Let's start with a cartoon:
Earlier this year in TIME, Adam Braun argued that the worse thing to happen to the social sector was to allow its entities to be labeled nonprofit:
The word non is defined as “of little or no consequence: unimportant: worthless.” And yet it’s the first word you hear when describing charitable work. That’s because charity historically stems from religious penance for sins performed in other areas of our lives. It’s still secretly present in our language, as you’ll often hear people tell someone who works at a charity that he or she is “such a saint.” But if we’re honest, absolutely no one works at a 501(c)3 organization because they have aspirations to be poor. No one wakes up and says, “I can’t wait to not profit today!” We’re driven by ambition to solve the world’s most intractable social issues. We want to craft a better world than the one we inherited, and we do this work not to pursue personal poverty, but to alleviate the lack of profitability in the lives of others and enhance the sense of meaning in our own. So why do we continue to use a phrase that only describes a small component of our business model? Shouldn’t we focus on the positive elements of what our efforts create instead of highlighting what they don’t? We’re moving to a place as a society where the question of whether an entity is “for-purpose” or “non-purpose” will be a greater indicator of its potential success than its for-profit or non-profit designation. The latter two will simply define the business model it adheres to in achieving its attempted mission.
You might be interested in this New York Magazine piece by Andrew Rice featuring Pierre Omidyar and his work as a philanthropist:
Many in the philanthropy world were aghast when Omidyar began mingling altruism and capitalism, but he dismissed the objections as “old thinking.” He found an area that promised to unite both instincts: microfinance. Omidyar loved the idea that giving out tiny loans in developing countries could unleash entrepreneurialism. He endowed a $100 million fund, administered by Tufts, that invests in microfinance institutions, and donated to numerous nonprofits in the sector. In 2008, Omidyar took a trip to India, where he visited a village near Hyderabad with the founder of a lender called SKS, in which Omidyar Network was an indirect shareholder, via a 22 percent investment in a Cayman Islands–based private-equity fund...But SKS’s stock later crashed in the midst of political uproar in India over harsh collection tactics, which were tied by opponents to a number of suicides. Omidyar seems to take such setbacks in stride; he sees traditional philanthropy as overly risk-averse. “In Silicon Valley,” he said at a 2011 nonprofit conference, “we say if you haven’t tried something and failed, and actually learned something from that failure, then why would I want to work with you?” But Omidyar’s habit of investing heavily in big ideas, and sometimes dropping them abruptly, made him appear fickle and inscrutable to many in the philanthropy world. “He got this reputation of being an arrogant know-it-all,” says one nonprofit-sector consultant, echoing Omidyar’s earlier self-assessment. “But they all kissed the ring because they wanted his money.”
Over at Barrons, Steve Garmhausen profiles Merrill Lynch advisors Kristina Van Liew and Linda Stephans on their impact investing practice:
VAN LIEW and Stephans are more than impact-investing gurus. They and their colleagues provide a full range of investing and consulting services for wealthy families, family offices, and institutions. In all, they manage $6 billion of assets. Van Liew is number 34 on Barron’s Top 100 Women Financial Advisors in 2014. Stephans is number 33... For a good sense of what impact investing looks like, the pair point to a family foundation. The $54 million portfolio is built around the themes of fair labor, sustainable food, and renewable energy, which are expressed both through impact investing and the traditional method of screening out certain investments. In all, 70% of the portfolio aims at sustainable food, renewable energy, and the promotion of progressive business practices—such as protecting workers’ rights, creating safe products, and protecting the environment. The specific investments include separately managed accounts, mutual funds, and direct investments. Those investments might end up supporting anything from an early-childhood education center for low-income families in Tulsa, Okla., to a company that designs low-cost solar lighting for rural India. Portfolios like that need not sacrifice performance, Van Liew and Stephans emphasize. “There was a myth in the early days in this arena that you had to accept lower returns,” says Van Liew. “If done properly, we generally believe you do not have to give up performance in pursuit of an impact portfolio.”
