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Sep 23, 2015

Deciding What Is Worth the Effort

How do we decide what is worth the effort?  There is little doubt that nonprofits can benefit from developing new sources of earned revenue through social enterprise.  Over seventy social enterprises are currently operating in Central Ohio, but the majority of nonprofits have not yet taken the plunge.

Creators for Good recently blogged that the biggest mistake social entrepreneurs make is “not starting.”  They focus on planning in hopes it will guarantee success or eliminate all risk.  My worry is that many remain on the sidelines because they cannot be certain the effort will “move the dial.”

There is too much talk that, to be worthwhile, social impact must be huge, using words like “scale, disrupt, global, affect a large number of lives.”  Social enterprises that benefit neighborhoods may never meet this test.  By that criterion, making a small difference or helping a few dozen lives reflects mediocrity, and therefore is not worth trying.  It is no surprise that this type of thinking has led U.S. social impact investors to place 60 percent of their investments outside the U.S. in global-scale efforts.

Is this the test we should be using to decide what is worthy of our efforts or our support?

It is easy to slip into this trap.  We want our philanthropy to be effective.  We want our efforts to “make a difference.”  There is a movement called Effective Altruism whose website declares “It’s about dedicating a significant part of one’s life to improving the world and rigorously asking the question, ‘Of all the possible ways to make a difference, how can I make the greatest difference?’”

It led William MacAskill to headline in the Washington Post “Working for a hedge fund could be the most charitable thing you do.”  He advocates focusing on building personal wealth so that, later in life, one can become a seven-figure philanthropist.  Big or Bust is his credo.

It has also led some practitioners of Effective Philanthropy to emphasize metrics to steer philanthropy to those causes that deliver the biggest measurable gain per charitable dollar.  Anyone hoping to turn around an ex-felon’s life or to restore hope and stability to a victim of human trafficking better “hope” they can reduce those goals to big numbers.  (See the chapter “Blurring Lines Between Donor and Manager” in More than Just Money.)

The laudable goal of making a difference with one’s life is diminished when it is reduced to a mathematical calculation of leverage, impact, and return on investment.   Research repeatedly shows that the catalyst for charitable giving is emotional connection.  Individuals who investigate more heavily before they give actually end up giving less.

Jeremy Ball, in an opinion piece in the Chronicle of Philanthropy appropriately published on 9-11, made an eloquent case for doing good, however small the effort may be.  He said, “[a small effort] may not change the world in the most “logical” way, but it nevertheless has an important effect: It protects, preserves, and grows local [communities] of [caring].”

Sometimes, making the effort is the most significant gift to the community.

All businesses start small.  Some become global, others stay local.  Starting a social enterprise that ultimately benefits only one neighborhood is still worth the effort.  Starting is the first requirement for success.  We need to encourage all our nonprofits to move off the sidelines and start a social enterprise.

Yours in Linking Mission to Money,

Allen Proctor, President & CEO

Center for Social Enterprise Development