New world: how NFPs can survive in a solution economy

Although Eggers hails from the United States, his considerable experience advising governments globally has provided him with a fresh and truly international perspective on government reform. His previous roles include manager of the Texas Performance Review and appointee to the US Office of Management and Budget’s Performance Assessment Rating Tool Advisory Board. Eggers has also authored eight books, including his most recent, The Solution Revolution, which is co-authored with Paul Macmillan.

The Solution Revolution describes a burgeoning new economy that has developed in the last decade in response to governments’ struggle to address a multitude of societal needs.

“You now have players from across business, government and social enterprises that are converging to solve the big problems and create public value,” explains Eggers. “These new problem solvers are designing innovative new solutions for society’s intractable problems. We refer to this as a ‘solution economy’ because markets are actually developing around this; people are trading solutions instead of dollars to fill the gap between what governments can provide and what citizens actually need.”

The increased prevalence of online interaction through social media and the development of new technology such as smartphone apps and e-commerce modules have created new platforms for these problem-solvers – or ‘wavemakers’ – to solve a wide array of issues, ranging from reducing food waste and recidivism to providing low-cost education and fighting human trafficking.

Eggers says these ‘peer-to-peer exchanges’ are crucial to the solution economy: “There are just so many ways to use different technology to amplify your impact rapidly in ways that were simply impossible to do before.”

Adapting to a solution economy

Not-for-profits (NFPs) are already playing critical and varied roles in this emerging economy, such as in the form of advocacy, education, and as a connection point between for-profit corporations and NFP causes through partnerships. For this reason, Eggers believes the solution economy will have a big impact upon the NFP sector.

“I’ve been speaking with a lot of NFPs in the US, the United Kingdom, Canada and Australia, and one interesting issue they’ve all raised is the belief that they are going to have to change and adapt to this new world,” he says. “There is a whole contingent of social enterprises that didn’t exist before, that are very much based on business principles and models. These social enterprises are trying to make a profit while also trying to be problem-solvers. They are designed to scale, and to scale quickly.”

Eggers says that NFPs will need to become much more technologically savvy, business-minded and outcome-oriented. “We’re seeing a big movement towards distributive problem-solving and the use of technology to engage many people. NFPs are also going to have to improve on showing impact and performance metrics, for example, to justify grants and contracts from governments and foundations. People are now looking for impact, and there are a lot of metrics to measure this. It’s no longer just about the number of people served, but also about actual outcomes.”

The changing role of government

The impact of the solution economy is not limited to the third sector. Eggers says that government will also play a powerful role in this economy, but one that is very different from the role it plays today, as civil problem-solving moves out of government hands and into those of the wavemakers.

“Instead of sole problem solve, the government will be an enabler, creating an environment where wavemakers – both for-profit and NFP – can flourish,” predicts Eggers. “Governments’ willingness to forge partnerships, to make data more open, to contract for outcomes, to reduce regulatory minefields, to convene diverse groups of contributors – those will all have an impact on the growth of this network cadre of problem solvers.

“I think the most successful governments will be the ones that act as catalysts to this environment, those that are constantly connected and working with the various sectors to grow the solution economy and to achieve better outcomes.”

Eggers says that government could also potentially play a role in facilitating partnerships between innovating NFP social enterprises and for-profit companies. “A lot of fascinating opportunities are created through partnerships with major companies that are able to scale and provide technical assistance to NFPs,” he says.

International trends

Eggers has observed some solution economy trends in overseas NFP sectors that may soon gain traction in Australia. “From a UK perspective, there’s a big movement for NFPs to supplement their grant income with other income – whether it’s from renting out space in a building or providing other services,” he says. “NFPs are looking to supplement and diversify their revenue sources, with some even changing over into ‘for-benefit’ organisations. I think that’s a key element – not just relying solely on donations.”

People are also seeking to fund and contribute to NFPs in new ways, such as through ‘micro-payments’ – a movement that Eggers says will be an important funding source in the future. This concept, similar to micro-volunteering, entails millions of people making very small monetary donations through a simple action such as clicking a button in an app after reading an article they enjoyed or seeing an organisation they would like to help.

“It’s that one-click ability,” says Eggers. “I think we’re going to see a lot more of that, and it’s going to involve many, many people, not just the local community.”

Adaptation for the NFP sector, while necessary, may not be easy. “The NFP sector in Australia – and around the world – will need to be able to use business principles and leverage new investment and technology in order to achieve better outcomes. The aim is for NFP organisations to retain focus on their missions, while serving more people for potentially less money,” says Eggers.

“I think for some, it will be a challenge, and for others, it will be a great opportunity. The NFPs that become more agile and that are able to make some of these changes – become more technologically adept and potentially bring in revenue through products and services – are going to be the ones that actually grow and thrive in this new world.”