Monks And Money

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Listen to “Monks and Money” by Fred Smith

 

One of my treasures is a framed picture of Peter Drucker, Bob Buford, Tom Luce and myself outside Peter’s house in Estes Park in the early 1990’s. Underneath it, Bob wrote, “The Beginning of the Social Entrepreneur Network.” It was an idea we had been working on for several years and one that was close to Peter’s heart as it combined two of his basic concepts – the value of the entrepreneur as a creative force and the social responsibility that entailed.

I’ve been thinking about this recently because, like the word philanthropy, the phrase “social entrepreneur” has morphed over the years. When we began thinking about it we meant it as a description of men and women who had accumulated wealth and were now putting that wealth into social ventures. They had lots of their own skin in the game when they identified areas of opportunity that would be great challenges for their skills, experience, wealth, and relationships. They were proven entrepreneurs who were simply moving their focus – sometimes completely and sometimes keeping their hand in the business at the same time.

Over time, I’ve seen how that definition has changed and become more inclusive (not a bad thing) but it has also diluted it some. Now a young person starting a nonprofit is deemed a social entrepreneur. I’m not sure how that differs from someone who simply starts another nonprofit.  Rarely do they have their own skin in the game. They typically have fine educations from prestigious universities and instead of going into business want to “make a difference” and start a nonprofit.

A recent article titled “Social Entrepreneurship Enters the Mainstream” points out the trend of more and more students pursuing business school degrees for futures in the nonprofit arena – not to own a business. They want to become fellows with Echoing Green with grants for a start-up venture or create business plans for Ashoka to solve social problems. It’s called a degree in social enterprise. I think that is laudable but as one of my friends asked recently, “Whatever happened to creating a business that has economic value and provides jobs and tax revenues for society? What is wrong with generating money from a profit-making enterprise instead of setting up yet another non-profit looking for donations?” He has a strong point, I think. In fact, there are organizations like Praxis who have asked the same question. While starting as an accelerator for primarily non-profits, in 2014 they expanded the for-profit track. So far, they have worked with 112 business ventures and have just announced their new class of business entrepreneurs for 2019. There are a few others, of course, like Y Combinator, Ocean Accelerator, Triga in South Africa and Sinapis in Africa. One of the pioneers in the field of business creation is the Acton School of Business in Austin, Texas. These are good signs of a change.

That said, I read a history of monasticism years ago and one of the insights was monastic movements tend to follow economic surges. In other words, one generation creates wealth and the next generation creates monastic movements. It was true not only for the early years of the Church but also for the explosion of missions in the 19th century. Many of the missionaries were children of wealth. Maybe we are seeing something of the same today. As John Adams said, “I must study politics and war that my sons may have liberty to study mathematics and philosophy. My sons ought to study mathematics and philosophy, geography, natural history, naval architecture, navigation, commerce, and agriculture, in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry, and porcelain.” It’s all part of a larger pattern. Ironically, even the monks could not survive without creating businesses and, in fact, became the earliest capitalists in Europe by investing their surplus wealth.

Again, I am encouraged by the desire of this next generation to serve God and the world, but my friend has a point about those who believe creating businesses still has extraordinary (though less glamorous) value for society.

Fred Smith
Fred Smith is a graduate of Denver University and Harvard Divinity School. He spent several years as teacher and administrator at Charlotte Christian School and The Stony Brook School before co-founding Leadership Network with Bob Buford and serving as President for 12 years. Fred is the Founder and President of The Gathering, an international association of individuals, families and private foundations giving to Christian ministries. Fred will tell you his true vocation is that of a Sunday School teacher and it is this role for which he would most like to be remembered. Fred and his wife, Carol, have two grown daughters and a son-in-law. They also have three well-loved grandchildren.
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Showing 6 comments
  • Rod Mabry
    Reply

    Amen. Because of current social/media/education voices, we must repeat often that for-profit businesses create the greatest social value by far. All Texans certainly thank God for the inventors and makers of air conditioners, for example.

    I am pleased to support non-profits. They help fill significant holes in our market, church and government systems. The heavy lifting for social good, however, is unquestionably done by the profit-making businesses that give us access to better food, clothing, housing and, yes, air conditioning.

    • Fred Smith
      Fred Smith
      Reply

      Sorry for the delay!We had our annual conference last week.Yes, the non-profit sector was never seen as the primary heavy lifter but, over time, so many things have changed and the categories have become so complicated now. Just take health care and the differences between “non-profit” hospitals and for-profit hospital corporations. There are so many other illustrations.

  • Paul Penley
    Reply

    Great topic. The issue isn’t the superior structure, whether that is a 501c3 or an LLC or a C Corp. The issue is the incentives that shape the expenditures and strategies and measures of success for social enterprises (be they profit-seeking or not-for-Profit). The pressure to maximize profits for investors can lead to inequitable pay, hazardous products, and employee mistreatment. But a company owner can also resist those pressures and turn the business into a force for good for employees, customers, and communities. Likewise, a nonprofit can get so focused on survival that fundraising growth strategies become more important than rigorous evaluation of effectiveness in mission achievement. Yet, many ministries care for employees and donors well as they rigorously assess impact and invest in the best strategies. Neither structure is a guaranteed improvement on the other. Both structures create jobs (10% of American jobs are at nonprofits) and value that people will pay for. The question your friend asked “What is wrong with generating money from a profit-making enterprise…” is making the point that profit-seeking companies are not inherently inferior. That’s correct. But the more important question is: which social enterprises (be they profit-seeking or not-for-Profit) are doing the most good for employees, investors/donors, and beneficiaries? Strong character, smart strategies, accountability, and internal incentives have to be in both non-profits and for-profits to keep that question center stage.

    • Fred Smith
      Fred Smith
      Reply

      I feel like all I can do is agree with you! It would be exhausting to try and find something you have left out! Thanks for being at the conference last week.

  • Roy Moore
    Reply

    Fred –

    I agree that here is great value in creating a business, pursuing a capitalist agenda, and stewarding the fruit of the venture; however, I don’t think the decision is business or nonprofit, I think both can and should work together.

    I am a sober capitalist that has transitioned to the nonprofit sector. Why? Because business skills are useful in the nonprofit arena. While fundraising is fundamentally different (and incredibly more frustrating) than in corporate endeavors, the skills associated with building a social cause organization that is repeatable, scalable, extensible, and effective is foreign to many of nonprofits. Those are skills honed in the for-profit/capitalist sector. But the joy and fulfillment I have enjoyed in my nonprofit pursuits have dwarfed the success I enjoyed in business. Perhaps it was also part of a larger pattern, a pattern of preparation and resource development to then advance a Spirit-led calling. I am still sorting that out but I can say that I am a better nonprofit leader because of the business skills honed over 30 years; a happy marriage of skills for Kingdom purpose.

    • Fred Smith
      Fred Smith
      Reply

      What a great balance you have in your life, Roy. Yes, I think you were prepared by business for the work you are doing now – and it is important work for sure.

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