Doing Well by Doing Good

Because we live in a world of dualities, we tend to prefer the straightforward clean approach of this v. that. Over the course of time, we have divided our economic world into two primary segments: For Profit and Non-Profit. "Any endeavor should be either business or charitable," we say, by the way we've set up our systems, rules and regulations. But many of our problems lie in our simplistic approach to a complex world. Black and White rules create gaps in the infinite sea of Grays that is the real world.

For profit businesses left untended get too greedy and leave out things that get in the way of their profitability. They hurt people and cause damage, making messes that the rest of us have to clean up. They solve the easiest of problems and leave the most complex for others to deal with. We need look no further than the headlines dominating our newspapers over the past few months to see in gross excess the fruits of this approach to doing business. In staggering amounts, we are transferring the wealth of society over to bad managers who created vast damage with their hubris and failure. But the best and brightest of businesses have certainly figured out over time how to do things efficiently, from meeting market needs to processing inputs and outputs to organizing people, processes, and tasks.

Non-profit organizations too often tend to flounder under the weight of too much responsibility and too few resources. They can lose their way not only through such inadequacy, but also through inefficiency, indifference, and their own versions of corruption and greed that plague the for-profit segment as well. They start with good intentions but then lose their way. But when non-profits get it right, they do so by shining light on neglected problems and segments of society, bringing attention and resources to address the worst problems of society. They organize and stimulate progress by demanding more from our collective better selves. They may not be as efficient or have access to talent and resources like the for-profits, but they are certainly doing what needs to be done, the best of them, that is.

NY Times columnist Nicholas Kristof, the social conscience of the Op/Ed page, in his column The Sin in Doing Good Deeds, highlights a new book titled Uncharitable, where author Dan Pallotta argues that we put too many constraints on our non-profits. Too high expectations combined with the shackles of non-profit result in inefficient and ineffective behavior, where we all end up the losers. We should be looking for Win/Win - that is rational - but our prejudices about the definition and rules of a "non-profit" give us Lose/Lose - that is irrational.

Yet there’s a broad recognition in much of the aid community that a major rethink is necessary, that groups would be more effective if they borrowed more tools from the business world, and that there is too much “gotcha” scrutiny on overhead rather than on what they actually accomplish. It’s notable that leaders of Oxfam and Save the Children have publicly endorsed the book, and it’s certainly becoming more socially acceptable to note that businesses can also play a powerful role in fighting poverty.

I would argue that the way we define the problem limits our set of possible solutions. What if there were a third, middle way, where something called a Social Corporation could be organized and run like a for profit business but have two primary objectives, equally weighted? What if we could pursue both optimization of shareholder benefit and solving a social problem in a single organization? We are moving there, but too slowly for my tastes.

Coming from the for-profit side, we see companies like Starbucks, Google and Whole Foods, which are most definitely all about making profits, but at the same time are conscious about how they make those profits, adjusting their processes to maximize the social benefits and minimize the social consequences of their business activity, way beyond the typical business approach (donate to charity in exchange for tax breaks, most often giving only as an afterthought after maximizing shareholder benefit - call it a "guilt tax").

Coming from the non-profit side, we see well-run non-profit organizations all around that have effective boards and administrators who routinely apply lessons from the business world to get the most bang for their donors' bucks.

And then right in the middle, pointing the way to the future, we see Grameen Bank, which started out with a very clear intent to solve a social problem - Third World Poverty - but did so by using sound business principles borrowed from the for-profit sector. Founder Muhammad Yunus even won a Nobel Prize in 2006 for his efforts and success.

From modest beginnings three decades ago, Yunus has, first and foremost through Grameen Bank, developed micro-credit into an ever more important instrument in the struggle against poverty. Grameen Bank has been a source of ideas and models for the many institutions in the field of micro-credit that have sprung up around the world.^[29]

On December 10, 2006, Mosammat Taslima Begum, who used her first 16-euro (20-dollar) loan from the bank in 1992 to buy a goat and subsequently became a successful entrepreneur and one of the elected board members of the bank, accepted the Nobel Prize on behalf of Grameen Bank's investors and borrowers at the prize awarding ceremony held at Oslo City Hall.^[30]

Grameen Bank is the only business corporation to have won a Nobel Prize. In a speech given at the presentation ceremony, Professor Ole Danbolt Mjøs, Chairman of the Norwegian Nobel Committee, mentioned that, by giving the prize to Grameen Bank and Muhammad Yunus, the Norwegian Nobel Committee wished to focus attention on dialogue with the Muslim world, on the women's perspective, and on the fight against poverty.^[31]

I think/hope we'll get there, but I think we'd get there much sooner if we were able to let go of the rules and structures that hold us back. Our potential as human beings is mostly limited by the shackles we put on ourselves. The human condition is one of struggle, but mostly, I think we get it right.

This Christmas, in the words of Tiny Tim, "God Bless Us Everyone."