Getting Corporates More Involved in Non-Profits

I was recently asked to comment on why more for-profit companies were not engaged in investments for community-improving non-profits.  This was my response.

Businesses and non-profits

Monday, August 02, 2010

8:47 AM

On the business front... the big issue with businesses investing in non-profits is related to their own mission and fiduciary obligation.  Their first obligation is to their shareholders to return a reasonable profit in return for the investment.  When companies do this well they are often derided in the press and social circles as greedy and profit-motivated.  When they do it poorly, they're derided as incompetent or illegitimate or evil. 

Businesses will invest in non-profits when it is in the best interest of their shareholders.  When they invest in non-profit education, they see it as an investment in a future workforce quality that will improve the profits they can deliver to their shareholders.  When they invest in parks, it is to create an environment that will attract talented employees.  And so on.

To attract businesses into the non-profit community, you have to demonstrate how their investment returns value to their owners, even if the value connection is indirect.  But to appeal to them out of a sense of obligation or moral rectitude misses the plain fact that companies owe their first allegiance and have a legal obligation to be good stewards of the investments made in them. 

If they donate to non-profits, they reduce the short-term return to shareholders: Let's illustrate it this way.  You give me $10 to start a lemonade stand and we agree that for every dollar of profit, I get $0.50 for running it and you get $0.50 for the risk of placing your investment with me.  So on week one I made $5 in profit.  So you, as the investor get $2.50.  But as the operating manager, I've decided to invest 10% of my profits in poverty relief around my lemonade stand.  So my profit is now only $4.50.  You only get $2.25 in a dividend payment.  You could either say, "Well done, Paul, I'm glad you're taking a long view and sharing with the poor."  Or you could say... "wait, you took $0.25 from me.  You're a crook.  I was planning on using those funds for my retirement or the education of my kids, but you've squandered it."

Many have argued that we need to have much longer view of business management and that we should not be focused on the tyranny of the 13-week business cycle.  Tell that to the shareholders who demand greater-than-market-returns every quarter. 

Even if we're not talking about big business with formal shareholders (the local bar or bead shop, for instance), the same dynamic plays out.  It may be different in scale or in stakeholders, but it is the same calculus.

In the end, if you want to connect businesses to non-profits, here are some thoughts:

- Find ways to demonstrate that an investment in a non-profit is not just "charity" but an investment that will benefit their stakeholders in some way.

- Engage business leaders along the lines of their gifts and battle-tested skills.  Let's stop asking CPAs to hand out cookies or paint lines in the parking lots and put them to work as volunteers using their accounting skills to the benefit of our organizations. The only profession we routinely ask to act along their lines of expertise are medical professionals.

- Run your non-profits well. Make the investment a safe one, with responsible and transparent leadership, clear vision, and regular progress against clear goals.  Be honest and clear about risks, treat them as a part of the environment and have a plan to mitigate the risk.  Speak the language of business.

A closing thought:  As I take short term teams in to Guatemala every year, I spend nearly six months working on cultural intelligence. How can we enter the country with awareness and sensitivity to the local culture, avoiding the embarrassing ugly American stereotype. Non-profits, reaching out to the business community have to cross a similar cultural gulf, learning to speak the language, understand the values, and perform the courtship rituals that are common to the native corporate drones.

Lovingly,

Your local corporate drone!

Culture Matters

I have been reading two books at once these days (one audio book as I work out and another "regular" book.  I can recommend them both. 

Mel Lawrenz's recommendation of "The Mission of the God's People" by Christopher Wright is a good one.  Wright argues that from near the beginning, God's intention has been to restore the entire creation and all people to himself.  His calling of specialness for the people of Israel to a special role in that restoration reminded me of my days as a fire fighter.  I had a special role to secure safety for those in trouble. If I did not do my role well, the Captain had every right to be angry and discipline me. If I did things outside of my firefighting responsibilities that made me unfit for the special role of securing safety, then similar discipline could be expected.  But a no time should I ever have seen my role as a firefighter as more valuable or more prepared for safety. In fact, my role was to put myself at risk to ensure the safety of others.  Wright argues that this is what God called Israel to do.  They often got all distracted by their shiny uniform, equipment and prominent place in the community parade, requiring divine correction.  So too the church needs to be about the firefighting, world-saving role to which it has been specially called. It is in at sense primarily that God acknowledges a specialness for us. 

Bruce Shelly's "Church Language in Plain Language" is a great tour of how we got to here from the first century.  It is one of those dot-connecting aha books that explains a lot of undercurrents of the modern church. But equally, it is helpful for understanding where the church has missed it's special calling. 

I met this week with International Center alumnus Navin Theyagaraj (Santhini Baskaran's brother) and his family.  We broke all Mullen rules of safety riding on the back of a motorbike flying down the highway along the eastern Indian coastline in monsoon rains. Elephants, monkeys, water buffalo, geckos, crocodiles, and bobble heads (do they understand the irony of a bobble head Ganesh statue on a car dashboard?) were prominent features. My work took me into rural India, visiting rural healthcare clinics.  I witnessed my first caesarean section (65% of Indian babies are delivered this way). But what was an aha moment for me was seeing the Hindu temples dotted over the country side. My read through the bible plan took me through biblical wanderers who had to confront local temples and gods as a part of their journeys.  It made the references all the more poignant as I made my way through the reading.  I wonder if the ancient peoples that the children of Abraham displaced were the tribal people that now inhabit Hindu India. 

Since Labor Day, I have been in a different country every week.  Though the contemporary world tells us to accept and celebrate diversity, I am beginning to believe that that from empirical evidence, culture matters. Culture drives values, hygiene, government, productivity, faithfulness, education, curiosity, joy, community, health, and so much that people call the stuff of life. I really am becoming to believe that the mission of the church has to be about changing culture if our mission is to reach all people the restorative mission of God.