Product, Service & Design Innovation
The Power of Three Words:


In our experience, when people hear the term ‘not-for-profit’ they mostly think of charity-dependent organizations such as Amnesty International, the Sierra Club, Save the Children, Greenpeace and Médecins sans Frontières. It’s well-known that these organizations rely on donations, philanthropy and grants to support the good work they do. This is the way not-for-profit organizations have traditionally operated, such that in the US, it’s common to speak of ‘non-profit organizations’ and in the UK, the term ‘not-for-profit’ is synonymous with ‘charity.’ Most people assume that dependence on the financial benevolence of others is the only way a not-for-profit can operate.




What Is a NFP Enterprise?


Not-for-profit enterprises come in many forms, such as Incorporated Associations; Companies Limited by Guarantee; Non-Distributing Co-operatives (including certain ‘producer’ and ‘consumer’ coops); Social Enterprises (in many European countries this model is NFP by default); Social Businesses (coined by Muhammad Yunus); Community Land Trusts; and Community-Supported Agriculture. The list goes on.

Why Not-for-Profit Rather Than For-Benefit or For-Purpose?

We are often asked, “Why are you calling your model the Not-for-Profit World? Why don’t you say For-Benefit or For-Purpose? Not-for-profit sounds negative and defines something by what it isn’t!” And: "What about B Corps? They offer exactly the hybrid you’re talking about!”

We are deeply committed to the term ‘not-for-profit’ and what it represents as a business framework for two main reasons. Firstly, the term ‘not-for-profit’ is fundamentally immune from co-option. Around the world, its near-universal meaning consistently distinguishes businesses that can privatize profit from those that can’t, and, given the near-universality of definition, it’s a distinction that is unlikely to change. This is important because history shows that those in power often seek to co-opt language in ways that maintain their vested interests. This is clear when you look at the wide variety of interpretations of ‘sustainable development’, ‘eco-friendly’ and ‘sustainability.’ This trend is extending to business, where for-profits have been using language that blurs the lines between FP and NFP activities: ‘profit-for-purpose,’ ‘hybrids,’ ‘shared value’ and ‘mission-driven organizations,’ yet all the time promoting activities that continue to privatize profit. At the end of the day, however, a company must always legally exist as either FP or NFP. Even attempts by NFPs to blur the lines can’t change that fundamental legal distinction. For example, Harvard University says on its website that it is “a private, not-for-profit institution,” as if to infer it is privately owned. Yet, no one owns Harvard as it’s a NFP, generating over 30% of its revenue from business activities in 2012.



This post first appeared on the Post Growth Institute blog on January 30, 2014.


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