Wanted by non-profits: Corporate leader

Wanted by non-profits: Corporate leader

Around the world, there has been increased scrutiny of for-profit companies and the role they play in society.

There is a growing belief that the for-profit corporate sector has contributed to jobless growth and widening inequality.

The reasons for this are complex and go beyond the usual explanations of globalisation and technological advancements.

Capitalism today celebrates a winner-takes-all approach.

Companies are expected to maximise shareholder value, which is narrowly defined as growing profits, often with a short-term focus.

Many also expand global supply chains, force redundancies, create few jobs and depress local wages while paying scant attention to negative externalities, such as environmental degradation, that everyone has to pay for collectively.

Non-profit organisations (NPOs) play a unique role not just in plugging the gaps left by the private sector, but in countering the long-term social impact of negative business practices.

First, NPOs can address under-served customer segments.

There are often products and services that could benefit large population segments but are not supplied, either because demand factors need to be addressed or the price point is too high.

Non-profits can disrupt market dynamics and provide innovative services, sometimes profitably too.

Few examples are as inspiring as Brac, which uses tools such as microfinance, education and social enterprises to serve the poor in Bangladesh and beyond.

Last year, Brac's expenditure came to US$728 million (S$924 million) and it had more than 120,000 employees.

Non-profits can fulfil an entrepreneurial function when for-profits shy away from providing public goods or from having to develop a market that has not proved to be viable.

For example, in Singapore, there is an under-consumption of eldercare rehabilitation services because of a lack of awareness about the benefits of therapy for the older person.

Public education is needed to increase demand for such upstream services - but for-profits typically have little incentive to invest in public education.

Second, NPOs can serve customers in ways that companies find it difficult to.

NPOs can move beyond transactional relationships and engage the community in becoming part of holistic service provision.

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