What on earth is a nonprofit entrepreneur?!
Is it a good thing?
Or an insult?
Entrepreneurs are yuck
Previously, I wrote about the distasteful stereotype of entrepreneurs, those we see in the media as privileged white males accumulating wealth through tech companies (link).
Those yucky traits of entrepreneurship make us in nonprofits turn away.
But there’s loads to learn from the study and practice of entrepreneurship.
Maybe not so yuck
The first thing is that we’re doing it. A lot.
Here’s how I know: after 15 years of starting up new services in health care, social care, and education, I spent six years supporting founders and start-ups in med tech and ed tech.
Their ambitions were big.
Their product or service would make the world a better place.
They worked crazy long hours.
They wore all the hats.
They desperately needed to raise money.
But here’s where you know the story isn’t about a nonprofit.
They wore the term “entrepreneur” with pride.
They referred to themselves as entrepreneurs and felt part of an entrepreneurial community.
They knew that being in start-up mode was a minefield and to survive it – stabilizing with reliable income – was the ultimate test, the Final Exam.
Get there, you’ve passed.
You’d be a true entrepreneur.
Through research, I came across the Entrepreneurship Learning Institute (ELI), who advocates for integrating an entrepreneurial mindset as foundational in education. To them, the traditional educational framework can’t cope with the speed our society shifts and changes and thus cannot prepare students for the real world.
ELI defines the “entrepreneurial mindset” as the “self-directed pursuit of opportunities to create value for others”.
I had to read that several times.
Isn’t that what nonprofits do?
We call ourselves lots of things in nonprofits.
“Social change maker.”
“Force for good.”
No one calls themselves a nonprofit entrepreneur.
By embracing this identity, however, we could learn better and faster what works in start-ups and how to spread our impact.
More founders would survive start-up mode.
More Executive Directors would scale safely without risking their core culture and ethos.
It’s not as though we’re not already entrepreneurial.
We’ve been working this way since forever.
But not with intention.
Not with self-reflection and learning.
We’ve been accidental nonprofit entrepreneurs.
Let’s dig into the “entrepreneurial mindset” and see what it means in practice.
Is it something you should aspire to or are you already there?
The entrepreneurial mindset
We hear a lot these days about “mindset”.
Quick reminder: a mindset is the pattern of beliefs, assumptions, and ways of thinking that work well enough for us to assume they are the correct way to think and feel about things.
Everyone has a mindset, whether they recognize it, and whether they deliberately cultivate one.
(A bit like strategy – everyone has one, deliberate or not).
Take a second to think about your beliefs and assumptions about running a nonprofit.
How close are those beliefs and assumptions to the ELI’s definition: “self-directed pursuit of opportunities to create value for others”?
Don’t worry if your first impression is “not at all”.
We don’t use this entrepreneurial terminology in nonprofits, so you can’t fault yourself for not having it drilled into your brain.
You’re probably a lot more entrepreneurial than you think.
If we break down the three essential components one by one:
- Pursuit of opportunities
- Creating value for others
We’ll see these pieces work together to form a whole greater than the sum of its parts, but let’s look at each one in isolation first.
Are you self-directed?
How many people can add to your to-do list?
Who influences your choices about how you spend your time?
Are you always running to the next thing, late, out of breath, and out of time?
Nonprofit founders take the initiative.
They get off the sidelines and get the ball rolling.
A burst of energy, wind in their hair, they’re flying!
Then something strange happens.
They run into a wall.
The ball ricochets in an unexpected direction.
They chase after it.
Maybe the ball stops altogether.
Maybe the founder stops, too.
The self-directed person perseveres.
Are you self-directed?
It’s natural to focus on the first half of “self-directed” but the second half matters.
Directed. As in “giving direction”. Telling someone or yourself “what to do”.
But there’s more to self-direction.
What, When, and Where
As any manager knows, giving direction involves a combination of What, When, and Where:
“Pass this message to Sam before 3 pm.”
“See if you can get them to agree to our proposal before the end of next week.”
(Except for micro-managers, we save How for occasional teaching moments.)
Implicit in giving direction is the Why.
Why is this action the best way to move ahead toward the bigger aim?
Why is this action the best option right now?
Sometimes we voice the Why when asked or as a general reminder.
Why and How
To be self-directed, adding What, When, and Where tasks to our to-do list isn’t enough.
The self-directed also define the Why.
They can’t rely on a corporate culture or profit-motive to serve up a ready-cooked Why.
There’s no job description with cosy HR soundbites depicting their contribution as “enabling” and “ensuring” and “empowering”.
For nonprofits, the Why isn’t the vague aspirational Mission Statement.
The nonprofit Why driving self-direction is the current strategic objective. It’s focused and immediate. It’s the big P Priority that shapes the little p priorities that go on the to-do list.
It’s building and refining a program that gets results.
It’s growing an audience and support network.
It’s reaching financial stability through reliable revenue.
By defining the Why, the self-directed nonprofit entrepreneur determines the time and effort spent on this rather than that.
She sets the balance of risk and reward.
Wait – there’s more!
Remember the How, saved for teaching moments?
The self-directed expose their limits by confronting the How when they don’t know how.
They find a way.
