Should Non-Profits Act Like Corporations?

Small Change: Why Business Won’t Save the World
by Michael Edwards

Reviewed by Angilee Shah

Small Change, by Michael EdwardsAnyone who has worked in the nonprofit sector, with big or small organizations, has likely felt pressure to think about markets and quantify outcomes in a corporate style. Michael Edwards’ Small Change does much to explain and challenge this kind of corporatization of the nonprofit world.

Now a distinguished senior fellow at the progressive New York City think tank Demos, Edwards is a relief and development nongovernmental organization (NGO) veteran who has, since 1982, held senior positions with Oxfam and Save the Children. He has worked for the World Bank and the Ford Foundation managing huge grant programs for giants of the nonprofit world.

So it is not a surprise that popular ideas about how business can help provide development solutions is a matter of great concern to Edwards. Books such as R. Glenn Hubbard and William Duggan’s treatise on the ability of free markets to help alleviate poverty, The Aid Trap, are a direct comment on the shortcomings of Edward’s life work. Seizing on the excesses and greed underlying our current financial crisis, Edwards rebuts, “Expecting price competition, the profit motive, short-term deliverables, and supply-chain control to bring about a world of compassion and solidarity is, to say the least, a little strange.”

Over the last 20 years, businesses have been making more explicit their “social and environmental objectives,” giving rise to a blurring between corporate and nonprofit sectors. Philanthrocapitalism was a term coined by Matthew Bishop and Michael Green in their book of the same name, which argues in favor of businesses solving social ills. What is missing from philanthrocapitalist endeavors, Edwards argues, is upheaval, a questioning of the systems that give rise to societies’ developmental needs. Business and markets, he says, can only produce “small change – limited advances as it is, not as it could be if we summoned up the courage to confront the deeper problems and inequalities that capitalism creates.”

Edwards’ call for a kind of separation of powers is a compelling one. Civil society, as he sees it, should be free from the constraints of the market and the “business is best” philosophy to seek sustainable solutions and “human fulfillment” over time, rather than quick fixes that meet bottom line. After all, he asks, how do you measure empowerment? What happens when billionaires like Carlos Slim garner immense decision-making power over education? Philanthrocapitalism can deliver laptops to kids, for example, but falls short in creating the conditions for communities to combat their problems for themselves. Microfinance might have reduced poverty in Bangladesh, but Edward points out that the country remains a “socially and politically dysfunctional state.”

There is plenty of need in the world and therefore plenty of space for many different approaches to solving problems. The question that remains unanswered by Edwards’ short but broad book is, have traditional nonprofits done any better than philanthrocapitalists? Have they met the needs of the poorest communities in the world and have they been able to include the voices of those they seek to help? What is needed to make a truly persuasive argument against current trends in NGO management is a solid explanation for why different approaches to relief and development cannot coexist and something that is precisely what Edwards is fighting against: a quantified, even corporate review of the successes and failures of traditional nonprofits.

Excerpt: “If I was ever invited to address the philanthrocapitalists, what would I say? ‘First, a big vote of thanks for taking up the challenge of entrepreneurship for the public good. Without your efforts, we wouldn’t be having this debate, and the world would be further from the commercial and technological advances required to cure malaria and get microcredit to everyone who needs it. But don’t stop there. Please use your wealth and influence to lever deeper transformations in systems and in structures, be open to learning from civil society and not just teaching it the virtues of business thinking, measure the costs as well as the benefits of your investments and interventions, learn more rigorously from history, and redirect your resources to groups and innovations that will change society forever, including the economic system that has made you rich. That’s not much to ask for, is it?’ Well, perhaps it is. None of these things are high on the philanthrocapitalist agenda, because they would transform the economic system completely and lead to a radically different distribution of its benefits and costs. Nevertheless, if the rich genuinely want to change the world, then an honest consideration of these challenges is the best place to start.”

Further Reading: The Aid Trap by R. Glenn Hubbard and William Duggan, Philanthrocapitalism: How the Rich Can Save the World by Matthew Bishop and Michael Green, and The Bridge at the Edge of the World: Capitalism, the Environment, and Crossing from Crisis to Sustainability

Angilee Shah is a freelance journalist who writes about globalization and politics. You can read more of her work at www.angileeshah.com.

*Photo courtesy coffeego. Homepage photo courtesy sandwiches.


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