In Nonprofit Quarterly, the Oishei Foundation’s Paul Hogan offers a rebuttal to Heron’s Buzz Schmidt argument that all enterprises are social. In May, Heron’s chairman offered his views on why enterprises should be measured for their social performance “untethered from corporate identity or tax status.” However, Hogan argues such an approach “could unintentionally do more harm than good“:
The last thing the nascent “social impact” movement needs is to be equalized, because in being so treated, it becomes co-opted and inconsequential. “Nothing happening here, folks; move along….” While it is true that definitions of and approaches to social enterprise are still in flux, as they are at the beginning stages of any major change to established understandings and protocols, the emerging work in social enterprise does not undertake enterprise as enterprise has always been undertaken. (I should note that I am referring mainly to the “benefit corporation,” or L3C.) This is an evolutionary period for capitalism—a “next phase” of practice. And as it took decades and generations for it to change to this point, so it will take as long as evolution takes for it to change from this point. The evolution of this system of enterprise is natural, normal, and inevitable. I even hesitate to say that it is “revolutionary,” as some have. So while saying that “all enterprise is social” may be accurate as a statement of fact, insofar as any activity in which humans interact is social, within the context of the evolution that many are seeking it becomes a statement of capitulation, of equivocation. “We are all alike, and therefore we are all friends and allies, and we all want the same things.”
In the National Catholic Report, Vinnie Rotondaro looks at why poverty doesn't play a bigger role in U.S. politics:
Today, "young people have consumer-influenced value systems that de-emphasize the intrinsic worth of human beings and highlight their connection to what they consume," Jones said. And beginning in the Reagan era, "misinformation about poverty became part of mainstream political rhetoric. 'The poor' began to be villainized and blamed for their circumstance."
"Income equality is the term people use now to refer to the poor," she said. "It puts the struggle of the poor in a context that people today can comprehend. In this time, money is viewed by many as the solution to everything, so to refer to 'the poor' as people who have unequal access to income and less opportunity to build wealth resonates with more people today ... [It's] more neutral. It carries less stigma, but it also may be less motivating."
Over at the Huffington Post, Columbia's Jeffrey Sachs says Tuesday's election was really all about billionaires:
This was the billionaires' election, billionaires of both parties. And while the Republican and Democratic Party billionaires have some differences, what unites them is much stronger than what divides them, a few exceptions aside. Indeed, many of the richest individual and corporate donors give to both parties. The much-discussed left-right polarization is not polarization at all. The political system is actually relatively united and working very effectively for the richest of the rich. There has never been a better time for the top 1%. The stock market is soaring, profits are high, interest rates are near zero, and taxes are low. The main countervailing forces -- unions, antitrust authorities, and financial regulators -- have been clobbered... Why does the actual vote count for so little? People vote for individuals, not directly for policies. They may elect a politician running on a platform for change, but the politician once elected will then vote for the positions of the big campaign donors. The political outcomes are therefore oriented toward great wealth rather than to mainstream public opinion, the point that Gilens and others have been finding in their detailed research.
Perhaps the big win for the small guy in Tuesday's election was the passage of several minimum wage referendums in the reddest states, and Businessweek, Vanessa Wong reports on why that is good for business:
[B]ehind that surprising result is waning business opposition, particularly among retailers, says Paul Sonn, general counsel and program director at the National Employment Law Project, an advocacy organization. “Business opposition to raising the minimum wage is softening,” says Sonn. Taking a stand against it has become unpopular, but that’s not the only reason for the shift: “There are business downsides to flat and falling wages.” The restaurant and retail industries will be most affected by the new wages. These industries employ the greatest share of workers who get paid at or below the minimum wage, so the result at the ballot box will increase costs. But these industries also stand to benefit from consumers with more money to spend because of higher wages, a boost that comes during a long period of stagnant incomes.