Instead of making the straightforward choice, staying in their comfort-zone, nonprofit entrepreneurs wade into the unknown because the Why insists.
The self-directed are self-taught (maybe with a little training or coaching).
They learn how to network. They learn storytelling, data management, and budgeting. They target their social media, refine their time habits, and attract people with complimentary skills and experience who also care about the problem their nonprofit tries to fix.
It’s a bumpy ride.
But the self-directed take personal responsibility for getting over those bumps.
They hold themselves accountable.
We’ve come full circle back to the “self” part of self-directed.
The locus of control for entrepreneurs is internal, where their motivation to make a difference lies.
2 Pursuit of opportunities
This motivation leads to new nonprofits.
Nonprofit start-ups are not accidents.
With purpose and intention, we create new organizations to do new things.
But when the ball hits the wall and bounces unexpectedly, we can lose focus.
Isn’t that the worst time possible to “pursue opportunities”?
Doesn’t that distract us?
Shouldn’t we focus, tunnel-visioned, toward our goal?
Our journey is bumpy enough.
Opportunities as shortcuts
Looking sideways while chasing our goals slows us down and distracts us.
We don’t need to add new goals until we crack our current one.
But we’d love to find ways along the journey that make it faster, easier, or better.
Seeing these ways, and taking advantage of them, is what “pursuing opportunities” means for entrepreneurs.
Pursuing opportunities means finding shortcuts.
We’re still focused on the single goal, but we’re getting there quicker, with less effort, and achieving a better result.
- We notice our program complements that of a partner and team up to serve the same population (quicker, less effort).
- The community we’re trying to serve tells us they prefer an alternative location or time of day to take part, so we accommodate and serve more people (quicker, better result).
- Or we acknowledge a fatal flaw in our program, go back to the drawing board to redesign it, but this time with the people we hope to serve so it delivers from the start rather than struggling through multiple iterations (less effort, better result).
How do we find these opportunities?
Problem finding and problem solving.
No, we don’t mean looking for trouble.
And no, not being the pessimist poo-pooing every idea.
Problem finding means looking at things differently, not accepting “that’s just how it is”.
Problem finding means extended observation and inquiry.
Having a good look, asking lots of questions, listening, and listening some more.
Problem finding combines curiosity with empathy, seeing how people experience “how it is” and their frustrations in trying to solve their problems.
Through problem finding, we discover new perspectives and unlock new opportunities.
Now that we’ve problem-found, we need to problem-solve.
Back on familiar ground for most people, problem solving uses creativity and critical thinking to overcome the obstacles we problem-found.
We try, we fail, and we try again through repeated trials and errors.
We bring in our partners to collaborate and network to find new partners, pooling resources and reducing risk.
We don’t let confusion and ambiguity get in the way.
We create our own clarity.
We don’t worry about how many cycles of trial and error we need to get it right.
We keep testing.
We find shortcuts.
We pursue opportunities by problem finding and problem solving.
Does that sound like you?
3 Building value for others
The third element of the entrepreneurial mindset seems obvious to nonprofits.
We work for others, right?
The key term here is “value”.
What is “value” for nonprofits?
Are we consciously building it?
This conversation is underdeveloped in our sector, and I’ll come back to it another time.
For now, we can agree that nonprofit entrepreneurs surely believe they’re creating value for others.
What folks don’t realize is the scope of value nonprofits create.
Nonprofit value falls into four categories:
Like for-profit entities, nonprofit value includes real assets, the balance sheet, cash flow, reserves, surpluses (profits) but not share price or dividend, since ownership isn’t traded and there’s no financial distribution (dividends).
Also, like for-profits, nonprofits crash and burn from lack of cash.
Cash is king, so nonprofit entrepreneurs keep a close eye on cash flow.
The heart and soul of nonprofits. Our raison d’etre.
There’s intrinsic value for the people and communities we serve, but value extends to the staff who gain skills and experience, to partners who add value to their own programs, and for the organization to evidence impact and the reputational consequences.
Nonprofits as a field learn what works and what doesn’t.
If you’ve ever negotiated a corporate partnership, you know that a nonprofit’s audience has value and not just in its size.
The degree of engagement, the type of engagement, the intensity of engagement, who in your audience is engaging – all these have value in what they say about the nonprofit’s ability to build loyal followers who become volunteers and donors.
Not all nonprofits think about the wider implications of their work, while others focus entirely on influence through advocacy (policy change) and thought leadership. The latter applies to both the problems the nonprofit addresses and potential solutions.
At minimum, all nonprofits bring attention to their focus and the community they serve, and that increased awareness has its own value.
ELI’s take on this third component is that “by creating value for others, we empower ourselves” and few in nonprofits would dispute this sentiment.
For founders, translating their passion into a mission-led organization fulfils a deeper need to contribute.
We should care because entrepreneurship as a field of study and practice has a lot of overlap with nonprofits, especially for founders, start-ups and early-stage organizations still looking for stability.
As I argued in a previous blog (link), we in nonprofits should ignore the negative connotations of stereotypical “entrepreneurs” and push financial wealth aside as the principal goal of entrepreneurship.
Our ambitions are bigger, broader, and shared.
Entrepreneurship uses the term “value” for the worth of our efforts.
Value need not be money, and in our case it often isn’t.