First Principles
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.”
We must contend with two vulnerabilities of the nonprofit sector: 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.”
Let’s explore in more depth what it means to be redemptive, and how this powerful idea lies behind our entrepreneurial calling.
We use a tool called The Redemptive Frame to define and explore redemptive possibilities in organizational or vocational settings. It combines the Three Ways to Work with the Three Dimensions of Work.
Three Ways to Work: Exploitative, Ethical, and Redemptive
People, communities, and organizations approach the world in one of three ways.
The Exploitative way is to take all you can get—to gain any advantage, to prevail, to possess. Exploitative actors most often approach the business with a zero-sum, “I win, you lose” scarcity mentality. The motivating force behind the Exploitative way is to win and control.
We are surrounded by the Exploitative way; we all fall naturally into it; and we are always trying to escape its effects on us.
The Ethical way is to do things right—to do no harm, keep the rules, play fair, solve problems, add value. Ethical actors pursue “win-win” whenever they can. The motivating force behind the Ethical way is to be good.
We expect the Ethical of ourselves and of those around us, yet we sometimes fall short; and we’re grateful when we encounter it.
The Redemptive way is creative restoration through sacrifice—to bless others, renew culture, and give of ourselves. Redemptive actors pursue an “I sacrifice, we win” approach with the resources and agency available to them. The motivating force behind the Redemptive way is to love and serve.
We rarely expect to encounter the Redemptive; though whenever we do, we’re changed.
But what does it really mean to be Redemptive? And why does it never fail to change us?
Defining Redemptive
The Christian account is that God created humanity in his image—so even though we are more frail and proud than we are willing to admit, we are more loved and worthy than we can imagine.
Our shared cultural work—to bear God’s image in the world by creating and cultivating with the resources he gave us—is distorted by our selfishness, and cannot be put fully right through human efforts alone.
Yet putting the world right—bringing about personal, spiritual, social, cultural, and environmental healing and restoration—is part of God’s loving and glorious purpose in the world he created. As people loved through grace, we are called to love God and neighbor by joining him in that work.
Redemption is an economic term that means to buy back something (or someone) to restore it to its rightful place. It is also used to describe Jesus’ act of sacrificing his life so that we can be ultimately restored to a right relationship with God and his creation.
Wherever there is loss, brokenness, unfairness, waste, or harm—and someone willingly enters into the situation by bearing a cost or taking a risk, to help the person, resource, or system to be restored—that’s redemptive action. And redemptive action at any scale usually requires creation or innovation, such as a new product, expression, model, or norm.
We respond to the redemptive, in stories and especially in real life, because we know that the world is broken; because we long to participate in its healing, even in the smallest ways; and because we sense that sacrificial love is the world’s most powerful force.
So this core pattern—creative restoration through sacrifice—not only describes Jesus’ ultimate redemptive work to save the world but also our daily redemptive work to serve the world. It gives shape to our mission as those who have been written into the greater story of his purposes through no merit of our own.
We believe we are to follow the redemptive pattern of creative restoration through sacrifice in our life and work.
Three Dimensions of Work: Strategy, Operations, Leadership
Strategy centers on what we build. It’s everything an organization does to express mission, serve customers, and create value—in the form of products, services, programs, brands, and even digital and physical experiences. We define Strategy by its cultural impact.
Redemptive Strategy doesn’t exploit or leverage cultural trends for gain, or merely advance culture in the direction of progress. Instead, it is products, services, programs, brands, and experiences that renew culture to be more humanizing, truthful, beautiful, lasting, and God-glorifying.
Operations centers on how we build. It’s everything a business does to develop, support, and deliver the Strategy—in the form of culture, systems, capital and other assets, business models, innovation, and partnerships. We define Operations by its people impact.
Redemptive Operations refuses to use people merely as resources to achieve organizational goals; and it seeks to go further than merely respecting team members and partners. Instead, it is culture, business models, capital stewardship, and partnerships that bless people through grace, generosity, justice, patience, and mutuality.
Leadership centers on why we build. It’s the motives, ambition, worldview, character, and imagination of the organization’s leaders—which set the course and define the horizons of possibility for the venture’s Strategy and Operations. We define Leadership by its success script.
Redemptive leadership is marked not by an ambition to live for ourselves, or even just to improve ourselves. Instead, it is patiently rewiring our motives, worldview, imagination, and practices around dying to self—becoming more surrendered, accountable, rested, and generous.
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.