Social Sector

Social enterprises are supposed to pay attention to the “double bottom line”—bring about a social good while generating income and excess return. But this concept fails to capture a third, equally important focus for non-profit leaders—creating psychic income. This is the focus of much of my work in the social sector, though the work often takes on many forms.

As a non-profit board chair and trustee, former CEO of a $200-million non-profit, and someone who has enabled hundreds of millions of dollars in social innovation investment as a grant officer, I’ve developed a healthy respect for the idiosyncrasies that shape the non-profit world and for the necessity of creating something called “psychic income” along with social return and real income.

It’s hardly a secret. The unique performance challenges facing social sector organizations are rooted in the not always realistic and often hidden needs of the sector’s principal actors—donors, trustees, employees, and volunteers.

These needs are the emotional foreground to an operational and political background of tremendous complexity:

  • Entrenched and sometimes seemingly intractable societal problems
  • Mission creep—driven by need and the search for financial security
  • Chronic talent shortages and burnout
  • Restricted and short-term funding at the expense of strategic, long-term capital infusion
  • Fragmentation and duplication/lack of coordination in fundraising and program execution
  • Complex governance
  • Limited fiduciary oversight despite the best intentions.

Yet against long odds, the social sector accomplishes remarkable things that neither the commercial nor governmental sectors could on their own. I’ve been privileged to work with non-profit leaders in addressing the following issues amidst these complexities:

The most successful leaders have seen that psychic income is important as financial income to their organizations continuing to flourish.