Free marketeers receive a cool reception nowadays but neither is socialism making much of a comeback, unless you count its mention on signs at Tea Parties. It’s never easy to develop a coherent economic response to a crisis when old ideologies lose relevance. Pragmatism therefore demands that we employ the best tools of our current system to address its greatest ills; a young real estate advisory and consulting nonprofit I know is a case in point.
Real Estate Advisory and Development Services (READS) raises funds through arranging real estate deals for budding charter schools as well as through writing grants, the more traditional work of a nonprofit. The president, Brian Keenan, told me, “Folks ask for reduced rates for our services, which actually are about half the rate of a for-profit. I tell them, ‘Our time is valuable. We can discuss when payment is made but we are unwilling to reduce our fee.’”
Keenan is a former banker and doesn’t fear sounding too commercial for the more delicate sentiments of the world of do-gooders. At the same time, he readily admits that he began his company because his old boss told him that he was “spending too much time helping floundering nonprofits with their real estate problems.”
Keenan’s work is emblematic of a generation of nonprofits not imbued with the anticapitalism of the 1960’s, nor evincing the noblesse oblige of late-nineteenth and early-twentieth century reformers. The triumph of capitalism is implicit.
Firms such as Keenan’s aim to harness a bit of the tremendous accumulated capital in our country in order to catalyze the full economic participation of underutilized and undertrained social sectors.
The need and the opportunity are identical: Investing in socially marginalized children creates obvious value for the country entire but less obviously does so for particular, for-profit corporations. By leveraging the goodwill of socially-concerned citizens and, simultaneously, uncovering new profit streams, entrepreneurial-minded nonprofits demonstrate the latent productivity of large segments of the population and, eventually, attract further interest and investment.
Capitalism is excellent at providing opportunities to well-equipped and motivated entrepreneurs. It is less good at developing the talents, outlook, and networks of those who remained removed from its dynamics.
The wealth of our age gives us the luxury of seeking synergies between these two goals. Those who uncover such synergies have the potential to do good and to prosper.
I think we will eventually find that not for profits are a good model for some of our services. It is used for most of the world’s health insurance companies. There is still competition and they are still businesses, they just dont make profits which sometimes are not a positive. Good piece, will pass to friends.
Steve
I heard about some successful companies that were leveraging charitable donations to provide more good per dollar donated by making products that had value. The example I remember was a company that made a nutritionally supplemental yogurt drink that was subsidized by donations, sold at slightly above cost to people in slums somewhere who could afford it, and the profits were turned back into the production. Another creative way to leverage donations are the micro-loan companies. Many people are committed to charity in some form or other, either through the jobs they do or money they give, and it’s good to take market system ingenuity and make those donations more valuable.
Thanks, Janice. I would argue that a good nonprofit acts as a catalyst to unleash the market potential of a specific population segment.
Our challenge today is that the gains from such investments are widely distributed but that, collectively, they have enormous value, given the increased importance of human capital.
Obama is attempting to take on the role of Grand Investor but we know how cumbersome a tool government for that end.
Nonprofits such as the ones you and I mentioned are intriguing, but marginal and symbolic to this points, examples of how to address the current nature of the ‘market-human capital nexus.’
Let’s keep our eyes open for more examples.