Of new ideas and new nonprofits

We often complain about the proliferation of nonprofits, and ask why people with ideas about service to humanity don’t join with those already serving humanity instead of striking out on their own.  But the Nonprofiteer has noticed how frequently her ideas are shot down by people with the capacity to execute them.  Perhaps this reflects the ideas’ weakness; but it may also reflect the "Not Invented Here" phenomenon, which prevents people from appreciating ideas they haven’t had themselves.

And–to be less harsh on the people who don’t adopt others’ ideas–running an institution has one set of demands (for stability, predictability, and keeping a number of moving parts all moving in the same direction), while innovating has another (for creativity, unpredictability and letting the chips fall where they may).

So let’s consider the possibility that the multiplication of nonprofits is the result neither of innovator narcissism nor of institutional paralysis, but simply of the fact that building a better mousetrap is best done where there are the fewest fingers and toes at risk of getting slammed. 

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6 Responses to “Of new ideas and new nonprofits”

  1. Sam Davidson Says:

    I think there’s something to this, and it happens in the business world all the time. However, if the for-profit world, mergers and acquisitions happen must faster/easier than the nonprofit world.

    For example, Google didn’t invent blogger; it bought it. Thus, the establishment didn’t have to take the risk and could focus on what it was doing while the entrepreneur can take the risk and shoot for the moon and maybe come up with the next big thing.

    But in the nonprofit sector, mergers are hard and messy, so rarely will an established nonprofit dare to merge with a new idea that is getting better results. So both carry on and soon enough, the young upstart becomes the next organization that needs to be maintained and the cycle begins again.

  2. Shawn Gavin Says:

    I think the Nonprofiteer is being charitable, as it were.

    How many of founders of new not-for-profits have actually tried to get their idea/program picked up by more established organizations? Not too many, I’d guess. The “not invented here” syndrome may be culprit some of the time, but mostly it’s vanity or navel-gazing that propels the launch of so many groups.

    And that’s all well and good in the for-profit world where the risks (as well as the rewards) are personal. But we play by different rules here. Or at least we should.

  3. Lisa Says:

    I agree wholeheartedly with Mr. Davidson. Being new to the nonprofit world, I can see a great deal of value in adding new orgs and consolidating down the road. This breeds innovation and aids in the ever-continuing search for best practices.

    Being a young person, I’ve seen friends who have been completely shot down when they have a new idea. The status quo works just fine, why mess with it? A lot of established orgs don’t want to invest the time/money in developing new programs, in large part because it’s hard to seek funding for starting a program when you’ve got an operating budget over 500k.

    Until larger orgs are monetarily encouraged to innovate and their ideas are nurtured so that more people can be served, I think it might be best to leave the new stuff to the starry-eyed dreamers who have the best chance of making the programs happen.

  4. Nonprofiteer Says:

    Shawn is right, of course: the nonprofit sector’s goal is not to gratify the vanity of people with ideas but to serve the needs of people with–well, needs. The real question is how efficiently the sector takes up and uses new ideas, and whether that efficiency is increased or diminished by the founding of new institutions. I don’t know the answer, nor do I know exactly what barriers (other than ego) interfere with the merger/acquisition of nonprofit agencies once new ideas have proved out (because, as Sam points out, mergers and acquisitions are relatively rare among nonprofits). Does anybody know of good research on these structural issues?

    I’m not sure what kind of monetary incentive would cause large organizations to act like smaller ones in terms of innovation, but Lisa may well be on the right track: back in the day, the monopoly phone company ran an entire research bureau (Bell Labs) on the philosophy that if you give smart people enough money they’ll come up with something good–which is why transistors exist, and God knows what else. Should foundations be funding Bell Lab-style subsidiaries of existing nonprofits, or a single big Bell Lab for the whole sector where ideas can be tested?

    Here’s one area (believe it or not) where I’m persuaded we can learn from the for-profits: no business without R&D can expect to survive for long. How can nonprofits get our R&D done at the lowest cost with the highest return? If it’s by encouraging people with new ideas to start their own agencies, then it’s well worth a couple of extra salaries.

  5. robert guinto Says:

    Nonprofits and for-profits get created every day. The creation of companies is due to the fact that there is a perceived need, a better way or a cheaper way. The market place will end up deciding which succeed.

    I am in agreement with this post.

  6. Nonprofiteer Says:

    It’s an interesting question whether the “marketplace” of donors is an efficient one in the sense free-market economists use the term–that is, whether donors have access to sufficient information to reward good nonprofit innovations and punish bad ones. Certainly people (e.g. Holden Karnofsky and the GiveWell gang) have argued that they don’t; but I’m not aware of any rigorous academic assessment showing that this market is any worse (in terms of imperfect information) than any other; and if it isn’t, then Mr. Guinto is right: the market will choose among nonprofit innovators and the strongest will survive.

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