FYI, the bid for the Detroit blight bundle has been withdrawn reports Anna Clark over at NextCity:
For all the publicity Strather and his 6,000 properties got over the last week, the deal never closed. He did submit a deposit of $315,000 to put a “hold” on the properties while he worked on developing a viable plan for them, which would have had to get approval from the Wayne County treasurer. The properties now transfer back to the city, which will proceed with the process until, most certainly, the properties do end up with the land bank after all. Strather does get his deposit back — something that would not have happened if he had gone forward with submitting a plan that was deemed unviable.
Meanwhile a NYT's editorial discusses stagnating wages:
The employment report for October, released on Friday, reflects a steady-as-she-goes economy. And that is a problem, because for most Americans, more of the same is not good enough. Since the recovery began in mid-2009, inflation-adjusted figures show that the economy has grown by 12 percent; corporate profits, by 46 percent; and the broad stock market, by 92 percent. Median household income has contracted by 3 percent.
Against that backdrop, the economic challenge is to reshape the economy in ways that allow a fair share of economic growth to flow into worker pay. The October report offers scant evidence that this challenge is being met.
In Fast Company, Neil Ungerlieder takes a look at how the Teamsters are making a play for Uber and Lyft drivers even as they work in some cities to protect these traditional taxi drivers from their competition:
We're seeing the gig economy becoming an important part of the workforce, and labor unions are responding. The drivers who shuttle Facebook and Google employees up and down Route 101 in Internet-enabled buses aren't Google employees; they instead work for transportation companies that bid on lucrative tech company contracts. Uber and Lyft drivers are hailed through a proprietary app that takes a cut of their profits, but are legally considered independent contractors, even if their customers think of them as "Uber drivers." Welcome to unionization in the digital economy.
Guess what, Burger King pays a living wage...in Denmark reports the New York Times Liz Alderman and Steven Greenhouse:
“We see from Denmark that it’s possible to run a profitable fast-food business while paying workers these kinds of wages,” said John Schmitt, an economist at the Center for Economic Policy Research, a liberal think tank in Washington.
Many American economists and business groups say the comparison is deeply flawed because of fundamental differences between Denmark and the United States, including Denmark’s high living costs and taxes, a generous social safety net that includes universal health care and a collective bargaining system in which employer associations and unions work together. The fast-food restaurants here are also less profitable than their American counterparts.
The American Enterprise Institute's James Pethokoukis argues inequality is "an indictment of crony capitalism" not competitive capitalism:
Dynamic, prosperous economies that push the technological frontier are likely to have a relatively high level in income inequality. So what do you do about that, if anything? I mean, we want the great new products and services from the companies founded by these new billionaires. We wouldn’t want to do something that would mean fewer billionaire entrepreneurs and thus less innovation. Here is how the virtuous circle should work. Startups threaten incumbents who either have to innovate or die. And when those startups turn into Google or Apple, they are threatened in turn by even newer firms. And it will work like that unless government gets in the way and turns dynamic, competitive capitalism into stagnant, crony capitalism. Countries with high levels of creative destruction will be more innovative, wealthier, and avoid exploding inequality.
In RealClearPolicy, W. Bradford Wilcox and Robert I. Lerman contend that family structure is a major factor in promoting economic mobility:
[N]o substitute exists for the intact, married family when it comes to boosting future economic opportunities for children, strengthening the commitment of men to the labor force, and ensuring the economic welfare of families. Indeed, even in Sweden, where the social-welfare state is strong, and where family-structure inequality is also growing, children from single-parent families are significantly less likely to do well in school and more likely to be poor. One study found that child poverty in Sweden was three times higher in single-parent families than in two-parent families. So, if political, business, and thought leaders, economists, religious leaders, and educators are serious about confronting economic inequality, social immobility, and stagnating wages -- i.e., about reviving the American Dream -- they also need to focus on how to reverse the retreat from marriage in America. The alternative is a future of durable economic inequality, where college-educated Americans and their kids enjoy strong and stable marriages that boost their economic opportunities, and everyone else faces an increasingly unstable family life that puts them at a permanent disadvantage. We cannot think of anything less progressive.