Don’t Just DONATE to what you believe in. INVEST in it.

With rising costs for charitable work and a decline in giving during difficult economic times, every dollar you dedicate to doing good needs to produce the greatest SSROI (Social/Spiritual Return on Investment).  Evaluating the work and efficiency of any nonprofit endeavor is important to knowing your effort makes the greatest difference.

Every donation, whether a one time or regular gift, is gone once spent in promoting your mission.  This creates the need for continual fundraising efforts to maintain ongoing work.   New donors are needed as inflation, growth in outreach and attrition of donors demand more dollars.  The perpetual work of fundraising keeps donors involved and informed, but also uses valuable staff and volunteer time to keep programs moving forward.

Some investments in your organization’s work can provide repeated returns for a single effort. This is the purpose of contributing to an endowment fund.  With low interest rates and a need for cash flow to maintain the mission, endowment funds require a large balance and produce a small return.  Investments in an endowment fund cannot be spent and are always at risk.

The nature of a social business enterprise is to create ongoing income and growth in financial resources over time.  Just as any profitable business increases in value and provides income for owners, employees and shareholders, a cause based social enterprise can grow and provide ongoing income when successful.  This residual income reduces the need for repeated fundraising events and campaigns.

When considering a social business enterprise to produce residual support for your organization, the social and spiritual return on investment must be evaluated in light of the original investment of time and money.  Running a typical business requires managing products, people or property, providing services, keeping records and customer service or startup costs.  A large investment is generally counter productive regardless of income generated for your cause since the time, money and risk associated with it distracts from the focus on your mission.

Every organization, however, has one valuable asset that can be invested for the common good.  It is less obvious than their financial resources, but may be worth even more to your mission. The social connections you share with each other and others outside the group create an affinity network of trust and communication.  In today’s marketplace, this social network is highly valued by corporations willing to pay for the opportunity to introduce their own business to your members.

Never place the integrity and relationships of your organization at risk of being harmed by commercial interests by corporations that operate according to typical marketing methods of deception, guilt, shame, greed, fear, enticement and pressure to “buy” your members loyalty.  These forces are so common in marketing efforts, we have come to accept them as normal and may be blind to the harm they can do to a community with a shared commitment to a common cause.

Invest your social capital carefully and wisely.  Don’t put your most valuable asset at risk of being lost or weakened.  Measure the potential social/spiritual return on investment in terms of the good that may be accomplished, care for relationships in your community, and financial support to accomplish your goals.

With careful planning, you can safely invest your social capital through voluntary participation in a low key marketing enterprise that generates significant support for your mission without risk to relationships, reputation, or the cause you serve.  The right social business enterprise can even strengthen relationships in your group through collaborating for the common good and connect you with new people in your community.

Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi

Born March 3, 1882, died January 18, 1949, Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi was a was a businessman and con artist in the U.S. and Canada better known as Charles Ponzi.  His name is now a code word used to describe the questionable business schemes of Charles Ponzi.  Anyone who considers social networking and deals in public trust should be aware of practices that can direct even worthy endeavors toward becoming a ponzi scheme.

The primary nature of a ponzi scheme is collecting money from people while promising return that will come from money to be collected from other people, who will receive return from money to be collected from other people…. etc.   Two realities make this illegal unsustainable and fraudulent.   One reality is that the “other” people that money is to be collected from eventually run out and everyone still expecting a return has lost their investment with no way to recover it.   The second reality is that there is no real business of substance that is creating income for investors outside of new money from new investors.

Entering a legitimate profit/nonprofit partnership is not a ponzi scheme if there is a real business venture earning actual income.  Even if the profit from sales or services is layered and shared by many participants in the business, it is not considered a ponzi scheme.   Profits are always shared unequally among stakeholders in any business.  CEO’s, VP’s, managers and even customers (by way of rebates, discounts, referral rewards, etc) can share in company profits.  There is always a “pyramid” structure that pays out profits by some set of salary, employment or commission standard.  If the standards for rewarding stakeholders in a real business operation are transparent and each party agrees as part of their participation, it is a contractual arrangement that can benefit all.  Some will always receive more than others depending on the agreed upon structure at the time of employment, sale or investment.

But Charles Ponzi has brought to light more subtle forms of betrayal than the blatant illegal sealing of funds under false pretenses.  The success of his practices reveal the nature of social connections and human nature that made it possible for him to steal 20 million dollars from people by 1920 after arriving in the United States from Italy in 1903 with just $2.51 in his pocket.  Although he died in poverty after spending many years in prison, he taught us much about how to use people for personal gain.

