"Entrepreneurs in Non-Profits"

                   Sydney M. Williams

Thought of the Day

“Entrepreneurs in Non-Profits”

June 29, 2015

Margaret Thatcher once said: “The problem with Socialism is that eventually you run out of other people’s money.” We may not be a Socialist country, but we are an aging welfare state. And we are running out of money. We are not yet France, but Social Security and healthcare spending consume an ever-increasing portion of our tax dollars. Economic growth is necessary for ever-expanding government budgets. Yet government regulation and tax complexity have a deleterious effect on small businesses, the main source of hiring and economic growth. The consequence is reduced revenue, increased borrowing and more pressure on discretionary parts of the budget.

In a column last week,  economist Robert Samuelson noted that while federal spending, as a percent of GDP, is roughly the same as it was twenty-five years ago (21%), its composition has changed.  In 1990, Social Security and healthcare consumed about one third of the federal budget. Today they comprise more than half. When other welfare payments are included, less than a third is available for defense, education and road construction. At the state level, thousands of non-profits are seeing budgets squeezed, as welfare-benefit spending consumes a larger share.

Like many, I live amid contrasts. The lower Connecticut River’s tidelands, along whose marshes I reside, have been designated as one of the 40 last Great Places in the Western Hemisphere by the Nature Conservancy. On the other hand, a study released in April by AreaDevelopment, a marketing research group, found that Southeastern Connecticut’s Norwich-New London’s economy ranked 364^th out of 379 regions in the United States. Despite the education of its people, and the fact that its wealth has been derived from finance and industry, Connecticut has become anti-business. The state is poorly managed; it has more debt per household than any other. Its taxes are high and so is its unemployment. GDP growth has lagged the nation. The median age is two years older than the U.S. There is little incentive for the wealthy to remain. The needy must.

Three years ago, a group of us formed a 501(c)(3) organization, the purpose of which is to provide assistance to those in need, create a more vital and engaged community and add “sparkle” to the region. (Since I am the least active member of this group, I feel free to tout what the others have done and are doing.) Our group is called Mentoring Corps for Community Development (MCCD). Our website is: http://mentoringcorps.org/. We help bring “real life” experiences to local school STEM programs. We help individuals who have suffered, because of natural disasters or events beyond their control. We work with small businesses and start-ups. And we offer assistance to a variety of not-for-profit organizations.

Our purpose is not to raise money for the latter, but to help them become more efficient and to suggest ways in which they may be able to better help themselves. Most of these groups have been largely state-funded. Over the years, relatively easy access to state funds coincided with a proliferation of non-profits. While they helped thousands of individuals, that easy access to money also bred a culture of dependency on state funding. But fiscal mismanagement in Hartford and a slow economy have caused state budgets to tighten. Consequently, many non-profits have had to cut expenses and find alternative funding sources. Humanitarian needs, of course, persist.

Last week I attended the annual meeting of a group with whom we have worked. It is a multi-million dollar organization, in terms of its annual budget. It helps provide housing and job opportunities for disabled persons. Like so many, funding has become difficult. Unlike others, however, the woman who runs this organization confronted the situation pro-actively. She explained to those of us gathered that, apart from the state, her options for resources are three. She can put greater emphasis on the annual fund. She can have special events, such as golf outings. And she can start for-profit centers within her not-for-profit organization.

She will increase participation in annual funding, but that is highly competitive. There are 1.5 million charitable organizations in the United States, with several hundred in Southeastern Connecticut. She will do one or two special events, but there are, as she noted, at least two or three every week in the area. Thus starting small businesses that will at least pay for themselves, while employing some of those she is helping, presents the best opportunity.  She has already begun one or two, like farm stands and a bakery. More ideas will be forthcoming. In doing so, she provides a service and/or product to the community. She reduces, but does not eliminate, the organization’s dependency on the state. Most important, in getting them paid, she is giving her charges a sense of accomplishment and responsibility. She has raised their self-esteem.

At the annual meeting, my associate and I were blown away with the pride of those who had helped bake and package the chocolate-chip cookies we were served – cookies that are now being sold to the area’s casinos and other outlets. The help of a businessman in the region who had experience with packaging and distribution was enlisted. While the bakery is not yet profitable, it will be soon. It runs more efficiently and is raising the profile of the organization.

We will never eliminate all government welfare programs. There will always be the sick and the needy. The numbers of aged are rising. But we cannot afford to ignore their costs – not only the financial, but social costs in terms of dependency. Striking the right balance is critical, else our fate, at some not-too-distant date, will be as Greece’s. What is happening there is a cautionary tale for the world. It tells of the consequences of promises made without regard to their fulfillment – of living for the moment, with no regard for the morrow. In the meantime, the world remains dangerous, as we saw in last week’s three terrorist attacks on three continents, which killed 67 people in a single day. If we and the West cannot assure our citizens’ safety against terrorists like ISIS, there will be little we can do to help our areas’ neediest. We cannot allow government-funded welfare to consume the entire budget.

We need to encourage people to help themselves, as this enterprising and dedicated woman has done in this depressed section of Connecticut. She and her team serve as a model as to how organizations can survive deteriorating state budgets. She is enthused; she has relied on the creativity and hard work associated with entrepreneurship; she understands the pride that comes from work, no matter what kind and no matter one’s disability. She has heeded, on a local basis, the request of John F. Kennedy when he said “…ask not what the Country can do for you, but what you can do for your country.” She is doing in New London County what can be replicated throughout Connecticut and the United States. She is helping people help themselves.