Nonprofit economics

At the heart of it, nonprofits exist because the system doesn’t work.

In theory a free market at its peak has no problem with housing, or hunger, or healthcare. Everyone has a job and market forces respond to ensure the maximum number of people are fully participating in the system.

In practice this is all but an impossibility. There will always be those that cannot be a part of the system. There will always be inefficiencies that push people to the wayside.

Nonprofits fill that void and provide something of a support for those that the market can’t reach. But the real issue is that nonprofits must operate within the framework of the market whose very shortcomings dictate their existence. They must fix the system from the inside.

This is the real challenge of the nonprofit industy. How do you affect change to a system while being bound by the rules, and shortcomings that created the change in the first place?

In theory, nonprofit organizations (possibly with the execption of the arts) should be trying to work themselves out of a job. A homelessness advocacy group should have in their vision something about a community without homelessness, a foodbank should be striving toward a population that is fed. But in reality, these organizations have very little chance or even ability to affect real change to the system in order to address these issues. All they can hope for is to serve the individuals that are more like the casualties of the system. 

So how do you change a system from whithin?