The New Nonprofit: A Model for Innovation Across Sectors

Susan L. Solomon

By Susan L. Solomon, Chief Executive Officer and Co-Founder,
The New York Stem Cell Foundation

Nonprofits play a critical part in the national economy. The nonprofit sector employs 10 percent of workers nationwide and drives 6 percent of total GDP. In New York City, nonprofits are an even more vibrant and crucial sector of the city’s workforce, employing 15 percent of the city’s non-governmental employees.

Considering the significant role of nonprofits in New York’s diverse economy, it comes as no surprise that it’s here where a new economic model of the nonprofit organization as a leading force for innovation has started to emerge. New York based-nonprofits have begun to go beyond replacing infrastructure and filling funding gaps to provide a testing ground for game-changing ideas and brand-new ways of looking at the world.

I recently joined Seth Pinsky, President of the New York City Economic Development Corporation; Tom Wright, Executive Director of the Regional Plan Association; and Robert Hammond, Co-Founder of Friends of the High Line to discuss the role of the “new nonprofit” in a members’ briefing moderated by Darren Walker of the Ford Foundation.

Our discussion identified three major ways these nonprofits are not only changing the philanthropic landscape in New York, but also playing an active role in shaping the city’s economic present and future.

The new nonprofits are incubators for new ideas. Without the pressure to produce a profit, nonprofits can be nimble and flexible in testing new ideas, turning on a dime to react and refine. Nonprofits can make mistakes with relatively fewer repercussions and, as a result, have the freedom to make important discoveries much more quickly than is possible in traditional corporate structures.

My organization, The New York Stem Cell Foundation (NYSCF), conducts and supports the most cutting-edge stem cell research in order to find cures for diseases like Alzheimer’s, Parkinson’s, ALS, cancer, heart disease, multiple sclerosis and other devastating conditions that touch all our lives. Our “nonprofit biotech” model allows us to pursue research other organizations deem too risky to invest in, following those leads in pursuit of cures.

The standard method to fund academic research seeks to reduce risk by asking, “Has this been done before and did it work?” The downside to this approach is that exciting ideas are discarded before their promise is fully realized, simply because success is not guaranteed. At NYSCF, we have the freedom to simply ask “Is this possible?” before pursuing high-risk, high-return ideas, bridging the gap between promise and reality to produce a treatment or technique that’s tested, proven and ready for the clinic.

The new nonprofits nurture talent and create jobs, even in an economic downturn. When an organization’s model is based on innovation for the public good, philanthropic dollars have an economic impact that reverberates long after the initial gift has been put to work.

Since receiving seed funding in 2005, NYSCF has invested more than $100 million in stem cell research and contributed to the creation of 145 direct jobs throughout the state. The resources NYSCF provides allow the brightest minds in biology to dedicate themselves to stem cell research without fear of unstable funding, while breakthroughs made by NYSCF scientists have advanced the field and raised the profile of stem cell research as a whole. In our model, our donors are venture funders and our shareholders are the patients in need of the cures we’re working toward each day.

The new nonprofits can push important new ideas forward when public opinion is slow to catch up. Philanthropy has long helped society advance by funding and advocating for important work when public opinion lags behind possibility.

When I founded NYSCF in 2005, scientists had demonstrated the great potential of stem cell research to combat the major diseases of our time, but restricted federal funding was holding the field back. Private philanthropy made it possible to create our safe haven laboratory, where we have made a number of breakthroughs, including a recent discovery deemed as one of the “10 Predictions That Will Transform Healthcare.” Rather than waiting for the restriction to be lifted in 2009, private philanthropy allowed us to spend those crucial four years making headway in the search for cures, which wouldn’t have been possible had we waited for public opinion about stem cell research to catch up to what the scientific community already knew was possible.

Looking to the future, we agreed we’re likely to see this nonprofit model become even more popular as new organizations rise up to address the major issues of our time. As our organizations have, these new nonprofits will blend the entrepreneurial spirit with a humanitarian twist, working with the private and public sector to drive innovation, create a diverse range of jobs and solve problems for the betterment of society.

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