Ponzi was an expert in getting people to act from a spirit of greed and the feeling of being treated “special”, better than others.  He used the power of claiming to have “secrets”, allowing certain people into the “in crowd”, promising something for nothing, and inspiring others to take great risks.  He was able to leverage good will, trust, fear, statistics and immediate rewards to gain a fortune.   Those used were often the most trusting or most desperate.   These same pressures can be used in even legal sales, services and investment opportunities.   They are no more noble in real business than they are in a ponzi scheme.

When working with nonprofit organizations, the opportunity and approval for abuse can be even greater since it is “for a good cause”.   Also, supporters of a good cause are often more trusting and abuse of funds may not be discovered as quickly because many donors/participants are involved and may not be seeking personal reward.  This makes the need for high standards and ethical principles even more critical when joining nonprofit and for profit endeavors.

Economic Circumcision

“So circumcise your heart, and stiffen your neck no longer.”  Deuteronomy 10:16

“Circumcision is circumcision of the heart, by the Spirit,                          not by the written code.       Romans 2:29

These biblical texts remind us of messy and painful surgery.  The cutting away of what covers the source of productivity, power and pleasure. Since it deals with the heart, this circumcision is not gender specific.   We also learn that the physical act is symbolic of a deeper truth.  Only when connected with understanding, meaning and commitment does the metaphor reveal the dedication and transformation intended.  Only then does it create a community of people with unique values and character. It is accomplished early in life by those who hold a dream that we will learn and live into the full meaning of it.

If the heart is the place circumcision is to take place, we will find it in the realm of our financial life since another biblical text says, “where your treasure is, there will your heart be also”.   As in the original practice of circumcision, this is a private place, one not often seen and not exposed to everyone.  Details of our financial standing are a personal matter and very few will ever know for sure your exact income or what you choose to do with it.

In our society, our economic prosperity is probably the indicator of power most people seek and regard in others.  Money is able to do great good, but also capable of abuse.  As other passions, the passion that fuels our desire for an unlimited more needs to be trained and restrained.   So the circumcision of heart is a way of cutting away those aspects of ambition and greed that would lead to unthinking harm or infidelity.  It  serves as a symbol and reminder of our primary commitments, relationships and convictions.

So what does economic circumcision look like? How does it happen?  In a new marketing effort that includes promise of great potential and personal gain, the heart can be “circumcised” in the very beginning of any new endeavor or dream.  The practice of giving away the first profit earned is a sacrificial generosity that sets the stage for a life of real economic freedom- not freedom to do as we please because we have money, but freedom to share with others or good causes from the start.

Any startup initiative that chooses to practice this circumcision of heart through sacrificial generosity will have the experience needed to follow a generous pathway in the future.  It also provides an example of generosity for others to follow and builds a community of those who have experienced the same sacrifice.

In order to be a meaningful expression of gratitude and faith, all donations are voluntary.  Even though circumcision was first given as a commandment of law and those being personally circumcised had no choice in the matter, the parents of any boy undergoing circumcision made a choice of faith and hope on his behalf.  It became a first step in identification with a community of people sharing the same faith and values. It was a rule of law that could be obeyed or not and when obeyed simply as way to keep the law, the act of obedience never fulfilled it’s desired end.

Consider the act of economic circumcision as a way to set your heart in the right direction at the beginning of an entrepreneurial journey that promises much good when practiced in the right way.  Dedicate your power, pleasure and productivity be used for great work.  The personal reward of a focused attitude will be greater for you personally as well as those around you.  It may be a simple procedure to sacrifice your initial profit, but it’s likely to be painful, even when you direct your gift toward a cause you love.  Once chosen, you be part of community set apart for change.

Who wins in a profit/nonprofit partnership?

Social Business has become a term describing any enterprise that serves the common good and creates a profit at the same time.   The business world is learning that what is good for people and the planet is often good for business as well.  To be sustainable, business must integrate social networks and serve other interests alongside the financial bottom line.  A true social business attends to the needs and concerns of everyone in the marketing system.  Everyone is respected as a stakeholder and treated fairly with opportunity to benefit from business transactions.

In a partnership including more than company employees, management and stockholders or owners, benefits are mutual for all participants.  Goals are modified so that everyone who contributes to the work of the business profits from any success.  Even the definition of success may change as profit comes to mean more than monetary.  Google and other social media businesses demonstrate the value of treating everyone with meaningful advantages.  Subprime mortgage derivatives and credit default swaps that show little regard for homeowners, investors and the larger community demonstrate what can happen when justice, trust, integrity and care are not employed for the benefit of all.

