Tuesday, February 24, 2009

It is not a recession, it is a restructuring

I've been thinking about this post since last November. Unfortunately, quite a few things have come between my thinking about it and my writing about it. I'm sitting here now, with 25 minutes to go before I know I'll be interrupted, to get some first words out there because I think this frame is critical - this is an opportunity to reframe, rethink, re-set, and re-build some of the things we take most for granted. It is not (just) a recession, it (can be) a restructuring.

This video, which I found on Marty Linsky's blog (with a big shout out to Virginia Clarke) is worth the 4 minutes and 50 seconds to watch - I bet it will get you thinking in a "re-set" kind of way.

So - beyond the alliteration - what does a restructuring mean? Focusing only on issues of the public good and how they get done and who contributes to them (what I might have previously called philanthropy) let's think about this:

We know that nonprofits are under extreme duress financially. Our communities are filling with neighbors out of work, houses under water, questioning of the "American dream," fear that the government won't be able to "get us out of this mess," closed shopfronts, under-performing schools, health care crises...you know the list.

Our collective financial assets have dropped by some un-imaginable amount - 10 trillion USD? 30 trillion USD? These are numbers none of us can visualize, let alone really comprehend.

Most of us have also finally gotten the message that we live on "spaceship earth" - the resources of which are both finite and undergoing rapid changes for which we argue about the pace but can't really begin to comprehend or plan for the impact of higher coastlines, arctic water passage, post-petroleum economics, and so on.

It doesn't make sense to think of this as a dip in an otherwise upward trend. It is more like a turn off onto a different path. People born since 1990, all over the globe, have fundamentally different assumptions than those born before that year about where information lives, who controls it, where and how work gets done, what the "proper" role of government might be, where their friends live, how much personal privacy they have, want or value, what kind of resources will be needed to fuel their futures, what kind of innovation might fuel the economies in which they will live, and what their individual relationships to others - proximal and far away - are, could be, or might be.

So, what might now seem to be on the edge of philanthropy - or any industry - may very well come to its center. And quickly. Here are some ways restructuring might happen:
  • Social enterprise begins to morph the philanthropic giving that exists to its left and the commercial enterprise that exists to its right (on a spectrum from giving to investing)
  • Networks of individuals - deliberately or expectantly time-limited - get more done than organizations
  • Individuals' daily contributions and activities are a deliberate and recognized mix of paid and unpaid - and successful enterprises build themselves to catalyze those inside/outside, professional/volunteer, expert/amateur, user/producer contributions
  • Philanthropic giving is really asked (read: required by regulators or purchased: in a marketplace) to prove its value in the funding food chain of producing social good. So are social investing, social enterprise, and socially responsible investing.
  • Islamic finance and various Asian cultural practices regarding mutual aid, private capital for public good, and giving become as influential in practice as they are in number of people
  • Enterprises and activities that generate economic, social and environmental benefits move from marginal to the middle - and innovation shifts elsewhere
  • Schooling and educational systems evolve to prepare more kids for the skill, job and political markets they will actually face
  • Cooperation on a global scale prevents or limits a global pandemic, and we learn from that
  • We will no longer assume that nonprofit = social good, commercial enterprise = profit, rather we will think about what we need as a society (investigative reporters, an independent media, universal literacy, human rights) and figure out new forms of delivering those things
  • Foundations will act like entities in the knowledge business, not as mere funders
  • We'll be working among a profoundly different set of dynamics between the public sector, commerce, and independent entities - and making the most of those changes
Such a future is already here. The debates about the future of the newspaper, working models in which indigenous knowledge informs medicinal innovation, free and open educational resources and tools to access them, debates on social innovation and business models, and the growth of the science commons, creative commons and (maybe even) a giving commons are early signs of movement in these directions. Linsky's post above asked individuals which way they'll go - hunkering down or resetting. These are choices at the individual level, but the larger forces are already in motion.

That's it - my time is up. More to come, I promise. In the meantime - please chime in.


Anonymous said...

I completely agree with many of your points, but the first one on the list about social enterprise is one that I personally promote, as I think moving from the “philanthropic” state of mind to a “revenue generation” state of mind for mission-drive organizations is going to be a must in the future. The Social Enterprise Institute (www.se-institute.org) is working closely with non-profits to create revenue generators to support their programs. So far, SEI’s programs have been successful in helping non-profits reframe and restructure their fundraising revenue streams. But, SEI still has much work it needs to accomplish as it is currently working on duplicating its model nationally. In times like these, providing value is more important than ever as consumers are extremely careful where they spend their dimes. Merely asking for money without providing a product or service does not hold well in recessions, so I think it’s time non-profits see the big picture links you presented if they are planning are continuing to support their programs.

Anonymous said...


Well said. I believe we have a broad cultural understanding of what is valuable, we just don't have the systems that facilitates our trading that value.

bethp said...

Thanks, Lucy, this is insightful. I just read another great article on a similar topic:


Ami said...

Great insights and great summary Lucy. Thanks!

MarcD said...

The future is here, but there is still a lot of work to do to build the right infrastructure to support this convergence between philanthropy, social business and regular business.
There is no question in my mind that if we want to resolve the crisis at hand (economy, war, environment, etc...) we will need to get philanthropy and social businesses out of their corner (as a convenient way to trust that something is being done while most keep doing their business as usual), to bring them into the mainstream.
Entrepreneur Commons is trying to do that, helping entrepreneurs in general while providing an investment structure that does not focus on maximizing profit.
Every business in the end should be a social business...

Unknown said...

Brilliant, Lucy, thanks. Two points in particular jumped out at me:
1) the real possibility that tax exempt status will be much harder to come by and scrutinized by municipalities with anywhere from 30 to, say, 70% unavailable to be taxed.
2) a real reframing of philanthropy as knowledge creators and sharers - something they/we have been notoriously bad at historically.

Thanks again!

Lucy Bernholz said...

thanks everyone - for the comments and the links. Your responses lead me to believe that there might be value in digging a bit deeper into this, and framing it a bit more completely than I was able to do in 25 minutes. Will make my best attempt

Anonymous said...


Thanks for posting my comments for me. Although we live in an IT age, it sometimes fails. Looking forward to your next post about this.

MarcD: Completely agree that now is the time to get non-profits and social enterprises out of the corner and into the mainstream. The media is picking up on this, finally. Business Week had a recent calling for America's social entrepreneurs and they are going to run an article in April or May. Thanks for the information on Entrepreneur Commons; will research.

Twitter: @10PerSolution