Ken Goldstein, MPPA

Ken Goldstein has been working in nonprofits and local government agencies from Santa Cruz, to Sacramento, and back to Silicon Valley, since 1989. He's been staff, volunteer, board member, executive director, and, since 2003, a consultant to local nonprofit organizations. For more on Ken's background, click here. If you are interested in retaining Ken's services, you may contact him at ken at

Thursday, September 07, 2006

Corporations Versus Nonprofits - A real question?

This morning I was searching out blogs with "nonprofit" as a keyword when I somehow stumbled across the "Esdena: Student Marketplace" blog and read a post called "Welcome back MIT! and Why Do People Hate Corporations." Now, I'm fine with the MIT part (welcome back to school), it's the rest of the post where the writer has some interesting things to say about our nonprofit sector.

The writer, Dominic Lee, says (in part - typos included):
I don't know about elsewhere, but at least here at Rice, people HATE corporations. Businesses and extreprenuers are seen as mercenary, greedy pigs that care only about money.

These people just never seem to remember their own parents probably will not have a job if it werent for these businesses...

There are several questions I want to ask:
Did Greenpeace invented Hybrid cars? Or did Toyota?
Did Friends of the Earth revolutionized the energy industry by introducing more efficient fuels? Or did BP?

My point here is, I believe for-profit corporations are more effective than non-profits organizations in achieving social means. ...
Okay. Good introduction. Good questions. Wrong conclusion.

First off, I don't hate corporations. I hate corrupt corporations, of which there appear to be many these days. But I am not a knee-jerk, anti-business death-to-McDonald's type. In fact, I am a small businessperson with two companies of my own, one of which is consulting to nonprofit organizations. So, while I am very much "in the nonprofit world" I am also a businessperson.

Back to the question ... "Did Greenpeace invented [sic] Hybrid cars? Or did Toyota?" Well, obviously it was Toyota (or Honda, or whatever). But it does not logically follow that Toyota is more effective at achieving environmental mission than Greenpeace.

Greenpeace is not organized to invent technology. They are not in the field of engineering. They are advocates and activists. Their mission is about education and getting the public involved in environmental issues.

Toyota is not organized to solve the world's problems. They are organized to devise and sell vehicles that are in current demand by the marketplace.

It's a fairly simple chain reaction:
Greenpeace (and others) influence public opinion on fossil fuels -> Public demands more fuel-efficient vehicles -> Toyota (and Honda, etc.) develop hybrid engines -> Toyota Prius becomes top seller.

I applaud Toyota for their work. I mean to take nothing away from it. But, it is the work of Greenpeace (and a dozen other major and hundreds of smaller nonprofits) that made the change in society that resulted in the Prius being a top seller.

The same chain of nonprofits influencing public opinion, to the public demanding something from the marketplace, also holds true for the Friends of the Earth / BP question. Thank you BP for coming up with cleaner fuels. But first thank you to Friends of the Earth for getting out the message and influencing the market.

This is how it works. Nonprofits influence the market. Corporations deliver in the market. They each play an important role. And then there are the thousands of things nonprofits do that have no market solution - or where the market is part of the problem - such as in the fields of hunger and housing.

Mr. Lee goes on to explain why corporations are better at achieving social goals:
Why? Because of tax breaks provided to companies when they make donations.

What? Yes, because of the tax breaks, very often, a company almost HAVE to donate some money. I mean, financially, they will have to pay anyway, they might as well build a good rep by donating those money they would otherwise in paying in form of tax.
Again, Mr. Lee states a fact (corporations give to nonprofits), but draws the wrong conclusion.

Corporate donations only make up about 4 to 5% of all charitable contributions. It's very nice, and we appreciate it very much, but this alone is certainly not what "achieves social means."

Final quote from the post:
... businesses will always donate to non-profits which fit the following criteria:

1. Have close connections with the corporations
2. Throw a good (by good, I mean luxurious most of the time) charity event
3. Able to create good PR for the business

Ok, so NONE of these 3 says anything about the non-profits ability to achieve their social goals.
Mr. Lee obviously knows nothing about the nonprofit sector, and his picture of us as providing nothing but good PR, tax breaks, and party invitations would be insulting if it weren't so laughable.

Mr. Lee, how about I ask you a few questions? Can you show me legitimate examples of where corporations have done a consistently better job of achieving the social goals of feeding the homeless, or rescuing wildlife, or fighting for civil rights?

Every social advance and achievement in this country over the past century was accomplished almost exclusively through the hard work and dedication of the nonprofit sector.

Yes, corporations have been involved (as they should be). But typically only after the change has been effected in the court of public opinion. The power of the marketplace to complete changes is incredible, and I mean to take nothing away from that. But, without the power of nonprofits to advocate for causes and lead the charges, very little would ever be accomplished in the area of social change.

You can disagree with me, but this is what I know.

crossposted to Random Thoughts, Notes, & Incidents

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