How Foundations Are Undermining America's Social Change & Public Interest Movements

Posted 3/24/06

Subject: The Revolution Will Not Be Funded
>From Adbusters Magazine (Canada)

http://adbusters.org/the_magazine/64/The_Secret_to_Being_as_Radical_as_We_Wa
nt_to_Be_is_to_Finance_the_Revolution_Ourselves.html

The Secret to Being as Radical as We Want to Be is to Finance the
Revolution Ourselves

By Michael Shuman and Merrian Fuller

If Mohandas Gandhi were a typical North American activist these days, he
would probably be wearing a three-piece suit and working in a plush office
with his law degree prominently displayed. He would have little time to
lead protests, since every other week would be spent meeting with donors -
and those power lunches would hardly go well with fasting. He would be
careful to avoid salt marches or cotton boycotts, so as not to offend key
donors. To sharpen his annual pitch to foundations, he would be constantly
dreaming up new one-year projects on narrowly focused topics, perhaps a
one-time conference on English human-rights abuses, or a documentary on
anti-colonial activities in New Delhi. To ensure that various allies
didn't steal away core funders, he would keep his distance and be inclined
to trash talk behind their backs. In short, there's little doubt that the
British would still be running India.

The problem with activism today is that it is largely funded by grants and
gifts from rich foundations and individuals. The long-standing assumption
that you can take the money with few strings attached, and then run, needs
to be fundamentally reexamined.

Building a philanthropic base of support can cripple an organization's
mission and wreck it altogether when the well runs dry. Most nonprofits
have engaged in a kind of fundraising arms race in which our best leaders
focus more time, energy and resources, not on changing the world, but on
improving their panhandling prowess to capture just a little more of a
philanthropic pie that actually expands very little from year to year.
Armies of "development" staff spend as much as a third of an
organization's resources, not to advance the poor, but to cultivate
wealthy donors. Significant numbers of our colleagues create campaigns,
direct-mail pitches, telemarketing scripts, newsletters and other products
exclusively to "care and feed" prospects and to frame positions that will
not offend the rich.

Nonprofit structures dictated by this mode of funding also burden
organizers with the heavy regulatory hand of the state. To qualify for
tax-deductible contributions, for example, US nonprofits must agree to
limit lobbying and not to campaign for political causes of candidates.

We believe it's time for North American progressives to break free from
the philanthropic plantation. Those of us serious about social change
increasingly must get down to business, figuratively and literally. Every
social change group may not be able to generate all its funding through
revenue-generation, but every nonprofit certainly can generate a greater
percentage than it is doing now. In other words, we should become our own
funders. Once we start generating our own resources, we can invest them
politically - as corporations do now - largely without limitation, without
wasting our time on fundraising appeals, without worrying about that next
grant, without apologies.

To get a sense of the possibilities, check out Cabbages & Condoms, a
popular restaurant in Bangkok. As your senses become intoxicated by the
aromas of garlic, ginger, basil, galangal and lemongrass, you cannot avoid
noticing the origins of the name. On top of each heavy wooden table is a
slab of glass, under which are neatly arranged rows of colorful
prophylactics. Posters and paintings adorn the half-dozen large rooms, all
communicating the restaurant's central message: the AIDS epidemic
afflicting Thailand can be checked only through the unabashed promotion
and use of male contraception. With balloon animals made from carefully
inflated and twisted condoms and the after-dinner candies replaced with
your own take-home "condom-mints," even teens cannot escape the message
prominently framed on the wall: "Sex is fun but don't be stupid - use
protection."

What makes the five "C&C" restaurants unique, along with an affiliated
beach-front resort and numerous gift shops, is that they are all owned by
the Population and Community Development Association (PDA), a rural
development organization that has been a leader in promoting family
planning and fighting aids in Thailand. Seven out of every ten dollars
spent by the PDA on such activities as free vasectomies and mobile health
clinics are covered by the net revenues from its 16 subsidiary
for-profits. Were the PDA dependent on funding from the Thai government,
the World Bank or even the Rockefeller Foundation, it no doubt would be
told to tone down the message. Jokes on its website - like "the Cabbages
and Condoms Restaurants in Thailand don't only present excellent Thai
food, the food is guaranteed not to get you pregnant" - would certainly be
discouraged.

The cash flow gives the PDA a measure of confidence and boldness. The
founder, Mechai Viravaidya, has no qualms about his decision to employ
for-profits: "Unlimited demand is chasing limited supply [of charitable
donations]. No longer are gifts, grants or begging enough. From day one,
thirty years ago, we have been acutely aware of sustainability and
cost-recovery."

