Tuesday, June 8, 2010

The Entrepreneur As Bellwether

If you want to get the jump of where philanthropy is going, pay attention, and pay heed, to entrepreneurs. If we map the most significant contributions in the past decade against the givers’ source of wealth, entrepreneurs emerge as the most generous. However, they do not give out of the goodness of their heart (which is not to say that they don’t have a good heart) but to invest seed capital to stimulate the propagation of opportunity. They are “next wave” thinkers who are far more interested in bringing something bold out of the ground than in investing in traditional systems and approaches. They will continue to give very large gifts to projects they believe in and, their philanthropic investments will have a critical factor in the building of non-profit brands.

So, as we think about securing the support of entrepreneurs we must remember:

They made their name with big ideas or by seeing value where others did not; as philanthropists that are not interested in our needs but our breakout opportunities. They are interested in big and bold concepts, but they had better come with a business plan.

They pursued their career-making opportunities in the face of adversity, indifference, entrenched beliefs, and bureaucratic thinking; as philanthropists they will bristle at the notion of cultural limitations, preset ideas, or the insistence that something can only be done one way.

They built their businesses with a mania for minimizing nonessential costs; “overhead” was the beast that had to be suppressed so that maximum investment could be made in people and new initiatives. As philanthropists, they a jaundiced eye on expensive buildings, fancy offices, or any frippery that funnels resources from the core objective.

They learned the importance of staying close to the consumer and remaining light on their feet to adjust and adapt to ever-changing markets; as philanthropists they have little interest in “endowment” which they believe isolates an institution from the realities that must eventually be faced. They want institutions to stay lean and live off the land, and thereby constantly adapt.

We must look monitor where they are placing their tremendous energies, whether it is third world development, green technologies or social networks because it will suggest where they see the greatest opportunities. In some instances, entrepreneurs will encourage non-profits to jump on the bandwagon too soon, as was the case with those who predicted that traditional higher education would be supplanted by “the classroom in the computer.” Those who invested great sums of money in that seeming inevitable took a bath. Notwithstanding their occasional over-zealousness, they often the first to see new developments on the horizon and the first to profit from them, skills that non-profits need in far larger quantities. And, since even great institutions can be hidebound, self-protective and risk averse, their leaders need to surround themselves with entrepreneurs. Non-profit leaders would be unwise not to seek out entrepreneurs’ reviews of their plans, systems and approaches. And, all non-profits should be concerned by entrepreneurs growing belief that most institutions, including those of higher learning, are ill-attuned and overly resistant to change. If entrepreneurs believe an institution has an important mission but is incapable of necessary change, they will seek to create new one will prove to be fierce and effective competitors for limited philanthropic resources.

So, while their instincts and inclinations may vary, the most successful non-profits in the future will be those who engage, learn from, and import the ideas and practices of entrepreneurs. Those entrepreneurs will create the new waves; non-profits need not be the first to jump on every one but must watch their formation to make sure the big ones don’t pass them by.

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