Since you are reading this article on the Philanthropy web site, you already probably are helping someone who is in need. America’s philanthropic roots, which Alexis de Tocqueville praised over 150 years ago, remain strong in the closing years of the 20th century. Coming into the 21st century, however, philanthropy faces a double challenge: figuring out who to help, and determining how best to do so.
In the course of our work with the poor we have formed some definite opinions about these two questions. Briefly, we believe that market discipline should be as important in the selection of proper recipients for our philanthropy as it was in creating the wealth that allowed us to be philanthropists in the first place. We believe that philanthropists ought to be analytical and demanding of those they support. After all, when assessing key executives in our businesses, don’t we expect and demand character, integrity, and results? Then why ask anything less of those human service activities that seek our support?
This is the era of entrepreneurship in the marketplace; it is also the time for entrepreneurs in the arena of human services. We have been suggesting to any philanthropist who will listen that they allocate a portion of their giving—say 15 percent—to small, personally-run, non-bureaucratic, entrepreneurial, and often faith-based efforts. We recommend investing a modest portion of your charitable portfolio in organizations that are delivering results in the traditional ways described in Marvin Olasky’s book The Tragedy of American Compassion. Olasky refers to the “warm hearts and hard heads” in the golden age of charity which existed a century ago, where the people needing assistance were asked by the care-givers to take responsibility for their own lives.
Step 13 (in Denver) and the All Addicts Anonymous program (at East Ridge in Hankins, New York) are two such programs, rebuilding lives by requiring personal responsibility of the people who are seeking their help. The result is often self-sufficiency, which reduces the burden to the whole society. For example, an integral part of an addict’s recovery is full-time employment. East Ridge Organic Bakery, a for-profit offshoot of All Addicts Anonymous, was established to offer job training and good paying jobs for addicts, then to donate all profits to support the “war on addiction” as it is being waged and won next door. Step 13, a non-profit residential center for substance abusers in Denver, takes much the same approach (except that Step 13 runs a car detailing business, providing the irony of recycling lives while recycling cars).
Charitable entrepreneurs typically provide another benefit that is distinctly market oriented—leverage. Denver’s Step 13 serves 100 men at the cost of $300,000 per year—and 60 percent of that budget comes from the residents themselves in the form of modest rent payments (the organization’s head, Bob Cote, says his creed is “a hand-up, not a hand-out”). In contrast, Denver Cares, a large conventional and publicly funded shelter, serves roughly the same number of men at a cost of $8 million per year, and asks no compensation from the men it serves. Which program will generate the greatest return on your philanthropic investment?
Back in New York, East Ridge opens its doors to any and all addicts from around the country at its 200-acre recovery facility. The program costs $33 a day, compared to $500 a day for an in-patient “rehab” center. East Ridge can keep costs down because addicts who recovered there over the years have donated more than $15 million to help cover operating expenses and “scholarships.” If the addict is totally broke, he assumes a moral obligation for the cost, and is accepted anyway. (East Ridge’s Tom Powers Sr. likes to say he offers addicts a way “off the booze, off the drugs, off the smokes—and off the dole.”)
As you think about providing help and support to those in need, please direct some of your resources to charities that are personally driven by dedicated individuals like Bob Cote and Tom Powers Sr. And keep in mind the life history of your own business. How many times did your enterprise get the investment support it needed because someone had faith in your hard work and good ideas, even though you did not fit the conventional business model? Or think about the thousands of enterprising businesses that you have seen expand and profit because someone realized that what they were achieving on a small level could be greatly expanded. In this respect entrepreneurial charities are much like ordinary businesses—they can only spread their wings as far as resources allow.
And finally, one more oh-so-capitalistic word: franchising. We predict that enterprising charities like the ones described above, if given more resources, will find ways to spread their good work through expanded outreach and franchising services that are proven to work. No need to re-invent the wheel, just produce more charitable wheels that can get the job done. In America, that means getting those who need your help back to work, just like everyone else. Once an entrepreneur, always an entrepreneur—and for a very good reason: it’s a model that works.
When searching for a charitable enterprise that is generating outstanding results, you may not have to look very far. A qualification for your support ought to be their inability, unwillingness or perhaps reluctance to fill out your standard form—the people you want to help are the ones who are falling asleep in their clothes, not filling out grant applications. These small, hard-hitting programs desperately need you. But they may not have the time or resources to run an elaborate fund-raising event or distribute four-color brochures. They probably do not have a professional fundraiser or a staff member who is an expert in grant writing. Would you please give some thought to going outside the envelope and directing a small portion of your giving to these people? Better yet, seek them out. They will be happy to hear from you. We think you will be pleasantly surprised to find these charities giving you the highest payback on your investment. And, ultimately, that means making America a better place to live—the land of entrepreneurial freedom in both the for-profit and nonprofit worlds.
Steve Schuck is the Chairman of Schuck Communities, a commercial, investment, and residential real estate development company in Colorado Springs. Steve Feldman is the president of Radioworks, an advertising and marketing agency in Warwick, Rhode Island.