/ Eleven / by Ute Volz

Non-profit organization? Hopefully not!

Well-managed charitable organizations in the social sector fine-tune their products and evolve on an ongoing basis. This sets them apart from their more traditional non-profit counterparts. Non-profit? Is this term valid anymore? – asks our guest author Roman R. Rüdiger.

Non-profit organization? Hopefully not!
by Roman R. Rüdiger

As the founder and managing director of EDUCATION Y (formerly buddY E.V.), I am often asked, “Are you an NGO?” Yes, we are. We are a charitable, non-governmental educational organization that is committed to fostering equitable education, teaching skills for the 21st century and innovation in schools. Does that make us a non-profit organization? No! At least, I really hope not.

In our sector, I find the term “non-profit” more than just misleading; it is downright wrong. The term is based on the (outdated) idea that profits are always financial in nature. But we now live in times in which social prosperity and innovation are at least as important as economic growth. Today we need to look at how to qualify young people to meet the digital challenges of the 21st century, or how to solve global environmental problems.

These are just some of the important tasks of societal and social progress that many charitable organizations have taken on. These organizations, like ours, want to be profitable by helping people, solving problems and initiating change. Many of them do this effectively and successfully. Particularly those organizations that work towards measurable outcomes or apply systemic concepts can be said to be “profitable” in the sense that they make a positive impact on the common good. These are social-profit organizations, not non-profit organizations!

The profit of NGOs is their social impact

And this profit is quantifiable. As a result of efforts to increase the level of professionalization with regard to outcome orientation in the third sector, there is very convincing evidence that many social-profit organizations are effective: they thoroughly understand the present challenges and problems and design complex concepts to work towards appropriate outcomes; they are often able to measure the resulting impact accurately and use evaluations to further improve it. In fact, very often, social-profit organizations bring together in-depth expert knowledge, a high degree of personal commitment and good management. When such organizations are labeled “non-profit”, I feel the need to raise an objection. “Non-profit” would be a more apt description for organizations that have been making losses for years, such as Deutsche Bank.

For many years, I have been working to establish the term “social-profit organization” in Germany. I would like to encourage as many people as possible to join me in this endeavor.