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Why Sector Blur Is Bad For Those In Need

Sector blur is among us. It’s got positive potential… but if we’re not careful, it might not be so great.

Why should you be concerned that sector blur is giving for-profits a social mission and giving nonprofits profit-motive management mentalities? It sounds great if you don’t think about it too hard… as if it means for-profits are becoming nicer and nonprofits are growing smarter. But if we aren’t careful, it seems there could be grim consequences for our poorest, sickest, and most in-need.

Yes, nonprofits are corporations that are exempt from paying taxes. These corporations, however, consistently make similar (and seemingly strange) strategic management decisions:

  • Planned Parenthood has spent well over $193 million dollars in attempts to influence policies regarding pro-choice legislation and access to affordable health care. If these policies pass, Planned Parenthood could go out of business due to competition and possible reduction of need.
  • The Nature Conservancy asks communities to reach out to state legislature to protect the land and water in each state.  If we did as they ask, this half-century old organization would shut down.
  • The Serpentine Project, a small organization that I do community engagement contract work for, provides mentorship and financial support to youth who have aged out of foster care and want to attend college. The organization supports policies that extend foster care to age 21 (verses 18), though it would make the organization irrelevant.

This is like McDonalds serving up Big Macs while simultaneously allocating significant resources to making the world population go vegetarian. It’s a good social move (studies find that vegetarians live longer than meat-eaters), but it’s a very, very bad business move. This difference illustrates one of the key ideological divides between nonprofits and for-profits:

If the for-profit sector operates with the economic market, the nonprofit sector attempts to solve market failures. During this time of sector-blur, there is danger in nonprofits putting too much focus on profit-like motives. Similarly, there is danger in for-profits putting too much focus and weight behind social missions.

Here are three reasons why we should not let sector blur completely fuzzy up our vision:

1. For-profits in social change would advocate policies that are bad for us. Think about it: a for-profit women’s health clinic– something perhaps similar to Planned Parenthood– would NOT advocate policies that would make their services more competitive. It would be bad for business. In fact, the company is likely to lobby for policies that make it harder for competition to enter the scene, and thus harder for the general public to have access to affordable health care.  To use an example from William P. Ryan’s article, The New Landscape For Nonprofits, “a juvenile detention center may advocate get-tough juvenile sentencing policies to increase business. Both the juveniles and the communities, however, may fare better with a more community-based approach.” Ryan summarizes this point well: “For-profits are more likely than nonprofits to advocate public policies that favor profitability in the short-term rather than policies that help communities over the long-term.”

2. There’s business incentive for for-profits to skimp, cream, and dump. These are three things that we nonprofiteers are taught not to do early on, as they violate a moral code of public service motivation. But if your bottom line is to make money- you may well be “forced to” do these things:

  • Creaming is when an organization selects beneficiaries based predominantly on which individuals and demographics are most likely to help the organization succeed. For instance, a reading program may only select children with well-educated parents- as those children are already in an environment that values education, thus making the children more likely to succeed and lead the organization to success than children with uneducated parents.
  • Skimping is when an organization allocates fewer resources to individuals or entities that they don’t think will help the organization succeed. Another reading program example would be giving less talented tutors to children for which English is a second language, on the basis that they aren’t likely to succeed in the program anyway.
  • Dumping is flat-out avoiding high-risk individuals or demographics that are most in need of service. If too-much emphasis is placed on profit-motives, there’s a good chance this moral code of-sorts will be left behind. If for-profits find ways to effectively solve social problems, the public must be wary of these practices. Similarly, a nonprofit that puts more emphasis on money than their social mission may take part in these not-so-helpful-to-society practices.

3. The “dumping” would happen on nonprofits. Logically, as for-profits enter the field of social change, they’ll begin by taking up the issues where money can be most easily made, and clients most easily served. This is generally not with high-risk populations. The result? Nonprofits will find themselves with the harder, complex, and more expensive cases left untouched by for-profits. And because for-profits may take up the programs where nonprofits gained surplus revenues, the nonprofits faced with the tough stuff may have significantly fewer resources. Another result? Poorer poor, sicker sick, and generally more people who will be very, very hard to help.

Sector blur, of course, has a lot of great potential. Competition across sectors which may lead to increased efficiency across the board and a global turn toward the importance of social change, to name some examples.

But what we still need is what we’ve always needed: a model (be it grown from the private, nonprofit, or public sector) that can take our poorest, sickest, and least educated and solve these market failures. Even sector blur is going to be a rough road, so let’s get all hands on deck in coming up with something even newer than this new thing.

Posted on by colleendilen in Big ideas, Management, Nonprofits, Public Management, Public Service Motivation, Social Change, The Future 6 Comments

5 Unexpected Ways in Which Grad School Loans Are Changing My Lifestyle

In August, I summoned my life savings, took out a Stafford loan on top of them, and headed back to school to pursue a master’s degree in Public Administration at the University of Southern California.  I was prepared for the basics of living on a serious budget: cooking more and eating out less, watching my spending, avoiding shopping centers… but my terror of forever paying off graduate school loans struck me even deeper than I expected.


