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Philanthropy Journal – Making a market – Invisible hand at work

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By Todd Cohen

Philanthropy is big business, and can be good for the bottom line.

That’s the message that some of American’s biggest companies are starting to get.

It’s about time. Nonprofits and philanthropy do the tough jobs in our society and represent a huge investment in time and money.

Nonprofits account for 6 percent of the U.S. economy, while Baby Boomers are expected over the next 50 years to inherit and donate to charity trillions of dollars.

Yet American business has been slow to recognize philanthropy’s business value.

Invisible as a sector, philanthropy has been seen – if at all — as marginal to the main action of supply and demand in the economy.

Now, however, business leaders are concluding that philanthropy itself is a key force behind the so-called invisible hand that moves the marketplace.

Microsoft, for example, has teamed up with tech startup B2P, which is customizing the software giant’s small-business products for nonprofits.

In another big move, AOL Time Warner has joined Cisco Systems and Yahoo! to build a Web portal to deliver a huge audience for philanthropy and spur online giving and volunteering.

And just this week, Bank of America named Verizon Communications’ top branding executive to head the big bank’s corporate foundation.

Like a growing number of companies, Bank of America has embraced the idea that doing good is good for business.

Philanthropy, these companies recognize, should be in sync with and built into their business strategies, as well as reflecting and shaping their brand.

These all are important moves that treat nonprofits and philanthropy as serious customers deserving serious attention for products and services.

To make the most of these developments, however, nonprofits have a lot of work to do.

Accustomed to doing business hungry for a handout, nonprofits need to transform themselves into savvy entrepreneurs and investors.

Instead of asking donors to come fill their cup, nonprofits need to make clear the value of the work they do, and of the resources they have to invest.

In most states, for example, nonprofits can join statewide associations, which can use the collective clout of their members to try to coax favorable deals on matters ranging from insurance to telecommunications.

In the same way, community foundations have formed Community Foundations of America, a nonprofit buyers group that is working with business partners to develop customized products and services for its members.

The lesson here is simple — and critical: As big business learns that philanthropy is a big market, the nonprofit world needs to trade in its empty cup and train its invisible hand to make the market work for philanthropy.

Unlike business, philanthropy measures its bottom line not in dollars, but in doing good.

Yet just as business can see that philanthropy is good for the bottom line, philanthropy must learn that business thinking is critical for doing good.

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