First Principles (original)
The nonprofit organization is a recent development in history; organized charity, service, and outreach are not. In the West, for much of the last two thousand years, charity was the work of local Christian congregations, or simply individuals and households, serving their neighbors in need. But around the time of the Industrial Revolution, in the English-speaking world, this charitable work began to be channeled through organizations distinct from the church itself, responding both to new chasms of inequity and to the increasing complexity of urban, industrial society.
It was not until the turn of the twentieth century that these charitable efforts were granted a special legal status, leading to an explosion of charitable “nonprofits.” Today, there are over one million public charities in the U.S., with a vast array of missions and strategies, from small neighborhood-focused groups to those operating on a global scale. The sector as a whole accounts for more than 5% of U.S. GDP and roughly 10% of wages.
Outside the U.S., especially in low- and middle-income countries, the nonprofit sector (including multinational and U.S.-based charitable work) has a disproportionate economic footprint, in some cases surpassing the local public and private sectors.
But when it comes to delivering social good, especially to those in the most need, many nonprofits fall short in impact and integrity, in spite of the noble goals for which they are organized (and for which they receive favorable tax treatment).
When we hear this, our minds may go immediately to the aging nonprofit hobbled by inefficiency and mediocrity—or to high-profile cases of charities that have become notorious for misusing donor funds. But while these stereotypes may dominate the popular imagination about nonprofits, they don’t represent the great opportunity for transformation in the sector.
Indeed, the nonprofit world is thick with disciplined, ethical, and creative leaders. Many are capable of scaling visionary organizations with widespread impact; others are endowed with the persistence to focus on a single community for the long haul. Yet many of these leaders and organizations fall short of the durable impact they hope to deliver.
Some do more harm than good, not out of corruption or incompetence, but out of well-intentioned mindsets and actions that fail to properly account for the complexity of the human condition.
Even in the most effective, resourceful, high-growth nonprofits, we often settle for practices and norms that are necessary but insufficient for the outcomes we seek. We may focus on numbers of people served, size of budget, retained donors, and great stories—knowing that these are inadequate proxies for measuring our true impact. We propose that there is a higher horizon of opportunity for the redemptive nonprofit, one that seeks the renewal of the larger society as well as all the stakeholders involved in the work.
The starting point, we believe, is to contend with two fundamental vulnerabilities built into the nonprofit structure. We’ve labeled these the “stakeholder gap” and the “nobility trap.”
The stakeholder gap is a structural issue. Often, the nonprofit’s funders do not require its services, and those who receive its services are not its primary funders.
The people in the best position to assess whether the organization is actually creating value—its beneficiaries, the ones who would be the “customers” of a for-profit business—are not the same people who deliver the financial resources that all modern nonprofits need to survive.
While this gap between donors and beneficiaries does not apply to the same extent to all tax-exempt organizations (many of which, such as prestigious arts organizations, raise their principal funding from their own “customers”), it applies dramatically to those with the seemingly most noble missions. The more vulnerable an organization’s beneficiaries are, the less likely it is that they are the ones who provide it financial feedback and accountability for results.
The nobility trap is a human issue stemming from the admirable intent of the leader and the organization. Nonprofits begin with the ostensible purpose of serving others and making the world a better place; and most people assume that nonprofit leaders and team members are making sacrifices relative to other more lucrative or prestigious career options. All this can be true—but it can prevent the leader and organization from being held to the highest standards of excellence.
In the worst case, sentimental admiration for a leader or cause can lead to neglect of the scrutiny that would disclose the gaps between an organization’s stated mission and its own beneficiaries’ assessment of its impact.
Because these two vulnerabilities arise from the very purpose of the nonprofit structure, and because very few leaders set out to take advantage of them, it is easy to treat them as benign. But amplified by our human tendencies toward pride and self-justification, they lead to blind spots that can cause any nonprofit to do unintentional harm, and to miss opportunities for significant impact.
Without intentional and sustained countermeasures, nonprofit leaders are likely to fall into creating internally divided organizations, where board, donors, staff, and beneficiaries are siloed from one another. Over time, the leadership team learns to carefully control the narratives and relationships that cross the gaps between audiences. Strategy is defined with fewer key stakeholders in the room; donors may be offered only the success stories and kept out of the true challenges of the mission, or given too much rein to define the problem and the solution. The communities served by the nonprofit may feel their voices are stifled.
These divisions complicate the already difficult prospect of translating lofty intent into sustainable beneficial impact. Though everyone is in favor of personal, communal, and structural transformation, these are very hard to measure, prove, or repeat. As a result, many nonprofits and their donors settle for powerful stories and input metrics alone, avoiding the difficult and essential work of impact modeling, structured listening, monitoring, evaluation, and reporting.
The nobility trap also leads directly to the all-too-common nonprofit with an inspiring mission but a toxic culture—where staff are underpaid, overworked, and flounder with little direction or wither with insufficient autonomy; where vendors learn to anticipate zero-sum negotiations, unrealistic expectations, and late payments; where boards are reluctant to contain the influence of a charismatic leader; where donors sense they are being manipulated; and where potentially beneficial partnerships are avoided or suffocated through suspicion and turf wars. The cumulative result is that the very sector many people consider to be the most generous actually faces the greatest risk of being the most exploitative.
The sector many consider to be the most generous actually faces the greatest risk of being the most exploitative.
But it doesn’t have to be like this. In this playbook, we want to encourage nonprofit leaders to chart a different course, on two fronts. First, recognizing that the stakeholder gap and nobility trap foster mediocrity (or even unwitting exploitation) in strategy and management, it lays out some essential elements of excellent nonprofit organizational practice.
