Somehow we think it noble, relative to social outreach, that we abandon profit motive even on the most important of all social endeavors. This is indicated by the unwritten expectation that nonprofit workers should be more interested in the good they do than the money they make; that charities should not take risks; that charities not be too visionary about the future, but meet immediate needs; that charities should not waste money on expensive advertising; that charities should not make mistakes; that profitmaking is not but for the for-profit sector; and that charities should maintain a low overhead percentage.
This list comes from the book by Dan Pallotta called Uncharitable: How Restraints on Nonprofits Undermine Their Potential.
So, with financial incentive effectively taken away from social endeavors by some form of contorted logic, do we really expect the results so desperately needed in all corners of the globe to rise to higher levels? Or will those results in fact be abysmal, characterized, at best, by status quo maintenance of a social concern and nothing more. The sick and the poor continue to die and suffer, but we are contented with how happy we are with the token gestures we threw at the social problem. We break our arms philosophically patting ourselves on the back that the leaders of social movements and organizations that address the most blatant suffering are paid minimally.
This makes no sense. As Mr. Pallotta points out and I paraphrase: Is the mother of a child who just died of malnutrition comforted by the fact that no one earned a decent profit in the failed social effort to save her daughter?
Proverbs 11:26 says that “the people will curse him who withholds grain, but blessing will be on the head of him who sells it.” Selling, and the financial incentive that goes with it, is a form of contribution to the needs of a society. Think about it. After you buy your groceries at the market, which is more appropriate; for the clerk to say thank you or for you to do so? If they withheld the groceries, you would complain, even curse. But the market owners are incentivized by the potential profit so they sell it to you and your complaining turns to gratefulness. A “blessing will be on their head” as they realize profit from the sale, but you are the one the most grateful because you are relieved that they have it in their heart to offer their products to you at a price. Get this; their profit incentive is what makes the groceries available to you. Just how grateful should that make you? Adam Smith, the founder of modern economics, but who considered his greatest life’s work a treatise on human morality, described it well, “It is not from benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” As a matter of fact, consider that a long supply chain of personal and corporate profit incentive is what eventually and effectively meets your need and feeds your family. This represents a large social impact. And it was all delivered to you on multiple platters of monetary incentive.
Then, if dire economic straits become your reality, and the local food pantry is much needed, are you relieved that no one there makes a high salary? That no one there has any profit incentive to effectively help you beyond that of a handout? You’re not any less grateful for the provision offered you there, but you sure wish you could be better off and back at the local grocery store thanking them for the provision they make available, albeit characterized by the presence of better paid employees and even better paid corporate executives.
The point is that profit incentive is not immoral. Make no mistake; it is the most moral of practices especially if you want to affect a social cause, any cause, with moral results and effective influence. There is but little proof that the social nonprofit sector does too much more than babysit the status quo; their obvious care, honorable concerns, and observable outcomes not withstanding.
What if the food pantry took on a staff of professionals who not only accepted the work of volunteers, and collected and distributed food to the needy, but who took on a visionary approach to poverty and economic struggle also? And what if they were paid well, not at all like they are paid now, so they had a realistic incentive that took their clientele beyond handouts to creative and innovative ways to overcome the distress in which they find themselves?
This and other related arguments are reasons why social business is an effectual way to address social concerns because the business model refuses to dismiss financial incentive. To do so would be embarrassingly shortsighted, even immoral. It would also be entrepreneurial suicide and immediate failure of the social impact they hope to make. Instead, such incentive empowers the main reason why the business exists, to deliver change to a particular social focus and go beyond status quo expectations in social sectors to the point of even breaking records that transform lives.
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