Balancing social and financial profits takes on survival value for businesses in a world that is becoming more conscious of hidden or external costs to consumers, workers, communities and environment. This balance is also needed for any nonprofit project that requires material resources to fulfill it’s mission.  If a nonprofit chooses to partner with a for profit company, it is important that the goals, needs and health of each is addressed.  In an ideal partnership, the for profit company will benefit from growth of their business at the same time that the nonprofit organization will grow in effectiveness by using commercial profits and resources to meet their own goals and expand their impact.

Until both groups understand their need for each other, each will operate from the assumptions of competition and scarcity rather than belonging and abundance.  Every decision or policy will be measured by who gains he most and who loses the most.  Suspicion and self interest will poison the relationship.  Results will not best serve either the social good or business interests when they are viewed in opposition to one another.

So the answer is that everyone wins.  Policies, attitudes and practices that give attention to all stakeholders provides for the most sustainable social business.  The strongest social enterprises will be those that are financially sound.  The strongest companies are those that work according to the ethical, moral, social and spiritual values that guide most nonprofit organizations serving a cause greater than their own existence.

The next question is to find those who are willing to play a game where everyone wins.

Ministry as Business or Business as Ministry?

We get suspicious when faith and money are mixed.  Thoughts of a greedy Judas Iscariot, gold in the Vatican, or Jim and Tammy Baker’s Heritage USA Theme Park come to mind.  Add the prospect of business and you come up with New Era, the investment/fundraising pyramid scheme fraud of a generation ago. Or we might think of an honest but failing religious thrift store, job training endeavor or private school that always seems to operate in the red in need of donations to be bailed out.  Best to keep faith and business separate. Far away from each other to avoid contamination of either.

One of the most exciting stories in the gospels is in John 21 when Jesus tells the disciples to throw their net on the other side of the boat after catching nothing all night.  Immediately they had a catch of 153 large fish.  The excitement was not just the pleasure of catching fish, but the income Jesus produced for career fisherman who had gone back to work after the crucifixion. In the book of Job, God rewarded a rich man, Job, with twice the wealth he once had, after going bankrupt.  The apostle James writes that God takes an interest in business endeavors when he teaches us to say, “If God wills”, then we will go into this city or that city, do business there and make a profit.

So God seems to have the courage to mix business and faith, even though the human heart is sorely tempted to love mammon or God, to pursue one or the other.  He allows the freedom for us to go off base and fail in business or in our faith as each seems to operate by different rules.  Divine guidance even seems to enjoy leading us into that very conflict.

Maybe so we can learn.  Learn what’s important and what’s not, what we need and what we don’t, what is right and what’s wrong with us.  We may even learn something of God’s nature as the One who marries our own desires, strategic planning and hard work to Divine blessing and provision.

One point of wisdom is recognizing the difference between doing ministry as business and doing business as ministry.

When we do ministry as a business, the bottom line is financial sustainability and profit.  When business principles determine the final decision as we are dealing with human lives, spiritual values, personal relationships and God’s reputation, our plans often fall short of both business and spiritual goals.  Compromises may include management and presentation of facts in a way that promote a successful material outcome.  It might be advantageous to cut off questions or demand order/compliance as a condition of participation in order to make a venture prosper.  Common kindness, generosity, sacrifice and honesty may cost too much.  We can’t allow some ministry practices or principles of justice and mercy because they might jeopardize the support needed to carry on ministry at all.  That’s ministry as a business endeavor.

When we do business as ministry, however, principles of justice and mercy, honesty, compassion and stewardship determine what must be done.  St. Paul was in the tent-making business.  His preaching made him unpopular enough to be stoned and put in jail more than once.  This doesn’t help your brand or maximize human resources.  Choices are made to do business in a way that enables and encourages ministry.  What will create the best social/spiritual environment?  What decisions result in the multiplication of good works and increase wisdom of the community?   Which practices reveal faith and hope by example?  These aren’t simple questions to answer, but they are in the forefront rather than the typical concerns a board of directors might have.

Doing ministry as ministry and business as business may be less complicated, but doesn’t follow the stories of fishermen, tentmakers, farmers and businessmen recorded in Scripture.  Doing business as ministry requires the creativity and courage to find wholeness in all we do with clear priorities.  It demands freedom from fear and tradition.