More significantly, it aims for a redemptive rethinking of the very premise of the modern nonprofit. The practice of excellence is necessary but insufficient to repair the fundamental flaws in the way we channel our charitable activities. Something deeper is needed—something that recognizes dignity and agency among those we serve by restoring the relationships that were the original, personal heart of God’s vision for just charity.
This kind of nonprofit work depends upon sound ethics and best practices, but it goes beyond them. The commitments and practices in this playbook can be implemented in organizations without a particular faith commitment, but they are rooted in a distinctly Christian view of human beings and our shared purpose in the world, which are summed up in the term “redemptive.”
The Redemptive Frame
The Christian account is that human beings are more frail and sinful than we would like to admit, but capable of more possibility and glory than we often are willing to imagine. Each of us is infinitely worthy, yet none of us can perfect ourselves. Likewise, nature and culture were created very good, have become distorted through abuse, and cry out to be restored, yet they cannot be put fully right through our human efforts.
In fact, putting the world right—bringing about personal, spiritual, social, cultural, and environmental healing and restoration—is God’s great purpose in history, into which we believe we all are invited.
The pattern of restoring glorious yet broken things to their rightful state, even at great cost, is best described using the word redemption. This economic term (to buy back something or someone and return it to its proper condition) is used repeatedly in Scripture to describe Jesus’ work of paying with his life so that human beings could be restored to a right relationship with God and his creation.
We believe we are to follow the core redemptive pattern of creative restoration through sacrifice in our life and work.
In the Praxis community we are committed to a way of practice that we call redemptive entrepreneurship: sustained and ambitious improvisation on this redemptive act of creative restoration through sacrifice, in the realms of venture creation and funding, organizational leadership, product and service design, process innovation—or any endeavor in which we take risk to bring about true flourishing for all people.
Redemptive entrepreneurship is a form of praxis—faith in action—where we express our love of God and neighbor through the ventures we build and lead.
We use The Redemptive Frame to connect our personal vocation and leadership behavior to our organization’s work in the world; and to explore opportunities for the greatest redemptive impact of that work.
The Redemptive Frame describes the Dimensions of a nonprofit or any kind of venture:
The Strategic Vision consists of everything the venture sends into the world to embody and express the mission, in the form of products, services, programs, brands, narratives, and physical spaces.
The Operating Model consists of the venture’s culture, functions, assets, business models, and partnerships that develop and deliver the Strategic Vision into the world.
The Leadership Intent consists of the motives, worldviews, and practices of the leadership team, whose decisions and actions set the course for the venture’s Strategic Vision and Operating Model.
The Redemptive Frame also addresses how ventures and their leaders approach the world:
The people and ventures following the Exploitative way do whatever it takes to win. They pursue every opportunity to take advantage, to extract value at others’ expense, to tilt and optimize all things in their favor, to leverage the letter of the law, to suppress or amplify truth to gain an edge.
Its doctrine is “Win at Any Cost.”
The people and ventures following the Ethical way reject the Exploitative, and instead seek to do good through their work. They want to address problems, do no harm, operate fairly, create sustainable value, be morally enlightened, raise the bar, win clean, and improve the world.
Its doctrine is “Doing Good and Doing Well.”
The people and ventures following the Redemptive way also seek to do good through their work. Yet they push beyond the Ethical, even inverting it in places—seeing the world as broken and in need of God’s ultimate renewal; recognizing all persons as God’s image-bearers, worthy of blessing; and knowing themselves as fallen and in need of grace.
Its doctrine is “Creative Restoration Through Sacrifice.”
Each dimension progresses from exploitative to redemptive.
The Exploitative venture originates from a leadership team that lives for self. They will likely lead the venture to leverage culture for their benefit, and to use people as resources to expend on the mission.
The Ethical venture originates from a leadership team seeking to improve themselves. They will likely lead the venture to advance culture for the better, and to respect people in and around the venture.
The Redemptive venture originates from a leadership team seeking to die to self. They will likely lead the venture to renew culture as God is renewing all things, and to bless people through the venture.
A Redemptive Strategic Vision is a way of designing and leading the venture as a culture-making force to join God in the renewal of all things. It is grounded in a commitment to create beautiful and humanizing products, services, and spaces, backed by truthful and God-honoring brands and narratives.
A Redemptive Operating Model is a set of processes, culture, and systems that bless people within and beyond the venture. It involves designing and building virtues like grace, generosity, justice, and patience into workforce practices, interactions with customers, partners, and funders, and use of capital.
A Redemptive Leadership Intent is the fusion of ambition, talent, discipline, and insight with wisdom, spiritual maturity, stewardship, and dying to self. It comes from identity, motives, imagination, and practices that are submitted to God and seek first the good of others.
A Redemptive Imagination for the Nonprofit Sector
We hope to inspire a new generation of leaders to go beyond the baseline of ethics and excellence that should characterize any organization (whether or not it receives a tax exemption)—to building nonprofits that embody the radical hope of the Christian gospel and its power to transform persons, communities, and the course of history.
We believe that through communities practicing redemptive work, we will see a resurgence of nonprofits that do not use faith or good intentions as an excuse for subpar performance. These organizations will promote flourishing for people and places not adequately served by the market, while working against the exploitation of all stakeholders—beneficiaries, donors, employees,
volunteers, and partners.
If this vision is consistently and creatively lived out, we will see transformation in the nonprofit sector.
It can become an even more productive ecosystem where diverse voices and actors are brought together, unified in pursuit of solutions to the world’s most pressing issues. Leaders of redemptive nonprofits can be set free from the fruitless attempt to serve multiple masters; they will experience the joy of rebuilding relationships across cultural differences that never should have been severed in the first place.
Perhaps most significantly, in the process of serving alongside one another, all of us—not just the “targets” of our mission for change—will experience redemption and restoration.