Through the actions of many people, groups and technologies, transformational social change is within new reach but it is also causing new and very different expectations of nonprofits groups.
In his provokingly titled article for the Stanford Review, Paul Klein explains why nonprofits are losing their monopoly as the most effective agents of social change.
Klein is the President and Founder of Impakt, a Toronto-based corporate social responsibility consultancy. He believes that significant new innovation from nonprofit organizations will not be possible until they begin embrace structural change themselves.

Unless nonprofits evolve, he explains that corporations, B Corps, and social enterprises will eclipse them. Funders have become impatient with the status quo in the nonprofit sector. They are limiting themselves by “slow-moving, institutional, and self-interested business practices” – making significant social change almost impossible.

Funders at all levels expect high performance and as a result are more selective about what nonprofits they support. They want social change organizations to do whatever it takes to get the biggest results at the lowest cost in the shortest period of time. They also want to see more collaborative efforts between companies and countries in setting strong goals, having clear plans, and openly demonstrating progress.

So the big question is, should nonprofits be biased towards putting themselves out of business?

With constraints to agility and innovation, Klein argues that it is time for nonprofits to be less bureaucratic and more responsive to the changing contexts in which they operate. “Funders are expecting significant change from charities,” writes Klein. “Starting with an intention of being much less institutional and much more entrepreneurial.”

Jay Coen Gilbert, cofounder of B-Lab explains that funders want to focus on what works. He outlines some of the changes that would help move organizations toward solving issues faster in a way that funders want to see:

1. Pay-for-performance: Linking salaries and bonuses to specific social change objectives.
2. Establishing review process: Looking at the data of all programs to identify initiatives that (a) other organizations would handle better or (b) consider partnerships with the private sector in order to improve performance
3. Introducing new exit protocol: Major supporters would diminish investment requirements as social change outcomes improve.

Many are still uncertain however of how shifting to a new structural model would fair for the majority of nonprofits. Mission drift, loss of focus on the communities and budget restraints are among the primary concerns. The gap between the capacity of small nonprofits versus large nonprofits raises another important question of how would smaller, local nonprofits benefit from a switch to for profit models.

For the full article and discussion, visit this link.

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