Every year, the Pershing Square scholars go on a New York Trek to meet the Foundation’s organisations, including non-profits, funds, and accelerators that serve causes from public housing to criminal justice reform. I loved that the trip focused on understanding each organisation’s theory of change to best serve their respective missions. Our scholarship cohort is made up of students across health, policy, and sustainability disciplines. While many of us know what we want to work on, the question that looms is how.
As students of a joint MBA program, we recognise that the private sector has immense potential to drive positive impact by mobilising capital, technology, and expertise. Furthermore, contrary to typical narratives, those in the private sector are not solely motivated by profit. However, when confronted with a zero-sum tradeoff between typical for-profit goals and driving social impact, the interests of shareholders or investors typically come out on top. The triple bottom line becomes a 'nice-to-have', fueling frustration, cynicism, and criticism (deservedly so) about corporate responsibility.
In the face of this frustration, one of our office visits was a powerful reminder of the need for thoughtful organisational design, measurement, and narratives in impact work, whether driven by the private sector or 'private-esque' entities. In this post, I will share my reflections on what I learned from Recidiviz, a technology non-profit that creates open-source data infrastructure to help the criminal justice system end mass incarceration.
Lesson 1
There is immense flexibility within organisation types. When designing a new organisation to serve a mission, focus less on the label and more on specific practices.
You might be asking yourself: What is a tech non-profit? How are they different from other non-profits or social enterprises? As more 'hybrid' models emerge and challenge what a 'traditional' non-profit or for-profit organisation looks like, it becomes increasingly murky to define the differences between non-profits, social enterprises, socially responsible corporations, and beyond. Most people delineate the different types of entities based on their sources of funding and level of efficiency or innovation. For example, social enterprises address a social need through providing a new, scalable, and profit-generating product or service. As a result, they are expected to be self-sustaining operations and can raise funding from private finance (eg, venture capital). In contrast, non-profits rely on public grants to sustain their manual operations.
Yet, Recidiviz oftentimes reminded me of a venture-backed startup. It doesn’t just use technology tools, but is creating an original tech product that is core to its social impact delivery. The product wins government contracts, reducing Recidiviz’s dependency on philanthropic grants. On top of more traditional non-profit roles, it employs product managers, designers, and data analysts at competitive salaries. It can innovate and adapt, actively listening to its customers to determine which features to prioritise next. Its funding is not necessarily tied to specific, pre-defined project activities or outcomes.
Holding on to preconceived biases and assumptions of how non-profits and for-profits are 'supposed to work' can constrain an organisation’s creativity and effectiveness in fulfilling its mission. Instead, starting from a blank sheet and learning from all sorts of models can lead to superior funding, labour, and operational decisions.
Lesson 2
Being socially impactful requires regular reflection, measurement, and the openness to recalibrate your approach.
I was really inspired by Recidiviz’s ongoing, proactive, and disciplined evaluation process. After product features were launched, their outcomes would be measured and compared against Recidiviz’s mission to 'safely, equitably, and sustainably reduce incarceration.' Negative outcomes could result in features being rolled back entirely. Recidiviz’s 'impact' is not assumed, but regularly challenged in daily office processes and strategic planning efforts.
I found this clear definition and counterfactual evaluation refreshing in the social impact sector, which is rampant with vague and sometimes contradictory definitions. If an organisation assumes that it is inherently positively impactful (whether because of its origin story, product type, geography, or beneficiary/customer profile), it can justify all sorts of actions without any reflection on unanticipated consequences. For example, many organisations will focus on financial viability and growth above all else, which can lock them into undesirable or harmful pathways. They ask: 'How can we continue to serve our mission if we don’t survive?' This is undoubtedly a critical question, but financial viability is not an end in itself. An equally important question that does not get posed nearly enough is 'If we don’t serve our mission, what is the point of surviving?'
Lesson 3
We should always challenge the conflation of market success and societal value.
In today’s world, the initiatives deemed most 'worthy' of funding are those that maximise profits and shareholder returns, with the assumption that a competitive market can solve all problems. This logic is reflected in the common reasons for startup failure: inadequate demand validation, market readiness, or adaptability. The underlying belief in Silicon Valley is that if a startup fails, it must not have solved a real problem, and thus cannot generate the growth or profits necessary for success.
But what happens when customers who need, want, and are satisfied by the product simply cannot pay? What if the government cannot subsidise the product because the government is a customer, itself? There are a lot of reasons why an organisation like Recidiviz drives both societal and commercial value. Imprisonment is expensive to upkeep and corrections facilities are understaffed; decreasing incarceration can save money from prison and parole sentences. Yet, traditional market-based models like value-based, cost-plus, or competitive pricing fail to capture the full value of these interventions because of limited public budgets.
The conflation of market success with societal value can be perverse. Not all problems are equal. Sectors that are central to societal well-being are often underfunded and reliant on smaller pools of government, NGO, or philanthropic support, while large private capital flows toward more proftable, 'problem-solving' ventures. The Pershing Square Foundation’s prioritisation of areas that lack sufficient market-based solutions is a valuable reminder that some interventions, despite their clear and essential societal value, will always struggle to be financially sustainable. This perspective makes me hope that private impact investment funds will also increasingly prioritise additionality as a key criterion when allocating funds (ie, will non-impact investors also fund this?), and that they allow their recipients the flexibility to experiment with hybrid commercial strategies, even if they are not immediately EBITDA-positive. For example, Recidiviz’s financial viability is strengthened by its ability to cover a significant portion of its costs through government contracts.
Recidiviz is not a perfect organisation, and I recognise that some questions may never have definitive answers. Does it adequately voice the needs of the incarcerated population? Is its scope of operations too narrow or too broad? It continues to navigate trade-offs and grey areas, where differing opinions on what constitutes the 'right thing' may arise among both employees and external stakeholders. That being said, I respected its willingness to challenge limiting archetypes, to continuously reflect on its role in the criminal justice ecosystem, and to adjust its product based on disciplined impact measurement.
We are living in an era where businesses, funders, and hybrid entities are not only taking greater responsibility for their societal impacts but also adopting impact-driven models as core to their mission, positioning themselves as powerful vehicles for change. I’m excited to further explore how organisations can be reimagined and restructured to reflect this evolution.
