What nonprofit organizations can learn from the closure of the Nonprofit Consortium

Letter published in Cape Argus, 24 May 2008.

It is with sadness that I heard that the Nonprofit Consortium is closing its doors.

This adds to the list of well-known nonprofit organizations that have been struggling to keep their heads above water, or who have recently been forced to shut down.

There a sad irony in this – that an organization that worked so hard to create an environment where nonprofit organizations can thrive and find the income they need, has itself not been able to find sufficient funds to enable it to continue to fulfill its own purpose.

This is not so much because of anything the Nonprofit Consortium did or did not do. In fact, the Nonprofit Consortium and its staff have done much valuable work in the last ten years, and I have regularly consulted with its staff.

The closure of the Nonprofit Consortium has to do with fundamental flaws in the business model of nonprofit organizations.

Fortunately, the closure of such a high-profile organization presents an opportunity for other nonprofit organizations to reflect on their business model and mindset.

These organizations can learn that they need to become more proactive, and start selling the outcomes they create in the world instead of asking for donations. They can learn the importance of demonstrating that they are good investments and value-for-money. They can investigate how they can build themselves into the business system or value chain of businesses. Most importantly, they can discard the outdated concept of a “nonprofit organization” and get to work on earning themselves a good income.

While these organizations need to continue to make a social profit, they also need to start making a financial profit to manage their risk and expand their impact. They need to start thinking of themselves as social enterprises.

Marcus Coetzee is a business strategist who helps leaders to think clearly about the future. 

In pursuit of strategic clarity

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