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Staying on the leading edge: The several economies of the social sector
Wednesday, October 10, 2012
What is the nonprofit sector’s contribution to society’s economics? This is a question often asked — but responding in true economic terms has been more difficult. Although the ‘double bottom line’ — profit and social value — have long been recognized, there are now new ways of looking at this question, encompassed in new terms: social, core, and monetary economies.
Dr. Laurie Mook, a professor at Arizona State University, defines the term social economy as:
A bridging concept for organizations that have social objectives central to their mission and their practice, and either have explicit economic objectives or generate some economic value through the services they provide and purchases they undertake. The term social economy puts up front the economic value of social organizations — that they produce and market services, employ people, may own valuable assets, and generate social value.1
Another perspective on the concept of social economy is that of Edgar Cahn, who suggests we have created two systems that are inter-related: the monetary economy and the core economy. He explains that the monetary economy is what we measure. It encompasses the income sources that drive our society: profit, government, philanthropy, earned income. The core economy, although supported by money, is not driven by it. It is “primarily powered by our minds, our spirits, our hearts.”2 It can be described as “family, neighborhood, community and civil society.”3 It is often invisible, overlooked, or unacknowledged. A dilemma is how to bring it to the fore and measure it for its overwhelming value. One way this can be accomplished is through “time banking,” which will be addressed in Edgar Cahn’s keynote address at the ASU Lodestar Center’s 20th Annual Conference on Sustainability Strategies, Oct. 18 & 19.
Online registration for the 2012 Nonprofit Conference on
Sustainability Strategies ends Sunday, October 14th!
Click here to register.
You may be asking, “How does this apply to me and my nonprofit organization?” I would answer that while these concepts may seem theoretical upon first look, they actually have immediate bearing on nonprofit practice. Staying on the leading edge requires unlocking and nurturing the human potential that leads, manages, and supports these concepts. Further, I would point to a few key areas in nonprofit leadership and management that are deserving of our attention. Each of these has implications for every nonprofit, as well as the entire social sector. They involve people and their development and support — their human potential. These are: volunteering, staff leadership, financial resources, and governance.
Volunteering
The role of volunteers is a key factor distinguishing the social economy from the private and public sectors. Substantially, all social economy organizations involve volunteers either as board members or in the day-to-day operations of the organization. Although paid staff provide most of the workforce hours for the social economy, more than half of the social economy’s organizations have no paid staff and have to rely entirely on volunteers.
Staff Leadership
Nearly one third of current nonprofit executives have been on the job for fewer than three years; while more than 27% have been on the job for ten or more years. Just 17% of organizations have a documented succession plan.4 Nurturing the growth and development, as well as providing support for the work of these individuals, is key to strengthening nonprofit organizations and their positive contributions to the several economies of the nonprofit sector.
Financial Resources
Financial sustainability is key to a nonprofit’s participation in a strong social economy. 46% of nonprofit executives reported cash reserves of fewer than three months when the prevailing wisdom is that an organization should maintain reserves of at least 3-6 months. Another 32% of executives report less than one month’s operating reserves.5 The accomplishment of mission is dependent upon strong financial management that generates sufficient resources while effectively budgeting expenses. The resulting bottom line supports the social economy.
Governance
Many boards of directors struggle to understand the monetary the core economies as they relate to their organizations. The responsibility for financial resources and the generation of voluntary action, either through time or contributed funds, weighs heavily on many. Financial, strategic, and generative governance help boards lead their organizations towards enhanced models of economic strength. As this strength increases, so does the ability of the governing boards to look to the greater economic and social forces to which they are linked. The need for boards to look beyond the sustainability of their own organization to that of the entire sector is the future, as we move into collective impact and its affect on society as a whole.
The 2012 Conference — "Unleashing Human Potential for the Next 100 Years"
While human and financial sustainability to provide service is an overall goal, this cannot be accomplished without the contributions of the people involved — volunteers and staff. The leadership, management, and support of the nonprofit sector is dependent upon their participation — and their potential. The ASU Lodestar Center’s 2012 Conference is focused on ways to expand the human potential that fuels the several economies of the social sector while keeping you and your organization on the leading edge. It will explore these various economies through the work of visionaries such as Edgar Cahn, Tom Suddes, and Rosetta Thurman, among many others.
Patricia Lewis' role as Sr. Professional-in-Residence at the Lodestar Center is to help bridge academia and practice. She has a long career as a nonprofit executive and as a "pracademic," having previously served as President and CEO of the Association of Fundraising Professionals, Executive Director of Camp Fire Boys and Girls in Seattle-King County, Development Director of the Childrens' Home Society of Washington State, and as the Nonprofit Professional-in-Residence at George Mason University. She has written and lectured throughout the world about various leadership and management topics for the nonprofit sector.
Sources:
[1] Mook, Quarter, Richmond, “What Counts: Social Accounting for Nonprofits and Cooperatives,” 2nd ed., Sigel Press, 2007. Pg. 17. (Emphasis added).
[2] Cahn, Edgar, “Priceless Money: Banking Time for Changing Times,” TimeBanks, USA. 2006, pg. 1.
[3] Ibid.
[4] Daring to Lead 2011, CompassPoint Nonprofit Services and Meyer Foundation, 2011.
[5] Ibid.