JS: Nonprofits serve different purposes in different countries. If a national government were truly able to provide for all of its citizen's needs, would nonprofits need to exist?
MK: Did societies create nonprofits to fill the gaps that arise between businesses and government services? If we consider the United States as an example, nonprofits fill the voids between government services. Consider arts in the US: arts are a core aspect of American culture yet there is only one federal agency that supports it, the National Endowment for the Arts. Hundreds of non-profit dance companies, centers, and museums fill the gap. In the country where The Harvest Fund works, Zambia, the government is unable to provide free schooling or ensure that all their citizens meet their minimum caloric needs for survival. This creates a large opportunity for NGOs or nonprofits. In the strong welfare state of Norway, voluntary organizations self-sustain and grow with government financial support and volunteer time contributions. The Scandinavian model of welfare provision combined with the culture of dugnad minimizes the need for non-profits.
JS: Can philanthropy be effective if the tax system isn't set up to support incentives for giving? What other incentive structures are needed?
MK: The U.S. culture of philanthropy exists because the government structures the tax system to incentivize charitable contribution. Additionally, in the US, there is a strong ethic of “giving back” - either through contributions of time or money - which is comparable to dugnad, however, dugnad focuses on contributions of time. An ethos of charitable generosity combined with a strong capitalist economic system and a low welfare state has created significant structural gaps in the US: rampant urban homelessness, mental illness, unemployment, unreasonably high healthcare costs, barely livable wages, among many others. Who will meet citizen needs when such strong societal gaps exist? Dugnad simply cannot. Therefore, American society seems to be stuck in a cycle of work hard, make a lot of money, give some to the government, and give some to philanthropy. But, is that the right solution?
JS: How does corruption and lack of transparency affect nonprofits simply trying to fill in the gaps for individuals that could otherwise have been supported through government or private programs?
MK: Business or government corruption takes away from resources that could be distributed to consumers, workers, or constituents. Lower-income populations can be particularly hard hit by corruption. When this stratum of society does not have essentials, non-profits must fill that gap.
JS: What type of frameworks could nonprofits consider to be more self-sustaining and not as reliant on donor funds?
MK: The US 501(c)(3) designation is flexible and allows exempt organizations to raise revenue if that business activity fulfills its tax-exempt charitable purpose. Many NGO, charity, or not-for-profit statuses in other countries do not afford that benefit. Oftentimes, society does not view nonprofits as businesses but, if they were, could they sustain themselves? Certainly! Nonprofits could operate as businesses and regularly focus on ways to streamline operations, integrate technology to maximize efficiency, and diversify revenue. Unfortunately, overworked nonprofits do not have the bandwidth to truly take a step back and think of the organization as a business.
Additionally, there’s a cultural element at play: society assumes that nonprofits must be needy. Also, for international nonprofits, there can sometimes be a neocolonial element that suggests that their beneficiaries are needy.
What if a nonprofit truly embodied a self-sustaining mission that extended to all their beneficiaries? If you truly want your beneficiaries to become self-reliant members of a self-sustaining society, couldn’t you set them on a path to prosper and eventually pay for services that you provide?
JS: What are the 3 things you most wish donors knew about the needs of nonprofits and their stakeholders like The Harvest Fund?
MK: Innovative nonprofits could truly benefit from more patient capital. The Harvest Fund works with desperately poor women farmers; one even divulged that she lost 3 children to malnutrition before we arrived in her village. Yet, this mother tries so incredibly hard to pay for her share of our products and services: long-term hermetic storage technologies, input loans, etc. She just wants to keep her remaining children alive. There are millions of people like this. Why can’t capital be patient enough to include ALL of humanity in the world’s progress? If the coronavirus pandemic has taught us anything, let’s hope that it has taught us patience. 2. Nonprofits struggle to serve marginalized communities. Sustainable change is stubborn, painful, and arduous. After all, we’re shifting human mindsets. In the absence of patient capital and a slow journey to breakeven (if there even is one), there are individual donors and grantmakers. Grantmakers themselves prefer to fund seasoned nonprofits, instituting requirements such as audited financials, minimum 3 years of operations, minimum operating budgets of $100,000, etc. If these are the requirements to win any sizable amount of money, how exactly is a nonprofit expected to survive through the initial 3 years? 3. If colonists were once brave enough to venture across unknown seas and strange lands hundreds of years ago, can industrialized society become brave enough to extend patient capital to the rest of humanity?