Consider some US examples of social entrepreneurship:

* Housing Works in New York uses its Used Book Café to generate more
than $2 million annually for its work, which prioritizes advocacy for
homeless people with HIV. The organization runs clinics, conducts
public policy research, lobbies federal and state officials, even
leads sit-ins. It is fearless, aggressive and stunningly effective -
and its $30 million of annual work would be impossible were it not for
its vast range of real estate, food service, retail and rental
companies that help pay the bills.
* Pioneer Human Services is a community development corporation based
in Seattle that assists a wide range of at-risk populations, including
the unemployed, the homeless, ex-convicts, alcoholics and addicts. The
organization serves 6,500 people a year and generates nearly all its
$55 million budget through a web of ambitious subsidiary nonprofit
businesses: cafes and a central kitchen facility for institutional
customers, aerospace and sheet-metal industries, a construction
company, food warehouses, a real-estate management group and
consulting services for other nonprofits. Most of the jobs in these
businesses are awarded to its at-risk clients, allowing it to further
its mission to integrate clients back into society.
* The Rocky Mountain Institute, a leading promoter of alternative
energy technology in Snowmass, Colorado, created E-Source in 1986 to
provide in-depth analysis of services, markets, and technologies
relating to energy efficiency and renewable energy production. In 1992
RMI secured a program-related investment from the MacArthur Foundation
to move the work into a for-profit subsidiary. By 1998 it was
generating about $400,000 for the parent nonprofit, but rmi decided it
could do even better under new management, so it sold the company to
Pearson plc in Britain for $8 million. Today, RMI assists and benefits
from other for-profit spinoffs, such as Hypercar, Inc., which aims to
create a lightweight body architecture to improve the efficiency of
the entire US automobile fleet.
* Judy Wicks' White Dog Café in Philadelphia is as much a community
organizing center as a restaurant. Radical speakers from around the
country provide a steady stream of public lectures. An adjacent store
sells fair trade products and will soon be introducing a line of
locally made clothing. The White Dog itself embodies principles of
social justice and environmental stewardship by paying all employees a
living wage, insisting on humanely raised meats and eggs, using
locally grown ingredients and running on wind electricity. Twenty
percent of profits from the restaurant go to the White Dog Café
Foundation, carrying on the café's mission through nonprofit
activities.

These examples embody many possible models. A for-profit subsidiary can
generate money for a parent nonprofit. Or, better still, a for-profit can
become the change it seeks, by producing and selling socially important
goods and services.

While we reject the libertarian argument that every human problem has an
economic solution, many social-change issues clearly have economic
dimensions that are susceptible to creative business plans. Hate nuclear
power? Launch energy-service companies to spread conservation measures, or
build local wind farms to take control of your own electricity future.
Concerned about the poor, minorities and women having equal access to
credit? Create more community banks, credit unions and micro-enterprise
funds. Troubled by pharmaceutical prices that make life-saving drugs
unattainable for impoverished people across the globe? Start, as several
companies based in the developing world did, companies that mass-produce
affordable generic versions of high-priced American drugs.

Socially responsible business should be not just a boutique sector of the
private economy, but its mainstream. We have been impressed in recent
years by the growing number of local businesspeople who not only "walk the
walk" of social justice in the small details of their operations and
products but also tout the virtues of local ownership. This third
generation of entrepreneur-organizers is being led by groups like the
Business Alliance for Local Living Economies (BALLE) and by the American
Independent Business Alliance (AMIBA). Each promotes local ownership of
business, champions social justice and neighborhood revitalization, and
pushes for new public policies that remove the tilts in a playing field
that favors badly behaved big business.

Sooner or later, the concepts of social-change organization and of
social-responsibility business should become indistinguishable. Truly
responsible businesses would be owned by all members of a community (rich
and poor), hire locally, expand local skills, comport with local labor and
environmental standards, produce goods and services that meet urgent local
needs and become allies of social justice movements. What better way to
help the poor than to transform them into the captains, worker-bees,
shareholders and customers of community-friendly business?

If foundations and donors had never existed and professional panhandling
had been outlawed, social-change groups would have been forced to turn to
creating and running new enterprises or new networks of local businesses,
and our movement would be considerably healthier than it is today.
Progressives have become the classic 20-something kid still living at
home, expecting an allowance from deep-pocket parents for a few basic
chores, while agreeing, as a condition for the chump change, to obey
someone else's rules on social change. It's time to grow up and strike out
on our own.

Here's a challenge to activists (one we take seriously ourselves): let's
try to wean ourselves from the charity habit, say by three percent per
year. Think about just one piece of your agenda that could be framed as a
revenue generator, dream about it a little, develop a business plan and
give it a try. If you lack the skills, skip your next fundraising class
and instead attend one of thousands upon thousands of entrepreneurship
programs around the world. Or hire someone who might start the
entrepreneurial subsidiary of your nonprofit.

Gandhi understood that the key to freeing India was to transform his
fellow citizens into economically productive agents by spinning their own
cloth and taking their own salt from the sea. Martin Luther King Jr.
implored African Americans to form their own credit unions and community
development corporations. The secret to being as radical as we want to be
- and as radical as we need to be - is to finance the revolution
ourselves.

Michael Shuman is the vice president for enterprise development for the
Training and Development Corporation. Merrian Fuller is a managing
director of the Business Alliance for Local Living Economies. This article
was adapted from "Profits for Justice," which first appeared in The
Nation.