Solution economy provides new opportunities for non-profit organizations

By: Michael Pentland

The non-profit sector has fresh competition as well as new allies. A group of innovators is shaking things up, addressing the same kinds of social problems that non-profits have tackled for decades.

Many of the 165,000 charitable and non-profit organizations in Canada will not only survive but flourish if they adapt and change. Others will fall by the wayside if they are unable to shift gears or if they cling to old ways of doing things.

Welcome to the “solution economy”

It’s what some are calling the solution economy: a new economy for social problem solving. One where philanthropists, businesses, social enterprises, citizens, and governments are reshaping how problems get solved. Bold thinking, disruptive technologies and emerging, collaborative business models are creating markets for solutions to our biggest social problems.

What’s a non-profit to do?

In this new solution economy, non-profits are no longer just competing with one another for government funding or charitable giving. Non-profits are struggling to remain relevant while competing with every other organization, citizen and corporation in the world that wants to make a difference.

With so little money to go around, how will non-profits grow or even survive? By partnering with organizations and individuals who could be from a different country, probably from a different sector, and may have a different outlook or motive…even profit.

Non-profits are struggling to remain relevant while competing with every other organization, citizen and corporation in the world that wants to make a difference.

What if we tried looking at an old problem through a new lens?

What if we brought that market-based dynamic to some of Canada’s toughest problems? What if we applied solution economy principles to getting millions of unemployed Canadians back to work?

That’s what Bill Young of Social Capital Partners did by offering incentives to companies willing to hire people on social assistance and anxious to find work. It proved successful. Now Young, who received an Order of Canada for his pioneering social enterprise and philanthropy work, has got his mind set on reforming the entire unemployment system.

If only Young or his counterparts could apply that same thinking to another set of seemingly intractable problems.

Consider these figures:¹

• First Nations youth in Canada are more likely to be incarcerated than to graduate from high school.
• In the Prairie provinces, 50% of those in correctional facilities are Indigenous.
• Indigenous persons are three times more likely than non-Indigenous to be victims of violent crime and run an even higher risk of becoming victims of sexual assault, robbery and partner abuse.
• In urban areas, Indigenous people are twice as likely as non-Indigenous to live in poverty.

Governments and non-profits have tried for decades to address these sorts of problems. Arguably, with limited success. Working with the Indigenous leaders and communities themselves, what if government and non-profits that serve these communities actively sought out new partners — multinationals, social entrepreneurs, app developers, individuals — including those with experience addressing similar issues elsewhere? Could they be as effective as Social Capital Partners has been?

Non-profits can play a big role

Canada’s non-profit sector – the 2nd largest in the world (Netherlands is 1st) – plays a critical role in the solution economy.²  

Non-profits bring a lot to the table. They are well positioned to inject cautionary considerations into how these markets and economic ecosystems are developed, to ensure that sensitivities are well understood, and how to avoid unintended consequences.

• They need to build on their strengths.
• They have the passion and commitment of motivated staff and volunteers.
• They have staff on the front lines with unparalleled local knowledge.
• They engage directly with those in need.
• They often have low-cost structures.
• They have the hard-earned trust and credibility of their partners and within the communities they serve.

But to survive in the new economy, they need to address their weaknesses.

• They often rely on a select few people to drive their organizations.
• Many are slow to embrace new technologies, often because of a lack of funding.
• They are sometimes resistant to change.

The good news is that non-profits that are willing to change, to look to new economic models and work with new partners, will likely not only help solve many of Canada’s most daunting challenges, but thrive in the new solution economy.

What do you think the role for non-profits is in this new environment? What other considerations need to be part of the dialogue? How might your organization change so that it maintains its critical role as a contributor to social good?

1. “Social Challenges: The Well-being of Indigenous People”,  Canadian Council on Social Development,

2. Canada’s nonprofit and voluntary sector 2nd largest in world”, Press release, Imagine Canada

Michael Pentland is a partner with Deloitte’s strategy and operations consulting practice in Ottawa, where he advises non-profit, government and health organizations.

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