The Non-Profit Dilemma

Building a Good Place and the Non-Profit Dilemma by

Scott Myers

Building a Good Place and the Non-Profit Dilemma

Scott Myers

Many of us hold some version of the following beliefs:

- The purpose of Business is to make money, specifically, to achieve the best return on investment for its shareholders. - The purpose of a Non-Profit Organization is to make the world a better place. - For-Profit businesses, from their profits, support Non-Profit Organizations. - The world is not nearly as good as it could be. Non-Profit Organizations could make the world a much better place if only more people, more businesses, and more government entities would give themmore money. - Many (if not most) businesses don’t really make the world a better place as they work to make a profit. Many businesses actually damage the environment, local communities, and human relationships - some maybe just a little bit, some more so, and some maybe a lot - in their quest to make and maximize profits.

Based on these commonly-held beliefs, the source of donations for Non-Profit Organizations (who work to make the world a better place) is the profit produced by businesses. This may take the form of - direct corporate donations, - donations from for-profit business employees (who receive pay checks because their work contributes to creating corporate profits), or - government money - which comes from taxing businesses and people who work at businesses. (Taxes paid by people working at Non-Profit Organizations come from donations or taxes from those working at profitable businesses.) Ultimately, based on these beliefs, the only source of funds to support Non-Profit Organizations - who work to make the world a better place - is the work of people at for-profit businesses.

Let’s say that all For-Profit Corporations make 10% Net Profit from their operations. This is an over- optimistic Net Profit percentage. Most businessed make less than 10% Net Profit, but let’s make the numbers easy to work with. What if all For-Profit Corporations would donate 10% of their profits to Non-Profit Organizations, who work to make the world a better place? A tithe would be 10% of their profits. Their profits are 10% of their operations. 10% of 10% is 1%. Ten Percent of profit, then, equals 1% of overall operations. Therefore, 1% of the impact of a For-Profit Corporation (in this example) would go towards making the world a better place, while the other 99% of their activities maybe don’t contribute to making the world a better place. Indeed, they may even damage the environment, local communities, or human relations.

The dilemma is this: Non-Profit Organizations, whose work helps make the world a better place, all have to share pieces of that 1%. The only way for Non-Profit Organizations to increase the amount of good that they do in the world is if For- Profit Corporations somehow give themmore money (through either higher donations or greater taxation). The only way that For-Profit Corporations can give Non-Profit Organizations more money is for them to increase the scope of their operations in order to generate more profit. But, by increasing the scope of the 99% of their operation that generates the 1% that they donate, if their corporation degrades the world by 1% or more, we aren’t getting ahead.. Every increase in the 1% of giving potentially increases the problem 99 times more. Even if a business’s operations are completely neutral,causing no harm to the environment, communities, or individuals, then the improvement of our world progresses at the pace of 1% of all our activities (as monitized) per year.

It’s worse than that, though. Actual corporate and individual giving to Non-Profits is not 10%. Both are 2-3%. Average individual giving is 2-3% of our income. Businesses, likewise, on average donate 2-3% of their profits. So for businesses, 2-3% corporate giving of 10% profits (which we already said are overstated for ease of math) results in 0.2-0.3% of business activity, as monetized, applied directly to making the world a better place, while 99.7-99.8% of business activity is directed at making money. The efforts directed at making money may help make the world a better place, be neutral, or actually damage the world. If their impact is totally neutral, then our pace of world improvement proceeds at a rate of 0.2-0.3% per year. Therefore, while this system guarantees job security for Non-Profit Organization workers, the hurrier they go the behinder they get. Ask any Non-Profit worker if they feel this way. They all do. And for good reason.

It is clear that, even under ideal circumstances, Non- Profit Organizations cannot keep up with making the world a Good Place by themselves. All is not lost, though! There is another path forward. We can focus on what we do at work in For- Profit businesses. For-Profit businesses could take as a primary aim to make the places where they work Good Places by the same labor that generates their profits. People who want to make the world a better place don’t have to just sit around saying, “I wish more people would give me more money so I can go out in the world and do more good.” We can look for economically sustaining work that both pays our bills by the profit it generates and makes the world a better place. We all need to resist the artificial distinction suggested by the tax system. Don’t allow the tax structure to bifurcate our lives into: For-Profit businesses pay taxes, and make tax-deductible donations to Non- Profit organizations. Non-Profit organizations receive donations, write receipts to donors so they can write off their donations from their taxes, and make the world a better place.

If the work we do to earn a living doesn’t also build up Good Places at the same time, we can’t make up for it by our donations and our volunteer hours on evenings and over weekends and the occasional mission trip week. We spend so much more time at work than we do volunteering! If our work is at best neutral and at worst damaging, our few spare hours and dollars can’t make up the difference. That’s why all of the Non-Profit organizations who are working to make the world a better place are always short of resources. We cannot donate or volunteer our way into Good Places (as important as donations and volunteering are). If we spend the majority of our time at work serving the principle of achieving the highest efficiency possible, earning the most money we possibly can, as that causes damage or neglect to human relationships, damage or neglect to the community, the same to the physical world, we can’t make up for those effects in our spare time or with our spare change. The work we do to earn our livings can - and must - at the same time build up Good Places. If it doesn’t, we can’t make up the difference through our donations and spare time.

A solution that (brilliantly, I feel!) addresses this dilemma: blur (and even erase!) the line between For-Profit and Non-Profit. For-Profit organizations can include in their values and on their task lists work that makes the world a better place. Non-Profit organizations can include activities that both accomplish their missions and generate revenue. Indeed, all organizations – whether For-Profit or Non- Profit - can seek a balance of effort in these three areas: 1. Economic Activities –work that builds up Good Places and returns a profit, that generates resources to support the members’ living expenses and pays for the organization’s other activities, 2. Development – encouraging and supporting the members in continual growth, 3. Service – work that builds up Good Places but that doesn’t return a profit. We can call these Good Place Organizations. We can propose this as a solution to the Non-Profit Dilemma.

Published by Good Place Publishing 180 South Avenue Tallmadge, OH 44278

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