As I’m reaching to end of my first semester in grad school, I’ve noticed significant (sometimes accidental) changes in my lifestyle that didn’t exist while I was working full-time. While it’s true that I’ve essentially transformed into a metro-riding, hulu-watching, caffeine-deprived vegan, I’m amazed by the overall value of these alterations and how much money I’ve already saved through these good-for-me changes.

1) I’m accidentally vegan.
I didn’t realize that I was essentially vegan until I went home for Thanksgiving.  It makes sense, though, when you consider that tofu costs $1.69 and two chicken breasts cost $7.49 (Ian is also lactose-intolerant, which accounts for the lack of dairy). There’s also a lovely little Farmer’s Market in Los Feliz, so I just didn’t notice the lack of meat and the sudden abundance of fresh veggies in my diet.

Here’s why it’s not so bad:

Here’s what I’m saving (roughly): I simply swapped the price of tofu that I buy in a typical month per ounce ($0.14/ oz; $1.69/12 oz) with the price of chicken breasts per ounce ($0.31/oz; $4.99/lb).

  • ADD: amount that would be spent on chicken per month if each ounce of tofu is swapped out for chicken: ($29.76 (0.31 x 16 oz = 29.76)).
  • SUBTRACT: amount spent on tofu per month ($13.44 for 96 oz (96 oz/month; 2 packages of 12 oz/ week) $0.14x 96 oz = $13.44)).
  • TOTAL: $195.84 per year ($16.32 per month)


2) I’m metro-savvy
It would be a blatant lie to say that it’s easy to live in this city without a car, but I live in a fairly walkable neighborhood, and I’ve grown to appreciate the bus commute. I get all of my work done, and often by the time I get home from class, I can spend the rest of the night enjoying myself. I’ll admit that one of the happiest days of my life will be when busses have wireless internet connections and airplane-style tray tables.

Here’s why it’s not so bad:

Here’s what I’m saving (roughly): I used Ian’s spending as an outline for calculating this information.

  • ADD: car payment ( $250/mo; $3,000/yr) + insurance ($1,000/yr) + gas ($250/mo; $1,440/yr) + parking in apartment building ($40/mo; $480/yr) + on-campus parking ($600/yr; $50/mo)= $6,520
  • SUBTRACT: 9 month student bus pass ($324/yr) + 3 month regular bus pass ($228/yr)= $552
  • TOTAL: $5,968 per year (which excludes initial cost of buying a car)


3) I gave up cable

The idea of losing HGTV and the Discovery Channel was painful at first (RIP, access to Mythbusters), but I think these savings are worth it. Ian created our new system for watching TV, and he did the math. Check out the link for more detailed information.

Here’s why it’s not so bad:

  • Hulu allows me to continue to watch addictive shows.
  • I watch much less television. In Seattle, I watched about an hour everyday to wind down after work. Now, I watch about one hour every week.
  • When I do watch TV, they are shows that I’m turning on the television in order to see.
  • I used to relax by watching TV. I now relax by cooking or reading.

Here’s what I’m saving (roughly):

  • ADD: cost of cable. Installation charge ($50) + monthly costs of Netflix, Comcast Cable Internet and Comcast Cable ($1,380 per year; $115/month x 12) = $1,430 per year
  • SUBTRACT: cost of current system. Antenna and cables ($72) + costs of Netflix and AT&T DSL Internet ($600/year; $50/month) = $672 per year
  • TOTAL: $758 per year


4) I have a job that’s not on my resume
I work 10-12 hours each week at USC’s Roski School of Fine Arts as an assistant for the MFA program. It’s low stress and laid back.  While the essence of the job is indeed in line with my interests in arts, culture, and education, there isn’t a great deal of leadership discretion required. This low-key job is not going to be on my resume or my LinkedIn profile, but it’s a nice way to meet new people and make some extra money.

Here’s why it’s not so bad:

  • I’m introduced to different organizational cultures outside of my program in the School of Policy, Planning, and Development.
  • I meet folks from an entirely different USC grad community, and I work for Rolling Stone’s 2005 “Hot Artist” of the year.
  • I get to research current artists and art happenings, which allows me to feel connected to my background in art.
  • I make money.

Here’s what I’m saving:

  • ADD: I make a total of $3,000 for the 9 months that I am in school.
  • TOTAL:  $3,000 per year


5) I’m caffeine-free

This was obviously a conscious (and semi-painful) decision. It was a big part of the culture of Seattle to meet friends for coffee (in LA it’s more often meeting for drinks). I was also drinking a few-too-many Diet Cokes everyday. I got horrible headaches when I stopped drinking caffeine, but now I don’t miss it.

Here’s why it’s not so bad:

Here’s what I’m saving:

  • ADD: average amount spent on caffeinated beverages per month before I quit, according to my account. ($487.20/ year; $40.60/ month)
  • TOTAL: $487.20 per year


Projected savings resulting from these lifestyle changes: $10,427.04 per year

It adds up!

Posted on by colleendilen in Generation Y, Graduate school, Lessons Learned, The Small Stuff 8 Comments