cult of personality. There really are individuals out there who pursue pattern-breaking change against the odds and we should look for both types of entrepreneurs.
Social entrepreneurs behave differently than other high achievers?
There’s this prevailing notion that they’re more risk-tolerant, which does not appear to be true. What they are is extremely optimistic about their chances of success. And that goes for the lone wolves as well as for the socially entrepreneurial teams and networks. They all have very high confidence that they will succeed and they often ignore evidence to the contrary because they believe so strongly that they’ll succeed. We don’t have many stories about failed social entrepreneurs. The field as a whole has focused almost exclusively on success stories and perhaps that’s the way it is at the beginning of an expansion of any field. The focus on the entrepreneurial individual dates back to the early 1980s with Bill Drayton and Ashoka but it turns out that optimism and confidence are what drive the perseverance that produces this kind of constant focus on driving forward with change. It’s not that these people have a gene that can be identified as social entrepreneurship. It’s that they really see the world in very optimistic terms. Additionally, they’re not more likely to take risks than others but they do tend through their optimism to stick with it, and when they are told they are going to fail, they actually invest even more energy; they rebel against messages that suggest they’re somehow on the wrong track. This optimism can shift into overconfidence and entrepreneurs of all types need to be careful about that. They need to fine-tune and listen to what the “market” is saying to them about their idea. They also need to be aware that they do see the world in very optimistic terms and therefore need to check themselves from time to time and challenge their own assumptions about their ideas.
What have been some of the key failures?
There’s so much enthusiasm for the idea of social entrepreneurship that we are not taking careful inventories of where success occurs and where failure might reside. We’re lacking an entire branch of research that would be very useful for instructing nascent social entrepreneurs on what they can do to avoid failure. That’s a problem in the field right now and one of the threats to developing the field so it’s useful to people who want to launch a change effort.
What kinds of research would be most useful in your view?
There are sweeping studies about success and failure in the field of business entrepreneurship. Is the organization still alive? Is its market share increasing? Is it profitable? Yet when we go to blended organizations or nonprofits, we just don’t have those indicators. Ashoka uses some reasonable indicators to get the dialogue started, like; to what extent do their fellows affect policy change? To what extent are their ideas still alive? But we need better measures of outcomes if we’re going to start separating the wheat from the chaff in social entrepreneurship, and we just don’t have those yet.
There’s also a lot of argument over what constitutes success. Do you have to change the world or can you change a piece of the world? Does it have to be changing an entire policy regime within a country or within a region or even a continent, or can it be changing a city block and diffusing the idea so that others can pick up the change effort for their city blocks and eventually you have a cascading affect? There’s a lot of confusion in the field right now. There’s great promise in social entrepreneurship but we need to help social entrepreneurs know where to best invest in their own ideas to get them up and running.
To what extent do social media play a role in social entrepreneurship?
The most effective ideas out there harness new technologies towards large-scale change; in the Obama campaign and in the organizations I’ve come to really admire, Internet technologies are used very effectively. How well an organization uses technology may be a key marker of a potentially successful idea. The ideas I like expand through technology and use social media as a tool of rapid dissemination—yet some entrepreneurial advocacy organizations are really shy about credit-claiming. I like Accion, which is microfinance; I like idealist.org, which uses technology to empower change agents and help build the community; I like Environmental Defense, which has a model of environmental change that involves partnerships with business. Some of these organizations don’t apply for the awards, they don’t show up at the big conferences, they’re not involved in the dialogue about the Obama social entrepreneurship agenda. Yet they’re doing extremely important work and often reject the use of the term social entrepreneurship to describe what they do. But maybe some of those organizations are the ones we ought to be looking for, the ones that fly beneath the radar. Perhaps it’s our job to find them rather than rely on them to find us. There are a lot of them out there that are terrific at pursuing change but resist the term “social entrepreneur” to describe themselves. Maybe the field overemphasizes self-selected entrepreneurs and misses a lot of organizations reluctant to self-identify as socially entrepreneurial organizations but which could use more help scaling up and moving ahead. The venture capital model says you present to us and we decide if you get money. The social entrepreneurial model may require us to be more proactive in finding social change efforts and promoting the ones that could take off. That would, however, require the social entrepreneurial community to be more proactive and aggressive in identifying the work being done in the field.
(Illustration by Bodhihill)