In a Globe and Mail column on October 31 Paul Alofs, president and CEO of the Princess Margaret Hospital Foundation in Toronto, recommended that we stop using the term not-for-profit (or by extension nonprofit). He asks, “what other sector of the economy refers to itself by what it’s not?”
He states, “If profit is a measure of value created, then the reality is that most charities are immensely “profitable” from both a net revenue and impact perspective. We need to raise more money than we spend in order to fund our missions and our causes. We deliver profit – value – to society through an extraordinary array of institutions, programs and services. So our net profit – analogous to the profit of a private company – is in delivering social value.”
Alofs concludes, “So it’s time to rename the “not-for-profit” sector to what it really is: the social profit sector. Rethinking charities as social profit organizations will recognize our impact and the beneficiaries of our collective good work.” He makes the point that doing so would shift focus from overhead costs to the impact that these organizations are making.
I think he’s on to something and suggest you read the column. Its better to talk about what a sector does than what it doesn’t. And rebranding the sector might help focus more on the value created. At the same time, I’m not sure if it fits.
In response to a posting of the article on Twitter, Terry Flynn, a professor at McMaster and past president of the Canadian Public Relations Society, had a different idea. In a tweet he said, “But why does it have to be framed in relation to “profit”? Social capital is another term often used.” He continued, “All organizations accumulate capital (financial, physical, reputation, knowledge) but not all organizations are profitable!”
I think that suggestion rings true but I’m not sure that I can see the term “social capital” taking off.
For me too, I’ve come to distinguish charities from nonprofits. In part, it comes from working for charities and prizing the charitable donation status. In part, it comes from the diversity of nonprofits that I see as including groups doing “charitable” work without the status, to community or neighbourhood organizations, to professional organizations, to industry associations. Can one term refer to everything that could be described as not-for-profit?
I heard the term “social profit” for the first time just a few days before reading the column. I was having a conversation where I was told that he had been using the term but stopped when “social media” became more common. That may be a consideration but I think more important is the possibility for confusion with the term “social venture” which is used to describe charities with for profit initiatives used to fund their operations or for profit operations that dedicate funds to causes.
So the column and response that I’ve seen on Twitter has me thinking but I’m not sure yet what the answer is. What do you think?