Is Inclusive Impact Entrepreneurship A Strategic Inflection Point for the Not-for-Profit Industry?
At In Place Impact, we look at the world in terms of paradigm shifts. Recently, we have come to the conclusion that global growth in inclusive entrepreneurship will create a paradigm shift that drives opportunity for everyone, while being a positive disrupter for the not-for-profit industry.
The old paradigm of fixing social and environmental problems was, go to college, graduate, make some money, then one day give some back to people purposed to fixing the problems. The new paradigm that is being encouraged all over the world is “make a profit while making a difference”. This means that in short order, millions (frankly probably tens of millions) of people all over the world will be focused on making money while solving the social and environmental problems we face. Furthermore, (as evidenced by the free community Impact Entrepreneurship class we run in Charleston, SC) it is not only college-educated graduates that will participate, as the demographics of the class are over 70% female, over 60 minority, over 50% reside in our most marginalized community segments, and over 65% did not attend college. Add to the aforementioned that people are starting to realize that "demonizing" the top and or bottom of the socioeconomic pyramid is not the answer, and it is clear to see what is coming.
For decades the .1% have been demonized as being a major problem in the goal to eradicate poverty. However, it is time to take a hard look at reality and to stop blaming those who can solve the problem.
Ask yourself a question. Do you know any family of ultra wealth that does not donate copious amounts of time, money, passion, and purpose to initiatives they care about? We have asked just over 700 people from all over the demographic spectrum, and to date, not a single person has said yes. Needless to say, and based upon our personal values and virtues, we can disagree with the causes each one of us supports, however, there appears to be no doubt that families of wealth truly do help with their time and capital.
Now ask yourself a second question. Why is the poverty problem getting worse, when over the past 60 years, billions of dollars have been donated, gifted, granted, etc., to millions of people purposed to eradicate poverty?
Maybe, it is simply time to play "follow the money", to see where the choke points are that prevent "Top-Down" capital from finding, funding, measuring, and scaling "Bottom-Up" innovations. (At In Place Impact, we call that find, fund, measure, scale, repeat).
There is no doubt that on many occasions only small percentages of the capital released from the "Top", finds its way to the intended targets at the "Bottom". Our research has shown that the majority of it never makes its way passed the:
Next 9.9% on the demographic pyramid, i.e. the sector that makes an incredible living, out of those who have made an incredible fortune.
The following 50% on the economic pyramid, this sector includes the government policies that don't just keep the status quo, they make it worse!
Community leaders in the bottom 40% of the economic pyramid who have stated to us not to "come in here and rock the boat", when we have provided free help for those living within marginalized communities.
After 27 years worth of work, we no longer look at the demographic pyramid being a single shape, but rather a pyramid that in of itself is made up of a myriad of smaller pyramids inside it, each with a "Top" and a "Bottom".
It is plain to see that there is no "direct line of sight" between the "Top" and the "Bottom" and that the current conduits channeling capital from one to the other has way too many choke points within them.
Also, without a direct line of sight, people hold on to narratives that are not based upon fact.
One narrative that has been socialized throughout the "Bottom" is that the people in the "Top" do not care and they do nothing to help. This could not be further from the truth. One narrative that has been socialized throughout the "Top", is that the people in the "Bottom" are there because they want to be, because they are lazy, and because they want handouts. This again could not be further from the truth.
In summary, we need to stop blaming the "Top" and or the "Bottom" and focus on the choke points preventing high percentages of "Top-Down" capital from fully supporting the "Bottom-Up" innovations they target. Eradicating poverty in America has proved hard enough, if we do not remove the choke points that are hiding in plain sight, we will never succeed.
When we look at this as a potential paradigm shift we ask the following questions:
1. Are many of today’s not for profits the fax machine manufacturers of 1993? The companies that realized they were in the business of transferring data from point A to point B, pivoted to align with email and survived. Those who thought they were in the fax machine manufacturing business did not survive.
2. What is the best way to efficiently and effectively help everyone participate? With the growth in the switch of mindset from donating to investing, we are seeing exponential growth in social enterprises. Just as emerging economies bypassed the old telephone infrastructure and went straight to wireless, countries like India are going straight to social enterprise. Some reports suggest that there are more social enterprises in India than there are in the rest of the world combined.
Question 3. How do we protect the not-for-profits that are essential to our future, including those focused on sourcing, conducting diligence on, helping fund, and measuring the financial and other impacts of local innovations? Even with people wanting to invest as opposed to donating, an entity has to do the work.
We are not aware of a time in history where ALL people have had the opportunity to be innovators in fixing their own problems, not just to subsist, but to make real money. If the solutions they create are designed to scale, who knows how large some of the companies they create can be. All too often, entire segments of our community are left behind when a paradigm shift occurs, this paradigm shift truly provides everyone an opportunity to participate, if we provide them with the knowledge, tools, information, contacts, capital, etc., they need. We cannot recall a time when so many people will have such an opportunity to fix the problems they face in their own communities while making money in the process.
We believe this is a strategic inflection point for the not-for-profit industry, but by the same token, we cannot in good conscience let the opportunity of spreading inclusive Impact Entrepreneurship get away. It will be interesting to see who understands they are in the data transfer business and not the fax machine manufacturing business.