Capitalist philanthropy — the phrase is almost a heresy, pitting greedy pigs and their code of sins against honest paupers and their labors of love. With a hint of good versus evil and a touch of ugly, the concept, being not without controversy, is practically alien to everyday life. How could such a thing exist, especially in a time when the corporate scandals at Enron and Arthur Andersen still linger in recent memory? How could McDonald’s and Halliburton even be considered humanitarian, when one makes the world fat and the other gets fat off the world? How could the line between doing business and doing good possibly be blurred?
Be more like a for-profit. […] What does that phrase mean? We should put all white men on our board? We should measure the impact of our company in dollars only? We should spend millions of dollars on a Superbowl ad with monkeys in it to get our brand out there? … [W]hen they say to me, “I’d like you to behave more like a for-profit,” I’d like to say to them, “I’d like you to behave more like an ATM with legs.” — Nancy Lublin, chief executive officer at Do Something, in her keynote for Craigslist Foundation’s 2007 New York Tri-State Nonprofit Boot Camp.
In the world of charities, commerce is the enemy. Many people in this line of work have adopted an us-versus-them “we have a mission but they have a bottom line” orientation, a sort of nationalism for promoting human welfare. This culture is illustrated in the literature written to educate readers about nonprofit management. Thomas Wolf, chief executive officer at Wolf Brown and author of Managing a Nonprofit Organization in the Twenty-First Century, asserts that “[a]n essential difference between profit and nonprofit organizations centers on the concept of mission. The ultimate mission of the profit-making entity is to earn money for its owners.”
Bridging the divide between commercial and noncommercial attitudes first requires understanding three critical issues: the consequence of noblesse oblige as a motivation to act; the effects of volunteerism on managing for the mission; and the business language barrier.
In ancient Rome, the people were segregated into two distinct classes: patricians and plebeians. Patricians, whose noble ancestry granted them special privileges, were sensitive to their duty to the plebeians. The old French word noblesse oblige describes this principle, now popularly understood as “with great power comes great responsibility.” In today’s largely classless society, people are free to embrace that noble duty as either volunteers or philanthropists. While positions of social responsibility serve to motivate acts of kindness and compassion, noblesse oblige as a driver of good behavior effectively asserts that other activities are less important and ignoble.
Over 75 million people living in the United States received no pay for work they performed in 2007, according to the U.S. Bureau of Labor Statistics. They were volunteers, people who contribute their time and energy and resources to noncommercial organizations and expect only progress in return. Many such organizations, however, treat volunteerism as their business strategy, relying exclusively on free labor to advance their missions. These organizations achieve too little and thus fail to meaningfully recognize volunteers for their participation.
A quick “thank you” and a pat on the back are hardly sufficient to invigorate people to continue volunteering, indicated by the unsurprising fact that the number of volunteers in the U.S. has declined every year since 2005. Volunteers are burning out, their commitment siphoned by mismanagement and misuse. As a result, increasingly more organizations are receiving increasingly less active, engaged support from volunteers, which only strengthens the attitude among organizational leaders that their work is more noble because they work to realize great visions without much help or compensation. Furthermore, leaders are facing the growing problems of demonstrating and funding progress, often resulting in significant changes to the missions of their organizations. The taste is bitter.
Adding fuel to the fire, commercial and noncommercial organizations communicate in different languages. All organizations are formed in furtherance of the interests of people. Organizations are established for various social benefits, such as to
- fulfill familial obligations, such as the survival and growth of children;
- satisfy the economic needs and wants of individuals, such as the need of food and the wants of entertainment and information;
- further the shared interests of a community, such as the development of knowledge, professional expertise, and trade skills;
- advance causes relevant to large bodies of people, such the worldwide eradication of polio or the legal defense of the poor; and
- facilitate communication and collaboration between organizations and individuals, such as public agencies.
All organizations are fundamentally humanitarian. The differences between these organizations are largely operational and sometimes legal, but often scale matters most to the perception of why these organizations exist. Whereas the family serves the least number of people, a government will serve the most. The reach of an organization, however, does not correlate with impact. A small organization can produce as much or more value for a community than a large organization. Where the relationship between scale and impact is of concern, how an organization serves constituents is vital to what an organization achieves.
Unlike charitable organizations, such as the Salvation Army or a local animal shelter, commercial enterprises exist to fulfill the economic demands of individuals. Contrary to popular opinion, businesses do not exist merely for profit or equity. Peter F. Drucker, the premier business thinker of the century, once wrote, “Profit is not the primary goal but rather an essential condition for the company’s continued existence. Other responsibilities, e.g., to employees and society, exist to support the company’s continued ability to carry out its primary purpose.”
In addition to the role of profit in sustaining corporations, the requirement of profit is a result of governmental regulation. Public agencies provide unique advantages to organizations that incorporate and operate in certain ways. Indeed, some organizations that would normally have been incorporated as nonprofit corporations and exempted from taxes were instead incorporated as taxable ventures. Profit is required for certain corporations to continue operating because profit is a powerful incentive that drives people to organize and provide social value.
Capitalist philanthropy describes the current environment, suggesting that the distinction between for-profit and not-for-profit is a fantasy. Invented to protect the faint of heart, the distinction has proven useful for only advocacy reasons. Society needs corporations to work together, to form healthy and fruitful partnerships for the betterment of mankind. Perhaps through understanding what keeps the two sectors separated, people on both sides of the fence can assume responsibility for establishing connections.
Capitalist philanthropy. Almost a heresy.
