Nonprofit Issues Forum Fosters Spirited Debate on Nonprofits and Business

The latest event in the Nonprofit Issues Forum series took place this past Thursday at the Woodruff Arts Center and featured Michael Edwards, author of Small Change: Why Business Won’t Save the World.

In his book, Edwards argues against the spread of philanthrocapitalism, which advocates for the use of market methods to meet the world's social needs. While supporters of this doctrine contend that using business principles to solve global problems will be more effective and efficient than traditional methods, Edwards takes the point of view that "real transformation will occur when business behaves more like civil society, not the other way around." In his discussion, he presented his four main points:

• First, neither the nonprofit nor business sectors are monolithic in scope or character. There are many forms of hybrid organizations or approaches to social change - B corporations are one example - that exhibit characteristics of both sectors. Likewise, there are some instances where business thinking can be useful and effective, but others where it is not. Reforming civil society should not be an issue of wholesale adoption or rejection of business principles, but rather adaptation of those methods that are most appropriate.


• Secondly, while philanthrocapitalism may increase access to goods and services for those in need, it does not bring about the deep transformations necessary to change the social and political dynamics that lie at the root of global problems. The immediate results of these types of programs are therefore overemphasized at the expense of more traditional forms of philanthropy that effect more sustainable, long-term change.


• The costs and conflicts of applying business principles to a social mission are also understated. There are significant risks for nonprofits engaging in business practices, including mission drift, increased aversion to risk and innovation, competition with other agencies, and decreased focus on advocacy, All of these potential factors can outweigh the minor benefits that might be gained in terms of efficiency.


• Finally, the increased consolidation of wealth and power among philanthrocapitalists creates major problems of accountability for civil society and democracy in general. Placing public services like health care or education in the hands of private individuals or companies creates fundamental conflicts of interest that cannot be ignored.

The response to Edwards' critique was provided by a panel of three representatives from the world of corporate philanthropy: Rhonda Mims, President of the ING Foundation and Senior Vice President of Corporate Responsibility and Multicultural Affairs at ING; Jackie Parker, Vice President, Global Inclusion & Diversity and Head of Corporate Philanthropy at Newell Rubbermaid; and Ann Cramer, Director of IBM Corporate Citizenship and Corporate Affairs. All three highlighted the efforts that corporations have taken to support the nonprofit sector, as well as the experience and knowledge that corporate volunteers and administrators can provide to nonprofit staff and directors.

Copies of Small Change are available for checkout from our library collection. Read the book and add your own thoughts to the debate by commenting below.

Stephen Sherman, Reference Librarian, Foundation Center-Atlanta