Small Business

For Love or Money


Is forming a nonprofit the way to solve social ills, or is it more efficient for business to do it?

TIM DELANEY

President and CEO

National Council of Nonprofits

Washington, D.C.

As a nonprofit you have an opportunity to get foundation dollars. Foundations are required to spend at least 5% of their assets every year on either internal operations or contributions to nonprofits. But with asset values down so much, it's becoming harder to get funding.

Sometimes there's no direct link between the issue and a sustainable business model. Take human rights in China, for example. I don't see a way to take that on through a for-profit model. Whereas I can see setting up a nonprofit where you get a foundation and some individuals to invest their dollars knowing they will not get a [monetary] return on it.

As a nonprofit you have the ability to wear the white hat. I started a nonprofit center on leadership ethics and public service. If it had been a for-profit consulting firm or law firm, there may have been pressure to give the client the answer they want instead of the right answer.

WILLIAM FULBRIGHT FOOTE

Founder and CEO

Root Capital, a nonprofit investment fund

Cambridge, Mass.

If you can use a for-profit model, you should. There's going to be a Darwinian flush on the nonprofit side as the financial meltdown causes funding to be reduced. So if you don't have to be out with your hat in hand, you are in a better position.

Business has the ability to scale. If you can bring the engine of business and real capital to bear, you can really move the needle. You can unlock billions and even trillions of dollars to address problems that are so huge. There just isn't that kind of money in the philanthropic world.

You have to be a starry-eyed romantic to think you won't have the dilemma of profit vs. the public good [if you use the for-profit model]. But the answer is to build awareness so that you have real consumer demand and shareholder pressure for ethical sourcing and environmentally responsible production.

—As told to Amy Barrett


Toyota's Hydrogen Man
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