Converting Social Capital to an Economic Resource

No conversion of social capital into financial capital is valid unless the value of social capital increases in the process.  This is common sense from a practical perspective.  If your connections, good will, hope and trust diminish, you lose the core of future productivity.  The energy becomes negative and not only hinders any hope of financial gain, but decreases what is needed for growth.

On a deeper level, however, if relationships are harmed in the process of converting social assets into financial support for programs, staff or facilities, you have just betrayed yourself as an organization.  The heart, the core purpose and life energy of an organization established to good must first do good for it’s own members.  To offend, divide or harm members in our attempt to do good is to violate the basis of what we claim to stand for.

Individuals may certainly disagree and even choose to come and go based on the changing direction of organizational goals.  This is different than seeking financial gain at the expense of social capital that has been built up over a long period of time.   Whenever social capital is redeemed to make a step forward, relationships should be strengthened at the same time, increasing the value of relationships used for advancement.

An example of increasing social capital at the same time it is used to accomplish a goal or it is converted into material benefits is when the group can feel a corporate pride in what is being accomplished  through the work, expectations, compromises made in the conversion.  Another gain in social assets can be seen when the visible result of using relationships to accomplish something of lasting value attracts new membership or deepens the commitment of current members.  Skills developed in converting social capital into tangible assets without harming mutually beneficial connections becomes an additional value to the organization in the form of new skills, experience and knowledge.

The joy of spending time together, trustworthiness that is maintained, willingness to sacrifice for hope of future benefits, ability to manage conflict, keeping primary purposes and values in focus, collaboration, use of individual gifts and making space for differences are essential to the health of any organization.  To be diverted away from these benefits in order to meet any fundraising goal or employ a new strategy is an unacceptable risk.

The nature of our social and spiritual life together will change.  Different priorities will arise.  New learning and goals will arise.  New methods of accomplishing the purpose we came together are necessary.  Our relationships will be tested.  But know that social capital is not to be squandered on an ambition that reduces the care and concern everyone feels for the organization, it’s work, and each other.

Be sure a careful accounting is being made with every change or challenge to the equilibrium of your group.  Never place such value on what can be seen or counted in monetary terms that securing it places your reason for existing at a risk that is too great.

What is Social Capital?

Ned worked hard all his life upholstering and repairing furniture.   He never had the heart to charge anyone what his time was worth and put himself into every project.  As an artisan, Ned was accomplished, but as a business owner, he could barely made ends meet to provide for his family.  As more people began to discard old furniture and replace it with inexpensive modern furniture, his business failed.  Ned retired and put his meager life savings into a bad investment and ended up penniless.  He hasn’t been able to work for 23 years but during that time Ned and his wife Emma have been in good health, traveled and enjoyed benefits he could never afford while he was working.

The wealth Ned knew later in life came not from his work or good good luck, but from his four sons and three daughters.  They were all anxious to see that Ned and Emma had whatever money could afford because of gratitude they felt for the love and care they all received through the years.  I only met Ned during the last year of his life. During my last visit a week before he died, all his children and grandchildren were around the bed and I reminded him that he was a rich man.   Rich in relationships and goodness.  Ned looked up from his bed at his descendents and smiled, acknowledging his riches.

This wealth is social capital.  Ned’s social capital was turned into financial capital through the gifts of his family.  When made by obedience to moral principles, the transformation of social capital into material wealth multiplies social connections and rewards rather than depleting them.  Good will, generosity, gratitude and loyalty is multiplied through relationships and stories of caring, sacrifice and hope.  Social bonds are only strengthened when friendship forms a legitimate basis for buying and selling that serves the common good of all stakeholders.

Social capital is created wherever people genuinely serve each other without seeking personal gain.  Friendship for the sake of friendship alone increases social capital.  Likewise, caring for family members simply because they are family and a need exists will build commitment to community that can lead to practical help or increase in material resources.

Among our most valuable assets are the relationships we hold dear.  They are filled with hope, potential and security.  Guard these assets, but be willing to share or give them away.  This is how social capital increases.  Don’t squander friendship or treat it lightly.  Don’t take it for granted or allow it to be destroyed through neglect or abuse.

Practice the faithfulness that Ned did with his family.  Encourage, listen, support and serve those in your social network.  Treat each one with respect and care.   Watch your social capital increase.  Live with the wealth that Ned and Emma earned with each kind word and deed.  This is the recipe for true riches.