Today’s not-for-profit business models aren’t designed to achieve tomorrow’s societal goals. The CWHL’s woes are emblematic of a wider trend.
The impending shutdown of the Canadian Women’s Hockey League (CWHL) in early May 2019 is not the result of a new phenomenon. In the past ten years, a number of worthwhile not-for-profits and charities have struggled, from health organizations to churches. It’s a sign of a changing landscape. For the next number of years, as alternative business models for societal change go mainstream because of shifts in demographics, donation behaviour and technology, you can bet that we will see another wave of not-for-profits experiencing serious struggles.
The engine warning light came on some time ago, but we ignored it. It’s time to pay attention.
The problem is that many of our not-for-profit business models were designed for a different era. Now we are trying to squeeze a radically better society from models that weren’t designed to do much more than deliver services. They weren’t designed to be surplus-generating, or data-driven, or to accept impact investment.
Not-for-profit organizations are a powerful engine for societal transformation. There are countless examples in Canada, from Saint Elizabeth Health to the National Association of Friendship Centres. We should be incredibly proud of our country’s civil society landscape. It is the envy of many countries around the world. Canada’s not-for-profit business models have strong elements of volunteer management, donor stewardship, advocacy and program delivery. Along with an appreciation and celebration of these elements, there is increasing consensus that societal transformation requires not-for-profit business models that are fit for a world that’s changing faster than ever.
Not-for-profits can adapt to a changing landscape, and it could mean incorporating a few features that you may already recognize in the worlds of business, labour and technology.
First, 21st-century not-for-profit business models require diversified investment—beyond the typical fundraising drives and sponsorships that organizations such as the CWHL relied on. In particular, impact investments are growing in Canada. Impact investments are investments made in companies, not-for-profit organizations and funds with the intention of generating measurable social and environmental impact alongside a financial return—a key ingredient for sustainability. Impact investments can be made in social-purpose technology, products, experiences, services or — the most popular type — real estate. Impact investing in Canada now totals $14.75 billion, an 81 percent increase over a two-year period.
Second, these models require a modern talent attraction and retention practice. This includes paying market wages, investing in employee professional development and offering a comprehensive suite of benefits. The average not-for-profit salary in Canada is just over $31,000 per year, and entry-level positions start at about $27,000. In the CWHL, players mostly earned between $2,000 and $10,000 a season.
And third, just as innovation in the business world drives new and improved products and services, innovation and experimentation can also help not-for-profit organizations generate significant and rapid advancements in services and solutions that enhance lives. However, currently only a small proportion of not-for-profit organizations intentionally and consistently incorporate a wide range of new knowledge (like insights into how the brain works), new technologies (like machine learning) or new processes (like human-centred design) all of which can help not-for-profits be more responsive and adaptive to their stakeholders
Here’s the thing: Canada is not just the country of transportation, energy and technology wonders. It’s also a country that is full of ingenuity to enhance societal well-being. From our arts and sports to our education and newcomer settlement, we are the country that created the world’s first registered disability savings plan and the globally replicated Women’s Institutes and jump-started the cooperative movement.
As we look ahead to the next decade, there is no doubt that we’ll have more not-for-profits voice their struggle, but we also have a pivotal opportunity to prepare for a great transition that supports organizations working to accelerate advancements in well-being. Canada can lead the world in providing the best social outcomes.
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