We’ve long recognized nonprofits for their role in making the world a better place. We can point to their long history at the forefront of social advocacy movements, collaboration with governments and civil society, design of large-scale development reforms and mobilization for grassroots efforts where communities need resources most.
The impact of nonprofits is gauged by lives changed, people reached, services rendered and donations earned. We qualify nonprofits and their work as the “business of social change.” But does evaluating nonprofits through that lens alone mask their role in stimulating the economy and expanding local markets?
By reframing our view of the sector with this additional perspective, we offer an opportunity to spur innovation, build broader cross-sectoral partnerships and impact the world’s most significant challenges through system-level solutions.
Nonprofits As Economic Engines
Nonprofits routinely provide the fuel to rev local, regional and even global economies. At the most basic level, nonprofits purchase and produce goods and services and pay taxable wages to employees like for-profit organizations. These transactions have an economic ripple effect, as money spent by nonprofits and their employees is then circulated throughout the broader economy, benefitting us all.
Job-wise, between 2007 and 2016, the number of jobs created by U.S. nonprofits grew by 16.7%, according to “ The 2019 Nonprofit Employment Report “ — nearly four times faster than the country’s for-profit businesses. The same research showed that nonprofit job growth was also more consistent, increasing during the recession period of 2007 to 2012, when for-profit employment fell. Between 2012 and 2016, philanthropic work also gained ground, while for-profit employment saw insignificant growth.
Nonprofits can also occupy a unique niche in our economy, spanning the public and private domain, and responding when capitalist markets cannot deliver solutions. For example, throughout the world, the goal of universal literacy continues to be held back by a failure to provide an essential and surprisingly rare commodity: a good children’s book.
Regardless of the global need for literacy and high-quality, engaging children’s books, book publishers have traditionally published for a specific book-buying audience. For low-income communities, this has led to children’s literature that is limited or often nonexistent. They face both a deficit of physical books in local languages of instruction, as well as a severely limited capacity of trained authors and illustrators who can produce storybooks in underserved languages or parents with the capital to purchase these books. That breakdown in the book publishing supply and demand chain has fueled a global illiteracy crisis.
Building Local Industries From The Ground Up
Almost 80% of children in South Africa fall below national literacy standards, even after four years of full-time schooling. The country placed last out of 50 countries in the “ Progress in International Reading Literacy Study.”
To address this countrywide challenge and its contribution to economic stagnation in South Africa’s low-income communities, my organization, Room to Read, forged a partnership with the World Bank and Global Book Alliance/Reach for Reading to invest in the local book publishing market. Working with public and private entities, Room to Read simultaneously built both sides of the supply and demand chain for children’s literature, partnering with numerous illustrators, editors, designers and writers for technical capacity building and with publishers and book stores to explore new business models that pilot how publishing African-language storybooks can be profitable.
Through these efforts, over 20 titles in five underserved languages were published, with the partners distributing 128,500 copies of these original storybooks to government schools. However, more than a good deed, this project functioned as an economic stimulator. The Publishers’ Association of South Africa (PASA) reported that, in 2018, only 10% of publisher profit came from African-language book sales. However, our pooled procurement model generated 47% of its profit from African-language storybooks. Where a scarce and disjointed book publishing industry once existed, a sustainable and independent market for children’s storybooks was born, and with the means to sustain itself.
The New Reality Of Nonprofit Work
Today, nonprofit work is so much more than outdated binaries of purpose versus profit. Instead, as a nonprofit leader or organization, we must understand the vast impact and benefit of our work, noting its ability to go beyond the feel-good or immediate and function as a venue for economic growth. Viewing your work through this mode opens opportunities to seize on new partnerships while cementing the sustainability and benefit of your program.
Importantly, the capacity in which you choose to either expand your work or strengthen your base is a pool of knowledge that can be used to further strengthen economies. Organizations like Kiva, Women’s World Banking and Creative Destruction Labs have also taken this same approach, using their expertise to stimulate economies and build new revenue streams in low-income and underinvested communities.
Nonprofits are not just routine operations that exist in a neutral corner of the economy. Their innovative interventions can lift communities and nations out of poverty and energize depressed markets. Free from the demands of shareholders and traditional revenue models, nonprofits have the flexibility to work alongside diverse partners and drive investment streams in systems that lead to economic growth and increased financial opportunities.
With a sharp lens for sustainable solutions, the nonprofit sector can drive economic progress. It’s high time our policies better reflect this understanding and produce stimulus packages that consider the role nonprofits can play in improving the economies of the communities that need it most.
Author Bio Dr. Geetha Murali is the Chief Executive Officer (CEO) of Room to Read, an organization that believes World Change Starts with Educated Children.® As Chief Executive Officer (CEO), Geetha oversees Room to Read’s global operations, which include programmatic work in 16 countries, a global network of investors and volunteer chapters, and a worldwide staff of more than 1,600 employees. Geetha is a member of the Forbes Nonprofit Council, the Young President’s Organization (YPO), and has been recognized by WIRED as a leader who will shape the next 25 years. She serves on the board of directors for the Global Press Institute and the board of advisors for COHORT3. Geetha received her master’s degree in biostatistics from the University of North Carolina at Chapel Hill and her master’s and doctorate degrees in South Asian Politics from the University of California at Berkeley.
Originally published at https://www.forbes.com.
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