In yesterday's Wall Street Journal, Dan Pallatta argued that if we gave the tools of capitalism to nonprofits, solving the world's challenges would be less challenging.
More specifically, Dan says that "If we free the nonprofit sector to hire the best talent in the world, take fundraising risks, use marketing to build demand and invest capital for new revenue-generating efforts, we could bring private ingenuity to bear on those problems and would not need to look to government to fill the gaps."
I kind-of agree but I stumble a bit thinking about what exactly keeps nonprofits from using the tools of capitalism. And one quibble I have with Mr. Pallotta in particular is his emphases on the idea that organizations must pay big salaries to get the "best talent". I won't dispute that there are occasions where the "best talent" might slip away for more money and that nonprofits aren't always the place for the really big salaries but I do believe that many of the best talents in the world do work for nonprofits despite the salary level.
Regarding the use of marketing (communications) strategies, there are number of nonprofits that are at the forefront of innovative uses of social media and other marketing communications strategies. Alas, most don't need to build demand for their services (there's plenty who want to make use of a nonprofit's offerings) but I suppose there's plenty of room to build demand by donors. Building demand by donors and using current marketing communications strategies is a really right idea anyway.
But, I have to agree that there is certainly a shortage of capital especially for innovative revenue generating ideas. I however think the problem may lay more in the development of innovative than a singular shortage in capital. Now, offering financial returns on capital investment, that is a whole other topic.
So Mr. Pallotta, thanks for continuing to think about the nonprofit sector. I look forward to your continuing ruminations.
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