2013-04-01

Connecting The Worlds Of For-Profit And Nonprofit For Greater Good

Robert Kaplan has spent his career bridging the gap between the two worlds, and showing that both kinds of companies can learn from each other to maximize how they serve society.

We live in a world where for-profits and not-for-profits occupy separate spheres, and we often focus more on their differences than on their similarities. What would happen if we stopped focusing on tax status, and took the best practices from each sector and began applying them to the other? Over the past decade, the nonprofit sector has been applying more lessons from the business world, and people in the NGO world are finding that there is value in learning from how the other half works. Rob Kaplan is a leader in this practice. The former vice chairman of Goldman Sachs, now a senior associate dean of external relations at Harvard Business School, doubles as an avid philanthropist and professor who teaches how valuable a person’s charitable work can be on one’s professional and personal life. He believes current and future business leaders don’t need to be just the most skilled, but also make the greatest positive impact on the world.

While at Goldman Sachs, Kaplan harnessed his passion for bettering the community by joining his first nonprofit board. Using a business approach on the board of Everybody Wins, he advised the organization’s leadership by helping them more effectively combat the literacy gap. He addressed the need for secondary education support in low-income families by collaboratively building the TEAK Fellowship from scratch.

And he eagerly accepted the challenge to influence medical research as Chairman of Project ALS, despite his lack of expertise, “Neurodegenerative disease research is extremely complicated, and I’ve found that I may know nothing about a subject, but if I have a passion to learn, I’ll learn enough to make an impact.” Every step of the way he used his knowledge to increase an organization’s effectiveness while learning new things about himself that he took back to the business world, making him a stronger leader and overall better professional. “I don’t know if I’m by myself so generous,” he says. “I would say I’m trying to make a positive impact and I find I perform at a much higher level if I have an aspiration to make an impact.”

Ultimately, this range of philanthropic activity led him to Bill Draper and Robin Richard’s venture philanthropy firm, now Draper Richards Kaplan. The firm is at the forefront of the venture philanthropy movement, an emerging field that is re-imagining the collaboration between business and nonprofits. Think of how microfinance revolutionized giving by applying lending ideas to a sector in a way that was once considered impossible or inefficient: venture philanthropy is rethinking how to invest in organizations in a way that yields the highest impact. Nonprofits are not the only entities with social missions, and the rise of for-profit social enterprises has also created a need for firms such as DRK to help fund the best of them. DRK works closely to develop 12 early stage nonprofits each year, providing organizations such as Kiva, Design that Matters and Little Kids Rock not only with funds necessary to move forward but high-level thinking and mentoring to encourage social change.

Kaplan saw firsthand the power DRK has had in creating social change thru the funding, and sought to maximize these important learnings. One way to effect and amplify social change is by creating a firm to fund the very best emerging social entrepreneurs. Another way would be to actually create social entrepreneurs (or at least encourage new business professionals to be more socially conscious) by reaching them while they’re still in school. Discovering that teaching would fulfill a hunger that working in finance could not, Kaplan made the transition to Harvard’s Business School in 2005.

This is the latest post in a series on generosity, in conjunction with Catchafire.

Kaplan’s courses focus on applying leadership techniques, with each class including at least one nonprofit case study. Illustrating the similarities between the two sectors facilitates an understanding that business approaches are not only desperately needed in the nonprofit world, but relevant and transferable. HBS students are also taught that service is not a false choice, where time and energy committed to charitable works means less time and energy spent on furthering their careers. Rather, committing to social causes can actually bolster their professional and personal lives, and provide opportunities for leadership positions not afforded to them in their early careers.

Kaplan dispels his student’s hesitations to work in nonprofits, using an inspirational ultimatum. “Your involvement is going to make the difference between these problems getting solved and not getting solved.” As leaders learn to fuse the worlds of business and nonprofit, Kaplan believes doors will open--increasing our positive impact on the world.

There are plenty of for-profit companies positively impacting the world by producing products that make our lives easier, the world greener, or solve a fundamental problem. And countless examples of successful businesspeople who have sought to apply qualities they honed maximizing profits to charitable endeavors. The best companies and organizations are built around strong leaders who know what they believe in and act upon those motivations to better the world. At its core, a business--regardless of how it’s incorporated--won’t last if it isn’t adding value to the world.

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8 Comments

  • BoardAssist

     

    Great story Rachel!  One terrific way for-profit people
    can add value to the nonprofit sector is by joining a nonprofit board. 
    We’ve placed thousands of people on NYC nonprofit boards and have been amazed
    at how much intellectual capital they have brought to the nonprofits they join
    in the areas of marketing, branding, strategic planning, etc.  www.boardassist.org

  • Mitchell Kutney

    Interesting read, I agree the sectors are blending and there is certainly value added in venture-philanthropy, as long as it is investment dollars being invested, and not previously allocated donations being turned into investments.

    PS. on 5th paragraph you spelt through, as 'thru.'

  • garyoppenheimer

    One point missing - the current philanthropic world does not typically support innovation...... something the for-profit world is heavily bought into.

    One example.... AmpleHarvest.org is a whole new model of ending hunger and malnutrition by moving information instead of food... yet foundations are more often than not, stuck in the "how many meals did you serve or how many pounds of food did you provide" thinking rather than "how much have you influenced society and how well have you enable the influence to actually have impact".

    It is common for us to hear "we love what you are doing, but we've never seen anything quite like it, so we can't help you.  Keep it up!" - you'd never hear that in the for-profit world.

  • Elaine Fogel

    Great story, Rachael. What would really make more of a difference is to fund and "teach" existing nonprofits how to operate more like businesses without losing their passion for their missions. As a nonprofit marketer, I've heard plenty of orgs claim that marketing is unaffordable. They don't realize its importance is building their brands and raising more money. It's an investment, not a luxury.

    Starting more nonprofits isn't always the answer. The existing ones need all the help they can get.

  • Bindu Rammohan

    I couldn't agree with you more Elaine.  I have been touting to non profits the importance of getting ones "house" in order (e.g. sharing operational resources) before organizing yet another fund raising gala or using other traditional fund raising methods to finance their programs.  All my pleas have fallen on deaf ears.  Creating new profits is not the answer.  Scan the horizon; hone in on non profits with similar missions and partner with them to create a smarter organization.  The results will be more sustaining and far reaching than what exists today - a myriad non profits, with minor mission differences and similar challenges. 

  • Elaine Fogel

    Hey, Catchafire, great concept. You trying to put nonprofit suppliers out of business? :)

  • Catchafire

    Completely agree Elaine, that is one of the things we are trying to do at Catchafire. By matching organizations with pro bono professionals who can help them using their expertise in areas such as marketing, branding, website design etc. These pro bono professionals teach the nonprofit skills that they will be able to use moving forward.

  • Loreto

    Yes! You are so right. I am starting my own non-profit (with the purpose of building alliances among existing groups that are already doing great work), and I truly believe in effective marketing. It is so sad seeing good work masked by terrible-looking websites, difficult-to-understand messaging and copy that turns people away because it is not welcoming :/