By Jesse Moyer, South Dakota ’03, Province President, Zeta Province
If you’re up on current events, you’ve probably read about or heard the term, the new normal. Apparently, there’s a sitcom on NBC that goes by that name. Arne Duncan, the Secretary of Education in the Obama Administration, also references the new normal in many of his speeches. While I am sure NBC’s show is pretty funny, it is Secretary Duncan’s definition of the new normal I would like to focus on. Basically, when Mr. Duncan mentions the new normal, he’s talking about doing more with less. More – and better – education using less money.
In the case of KnowledgeWorks, the foundation I work for, doing more with less means achieving the same (or better) educational results for more students and communities with fewer resources. I mention better results for students and communities because that’s what KnowledgeWorks is all about. We support the work of three education-focused organizations, New Tech Network, EDWorks and Strive. These organizations provide innovative tools, training and assistance to school leaders, teachers and community stakeholders with the goal of improving learning outcomes for all students.
Now, you might be thinking to yourself, “How are they supposed to execute more work with less money?” Let me explain.
Private foundations achieve results through giving away money and are funded by their own money. Think Rockefeller, Gates, Buffett, etc.
When I tell people I work for a foundation, most people think of a private foundation, a nonprofit organization that has a principal/endowment fund managed by its own trustees. Typically, private foundations maintain or aid charitable, educational, or other activities that serve the public good through the making of grants to other nonprofit organizations. These organizations in turn deliver the programs or services. Some examples are Habitat for Humanity, Red Cross, and St. Jude’s Children’s Hospital.
Public charities achieve results through delivering programs and are funded by their own money AND grants from private foundations.
KnowledgeWorks is a public charity; we derive our funding from our principal/endowment fund and grants from other private foundations. This financial model works well when grant money is plentiful and the stock market is on the rise. Unfortunately, over the last several years the stock market has dipped and grant money has become scarce. As a result of this new normal, KnowledgeWorks has created two additional funding streams:
- A fee-for-service model – Our clients (schools and communities) pay us for our services.
- Public/private partnerships – We work with our clients to find business partners or corporate foundations willing to fund our work on behalf of our clients.
The addition of these two funding streams has allowed KnowledgeWorks to also become a social enterprise.
KnowledgeWorks is also a social enterprise. A social enterprise is created when a public charity establishes an income generating business and re-invests “profit” back into the business instead of paying shareholders, which is a for-profit business practice. The work of the business must maximize improvements in human or environmental well-being and it must have a 501(c)(3) tax status.
By applying these commercial strategies to generating new income and investing that new income to expand/scale our work, as opposed to returning that profit to shareholders, we have transitioned from an operating foundation to a social enterprise, while still maintaining our 501(c)(3) tax status. As I mentioned before, operating as a social enterprise allows us to reinvest the money we make back into our work instead of returning it to our stakeholders.
In addition, operating the way we do allows us to cultivate relationships with federal, state, and local leaders in order to further our work instead of being mandated to cumbersome procurement processes. It also allows us to influence state and federal education policy as partners. In short, KnowledgeWorks operates as a social enterprise by ‘doing charity by making money’, rather than ‘doing charity while making money’.
How applying for-profit business practices in a non-profit setting can provide a fulfilling life purpose and career.
My job entails three main responsibilities. I work with our program teams and operating subsidiaries to systematize their cultivation, relationship management, and business processes in order to reduce risk in our organization, enable our operating subsidiaries to scale on the national level, and increase efficiency. As part of this effort, I am charged with creating, administering, and maintaining our CRM platform, Salesforce. The second part of my job involves operationalizing the cultivation and relationship management processes by building and maintaining relationships with federal and state education leaders, business and funding partners, and policymakers. Finally, I manage all of our policy-related social media including the World of Learning blog and the @KWPolicy Twitter account.
For me, personally, this has been a great experience because I get the best of both the non-profit and for-profit worlds. I get to work for a great non-profit organization that allows me to go to work every day knowing that I contribute to the greater good of society. I’m also privileged to impact the social issue of education, which I care very deeply about. Even though I work in the non-profit sector, through my role on the National Advocacy and Partnerships team at KnowledgeWorks I have been able to learn and apply business cultivation principles from the for-profit world as a way to expand the number of schools and communities in which we work.
My career in the non-profit sector began when I was working for the Fraternity as a Leadership Consultant and Director of Chapter Services. This job allowed me to begin my career with an organization that contributes to something bigger than myself…to the greater good. Once you have a job like that, it is difficult to imagine working for an organization whose purpose, even if it isn’t the core purpose, is to answer to, and make money for shareholders. That’s why it was, and is, important to me to continue working with a non-profit. Frankly, it’s easier to get out of the bed and go to work in the morning.
One thought on “The New Normal and Social Enterprises: How Philanthropy and For-Profit Business Has Merged to Improve Primary and Secondary Education”
Reblogged this on The Next Step and commented:
Such a fantastic perspective from a very accomplished Brother. I appreciate his point of view about this unique philanthropic model. Another shining example of the powerful and much needed work nonprofits provide in our society. Proud to be a Phi!
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