
Volunteers at the Model Farm in India preparing organic fertilizer
By Thomas Pastorius, Director of Marketing - Pacific
The views expressed in this article are solely those of the author and do
not reflect the views of Projects Abroad Inc, its staff, partners or
affiliates.
One of the themes in President Obama’s inaugural address, which goes back to
his 2004 DNC address, was the need to set aside sclerotic divisions in our
society and focus on pragmatic issues of effectiveness. I think Big ‘Bama
hit on something important here.
That’s why I was excited to see The Economist publish a small article in its
January 29, 2009 issue on “for profit activism.” You can view the story
here until they make the link available only to subscribers:
http://www.economist.com/business/displaystory.cfm?story_id=13031214
(Projects Abroad staff can email me to borrow my hardcopy.) The article
highlights several companies which, like Projects Abroad, are for-profits
working in a field traditionally filled by non-profits. One was Bono’s
(RED) campaign, another was the Facebook Causes application. I would add
Google.org and Banco Compartamos, a for-profit microfinance firm in Mexico,
to this list.
I sometimes forget how strange this corporate gender-bending sounds to most
people. What are the social advantages of being a for-profit in a field of
traditional non-profits? Well, as the article points out:
1. COMPANIES CAN RAISE CAPITAL
Companies can raise funds by selling ownership in themselves. Since no one
owns non-profits, they can only get donations. Thus, it’s easier to find
money to start and grow a company than a non-profit.
Take Projects Abroad as an example. We got our start when a private
investor took a stake in the company that gave us the cash to make capital
investments. As money meant for his retirement, it only could have found
its way into our pockets as an investment - not as a gift.
2. COMPANIES CAN PAY THEIR STAFF MORE
Given the laughter rising from our office, I am skeptical about this point.
However, if true, it’s probably another benefit of a companies’ ability to
take on investors. Since investors demand a constant return on their
investment, for-profits might put a higher premium on growth and efficiency
improvements, which usually means paying for higher quality staff and
equipment.
I would add to this list:
3.COMPANIES ARE NOT BOUND TO A MISSION STATEMENT
Each non-profits has, or should have, a clear explanation of what it does,
for whom, and where. The list of “acceptable” goals are controlled by
governments and, once registered only the stated goals can be pursued. In
contrast, a company has the freedom to change its shape as often as it
likes. Probably the best example of this is India’s Wipro, which started as
a vegetable oil producer but now works in IT, consumer service and
healthcare.
Taking Projects Abroad as an example again, consider that it started as a
program called “Teaching Abroad,” which only sent English teachers to
Eastern Europe. This past is only tangentially related to the work we do
with, say, medical volunteers in Latin America, or Journalism interns in
China. We had the flexibility to follow the interests of our volunteers
because we are a for-profit company.
BUT…..?
Some people may object that for-profits can misuse resources for individual
gain. That is certainly a valid concern, but make no mistake, so could a
non-profit. The non-profit designation can protect against certain abuses,
but no law could possibly ensure a completely efficient allocation of
resources. In the end, the issue boils down to the individual integrity of
the members in that organization.
I’ve had the privilege to engage with a number of other international
volunteer organizations, both for-profit and non-profit, during my time at
Projects Abroad. It’s been my experience that there is no correlation
between the for-/non- profit issue and the quality of the program on the
ground.
If we really care about effectiveness, more consideration should be given to
the for-profit models ability to effect positive change. There is no doubt
that plenty of wonderful non-profits exist, and the next decade will see
many more join this list. However, we do the world an injustice to ignore
the huge positive impact that for-profits can make.