Some organizations have found a way to get the best out of the nonprofit and business worlds.
A growing number of organizations combine business and nonprofit structures that offer them the best of both nonprofit and for-profit worlds. They can retain profits but are also able to raise money from both shareholders and foundations. As these organizations grow, they present new challenges and new opportunities for consultants.
First, it helps to understand how two of the most popular socially oriented companies are structured:
* Low-profit, limited liability corporations, known as LC3s, were first created in 2008 and are constructed primarily to meet social needs or provide a social benefit. They are not tax-exempt, but they can attract investment dollars and apply for foundation grants. They can retain their profits.
* B (Benefit) corporations are companies that have a passing score on an assessment of their business practices that is administered by an organization called B Lab. In just four years, more than 400 companies have earned the status, including at least one consulting firm—the Monitor Institute—which belongs to the Monitor Group, the global management-consulting firm.
Traditional businesses are also making a bigger deal out of their giving and seeking help from nonprofit consultants to shape their strategy.
One World Futbol, founded in 2006, is a business with a built-in charitable dimension. It sells balls online at a price comparable to those of competitors. But for every ball purchased, an identical ball is donated to a nonprofit that works with needy children or to a community recreation program.
The interplay of business and nonprofits is not new, but as these groups grow more sophisticated, they raise questions:
* What does governance look like for organizations that are not completely like a business or a nonprofit? How can consultants help?
* How can consultants help measure results? What weight is given to profit and what weight to other objectives? The B corporations have already set that out, but other organizations have not.
* What skills are needed to advise these organizations? Is both for-profit and nonprofit expertise needed?
What have your experiences been with these kinds of organizations? Share your thoughts and approaches in the comments section.