Every sector has its strengths and below I've highlighted a few "lessons learned" from the for-profit sector that could benefit nonprofits and NGOs:

• Customer Focus: For-profits know that, in the end, it's all about the customer. They take time to get a really clear understanding of their customers' needs to ensure that their product meets or exceeds those needs. Nonprofits and NGOS don't usually do this as well, in part because we aren't always clear about who our customers are! Is it our individual donors? Our grant funders? Our program participants? Our own staff? Regardless, becoming more customer-centric is key.
• Real-Time Communication:  For-profits understand the value of reaching their customers "in the moment." Whether adopting social media practices, surveying folks after website visits, or communicating regularly with customers, for-profits are usually light years ahead of nonprofits and NGOs. For instance, many of us still rely on monthly or quarterly snail-mail newsletters instead of weekly e-blasts, blogs, Facebook, or tweeting good news.
• Harnessing Technology: Many for-profits are also really good at harnessing the power of technology to make their lives more efficient. Although most nonprofits don't have a ton of in-house technology expertise, that's precisely why technology is so important. Nonprofit staffers are usually spread thin and, with a better technology toolkit, could operate more efficiently and spend more time delivering services.

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In a recently published paper supported by the Aspen Institute’s Program on Social Innovation and the W. K. Kellogg Foundation and written by Heerad Sabeti, co-founder of the Fourth Sector Network, the author examines the emergence of practices and new types of organizations that blend social and environmental missions with business practices. The paper also suggests that the creation of a new class of "For-Benefit" organizations could accelerate social change.

What do you think? Will the emerging 4th sector accelerate social change?

Read the executive summary here.

Contributed by Laura Deaton.

Adapted and excerpted from 3rd edition of Financial & Strategic Management For Nonprofit Organizations by Herrington J. Bryce, here's a summary of 8 questions for nonprofits and NGOs to consider before engaging in for-profit, business, or social enterprises.

1. How will the enterprise affect the tax-exempt status of the organization? In some countries, organizations can only conduct business if it is directly mission-related. In other countries (like the U.S.), both related and unrelated business is permitted, although there may be percentage limitations or caps on revenues.
2. How will the enterprise be started? Is there an existing business that the organization is considering taking control of? Will it be a new start-up in-house? Either way, it may be a time-consuming and expensive activity. Budgeting for both the human and financial resources for acquisition or start-up activities like incorporation, securing business licenses, additional staff, purchase of inventory, and marketing is essential.
3. Will the business be related or unrelated? There aren't any hard or fast rules for defining "related", and an organization may want to consider and advance or private letter ruling from the IRS (in the U.S.). "Unrelated" isn't based on the complexity or capacity of the business, but has to do with relevance to mission. Does it rival the mission for attention and resources? If so, protecting the nonprofit's tax exempt status through separate incorporation may make the most sense.
4. Should the business be separately incorporated? The income from an unincorporated business flows directly to the nonprofit. When high-risk or complex businesses are being contemplated, legally separating the business from the organization may most effectively protect the nonprofit or NGO.
5. Will the business be profitable and do the benefits exceed the costs? If the business is unrelated and designed to generate additional revenue for the nonprofit, profitability is of primary concern. If the business is related, and has another social purpose (e.g. employment for the org's program participants), will it at least cover it's own costs? When will the organization recapture its initial investment and what are the associated opportunity costs in the meantime (how else could that money be used more effectively?)
6. What is the competition? Is there a real market for this business? What data exists to support the marketplace? Considering the formation of a business without a thorough assessment of the marketability of its products or services is risky at best.
7. Can we create a business plan that will be approved by our Board of Directors or trustees? Do any Bylaws changes need to be made? Engaging the Board early in the consideration of business enterprises can help you avoid tremendous wasted resources and time if the Board is uninterested in supporting the enterprise.
8. Have we consulted legal and financial counsel? There are significant financial and legal risks for a nonprofit or NGO that is considering this route. Engaging with "eyes wide open" and full information about tax consequences is not only smart, but essential to success.

What other questions would you add to this list?

Excerpt, summary and analysis by Laura Deaton.

Additional Resources:

The npEnterprise Forum (free listserv that discusses all aspects of social enterprise strategies)

The Social Enterprise Alliance website