Here are my musings:
The Monday November 28th edition of the Wall Street Journal included a debate between proponents and opponents of business-minded philanthropy. The pieces were interesting, if not particularly sublime. Both Mr. Edwards and Mssrs. Bronfman and Solomon seemed to argue from two sides of the same coin. This, as opposed to a pure dichotomous debate, diluted both arguments. The deficiency seems to have come from a sort of confusion of terms. Bronfman and Solomon advocated for a reasoned approach to management of non-profit funds based upon business models while Edwards dismissed this approach as inappropriate for the philanthropic world. Their respective arguments seemed to boil down to “It makes good sense to use good sense” and “this is charity, not a business.” Granted , the fundamental difference between the positions is based upon each parties’ belief of the effect business-model philanthropy will have on actual charity.
The arguments become deficient though when we realize they weren’t arguing on a point by point basis. The sides were not arguing for dependency on or rejection of business principles in philanthropy. Rather, they were arguing for the place business principles should occupy. It’s a subtle difference, but one worth reflection. This is because business principles are not meant to be the thrust of a charity, but rather a tool for the effective administration of a non-profit. Bronfman and Solomon concede as much by the only real-world cite they make. The Robin Hood Foundation in New York uses business analysis to inform their decisions but only as a tool as they make “qualitative decisions.” Additional tools include the “experience of managers in the field” to best spend the limited supply of money the charity has. Edwards contends that allowing business analysis to pervade the non-profit sector will result in less money getting to those who actually need it and, what’s worse, diluting the social change point of charity.
The problem with this debate is that each party is arguing over different functions. The pro-business side is advocating for the pervasive use of a rational tool to encourage growth in the sector. The traditional side is advocating limitations on the business approach because it will dilute the social thrust of charity. It’s the difference between philosophy and practicality. Both are necessary, but are best used in their proper place. Non-profits should seek to act in the most rationale way to most effectively use their limited resources, but they should do so in a subjective way. Sometimes it will be better to feed more people and sometimes it will be better to feed less people better. Either way, we want to feed the most people the best that we can. Non-profit leadership, in essence, must use the tools at their disposal without losing the plot. That is to say, Business flavored management must be seen as a tool to be used in the pursuit of the organizational goal of better lives for people who really need the help. Mr. Bronfman and Solomon fail to offer a compelling business-minded philosophy and Mr. Edwards fails to express anything other than philosophy. It’s a confusion of terms.
The real problem is a lack of upper-level non-profit management talent. The lack of sharpness of each side’s points indicates that we don’t have leadership that can simultaneously understand the philosophy of giving and the effective way to give. What we need are leaders that can understand both. What we need are leaders who understand that when there isn’t enough money in the coffers, they need to spend more time and energy to make up the difference. In pursuit of the good life, if your garage door opener breaks and you don’t have the money for a repairman, you fix it yourself. Essentially, we need leaders who are fired by passion and grounded in good sense. We need talent that is passionate and intelligent. We need leaders who understand sacrifice and blessing. When our society trains leaders like that, then we will truly on the path to the social changes we so desire.
What a great topic for your annual blog post!
ReplyDeleteThis is, to me, a really interesting discussion. Although I have tended to be drawn to the non-profit sector in my recent job searches, I have been confronted with people who argue that non-profits are largely rendered ineffective precisely because of the people from Bronfman and Solomon's camp. They say, "Organizations receiving your support should be as accountable to you as a company's board is to its shareholders. You are a stakeholder. And that means, above all else, that you have to know your return on investment." The stakeholders in non-profits are often the reasons that these organization are held back from their goals or manipulated toward the goals and interests of the investors. Businesses have all different motivations for investing in charitable organizations and big companies sure don't look bad in the public eye when they are feeding the homeless or saving the environment with their dollars, especially as the consumer becomes more and more socially and environmentally conscious but doesn't have the time to do their own extensive research. In this case, they make their ethical consumption choices through what they learn from advertisement. They see a Fair Trade label or hear that Wal Mart is donating to some Cancer Foundation, then they shop there and call it a day. Not that I'm saying that these labels or donations are bad, but they can be misleading. Maybe Fair Trade isn't all it claims to be and maybe Wal Mart, because of their "philanthropy" has essentially bought this Cancer foundation and has more control over it than it should.
It seems to me that people who have philanthropic goals in a certain arena may often have more success and freedom through NOT becoming a non-profit. I have begun seeing a lot of these kinds of businesses. TOMS shoes and Eurasia Cafe, for example, sell shoes and coffee as a business with a philanthropic goal in mind and various business strategies to meet that goal.
I know there is a need for non-profits and sometimes they fill a need that would not be met otherwise, but maybe the generally more effective option than debating between whether to run a non-profit as a business but rather to run a business as a non-profit.
an interesting topic i would like to discuss in person. mano-e-mano-e-womano.
ReplyDeleteWell, I already did that with him a couple weeks ago oddly enough. And you should probably tell him in person because if you'll notice up at the top, he only checks this annually. :)
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