Charity Or Company?

Some nonprofits are getting into the business of making money. So how does that work?

- Liz Brody

Kenton Lee was traveling through Nairobi when he had, as he says jokingly, “the only idea I’ve ever had.” He saw an orphan girl’s shoes that were way too small; someone had cut off the front so her toes could stick through. “Right there, I thought, Wouldn’t it be nice if there were shoes that could grow?” Then he went home to Boise, Idaho, developed a shoe that expands five sizes, and founded the nonprofit Because International—which today, 12 years later, has distributed more than 250,000 pairs worldwide. And somewhere along the way, an unexpected thing happened. American parents started asking to buy his expandable shoes for their growing kids. He saw the value of it: If he sold shoes, he might not have to do as many fund-raising dinners and golf tournaments. But he wasn’t passionate about selling. “That’s not what we do,” he’d reply. “We’re a nonprofit.” Meanwhile, another nonprofit called Grameen Foundation reached a similar juncture. It had built an app to help Colombian farmers improve their productivity, and it worked in places without wi-fi. Other organizations asked if they could use it, which signaled to Grameen that the tool could be more useful as a business. But Grameen wasn’t set up for that. It’s a global nonprofit.

And meanwhile, yet another charity called Speak Your Silence was wrestling with the same quandary. Its platform provides in-person counseling to sexual abuse survivors. Years before the #MeToo movement, founder Matt Pipkin wanted to provide a version of this to companies, to help keep their employees safe from sexual harassment. But his board pushed back—they ran a nonprofit. “If you have a business and start a nonprofit, no one thinks twice,” Pipkin says. “But if you start a nonprofit and then start a business, people think, Wait a second.”