Posts tagged with: nonprofit

An essay of mine appears today over at the First Things website as part of their “On the Square: Observations & Contentions” feature. In “Between Market and State,” I explore the dialectic logic of market and government “failure,” which functions in part to provide us with a false dilemma: our solution to social problems must lie with either “market” or “state.”

I work out this logic in the context of the sub-prime mortgage crisis, and conclude that non-profits play a critical role as mediating institutions that are not driven in the first place by profit motives. A great deal of the economic woe of the last year or so has been the result of seeing the poor as objects of material gain rather than partners in charitable compassion. Read the piece over at the First Things site and discuss it here.

I should note that PowerBlog contributor Dr. William Luckey has provided a brief and challenging analysis of the role of non-profits. His survey of the treatment of non-profits in the literature includes the observation, “Many sources see the purposes of non-profits as taking up the slack from either market failure or government failure, thus revealing a pro-statist, anti-market bias.” The argument in my First Things essay takes the position that one purpose of non-profits is to “take up the slack,” so to speak. But I don’t see how this by definition reveals a “pro-statist, anti-market bias.”

As I say in the essay,

Advocates for government intervention abound nowadays. But apologists for the market economy do themselves and their cause no favors when they ignore the fact that there are limits to what the market can and ought to be asked to do. Indeed, much of what has been called “market failure” is actually the result of applying market-based solutions to problems for which profit considerations ought to be considered secondarily—if at all.

Within a market framework people tend to maximize efficiency and increase material well-being. But the market is not the answer for everything. It cannot tell us, for instance, how to arrange our familial or spiritual lives.

I was influenced in this line of thinking by a brief reflection from Arnold Kling, who writes about two propositions in the context of the sub-prime lending disaster: 1) Market failure is inevitable; and 2) Government failure is inevitable. He says, “In talking about the financial crisis, I believe that to speak the truth one has to accept both propositions. Most people prefer narrative, which either explicitly or implicitly denies one or the other.”

To be sure, I do think Luckey is right to call for “a completely new study of non-profit organizations,” an early attempt at which was made in the context of Acton’s own Samaritan Guide program. (With Marvin Olasky’s comment that the finalists tended to be either “rescue missions for the homeless or rehab centers for alcoholics and addicts” in view as well, see the conclusions of the promising paper, “Faith Makes a Difference: A Study of the Influence of Faith in Human Service Programs,” by Beryl Hugen, Fred De Jong, and Karen Woods.)

One non-profit ministry that I highlight in the First Things essay that is neither a homeless shelter nor a rehab center is the Inner City Christian Federation. This is a worthy organization that merits a great deal of attention in the debate about home ownership, the mortgage industry, and Christian charity.

As I also note in the First Things essay, this discussion about the credit crisis must go to our core assumptions about home ownership. A fascinating interview with Edmund Phelps, director of Columbia University’s Center on Capitalism and Society, picks up on some of these issues. Phelps has a lot of great things to say, and here’s one of them:

I’m hoping that the administration and other thought leaders will succeed eventually in bringing the country back to the older idea that the American dream is having a career, getting a job, and getting involved in it, and doing well. That was the core of the good life. That’s what we have to get back to, and get away from this mystique that the most important thing in your life that could ever happen to you is to be a home owner.

A handy chart showing the movement in trust in social institutions over the last thirty years according to the General Social Survey is available here.

Non-profits are increasingly being squeezed out between market and state, and the solutions they offer are either marginalized or subsumed under the logic of profit or coercion. As many others have noted, some recent policy initiatives, most notably lowering the limit on qualifying charitable donations, will only serve to exacerbate this problem.

In response to the question, “What form will journalism take in the age of new media?” I came across this Reuters story highlighting a proposal to allow newspapers to file for nonprofit status. The legislation was put forward by Maryland Senator Benjamin Cardin, (D-Md.) and he suggests the nonprofit action could be a possible solution for smaller community minded newspapers.

I’ll let somebody with more expertise regarding print journalism take a crack at the deeper consequences of such an action, but it seems to me that it wouldn’t assist with what should be the main goal of media, securing a free and independent press. At least many of the arguments put forward for saving papers is tied to the notion that they serve in the capacity as a civic watchdog over government. Obviously you can’t serve that goal as effectively with a tax-exempt status.

Nonprofits are having to sort through their own serious financial struggles as well, so the financial benefits may not be much of a saving force in the end. I am sure there are a lot of papers that are surviving and thriving in the free market even now and their credibility will look even better when put up against a paper dependent on government recognition for their status.

Here is a story from Real Clear Politics which alludes to a greater fear, at least when it comes to even more federal involvement in the private sector, and that is “the legislation is a starting point for discussions already under way on ideas to help the industry.”

The 10 finalists for the Samaritan Award were announced last Thursday. This annual award was created by the Acton Institute to honor a highly successful, privately funded charity whose work is direct, personal, and accountable.

The finalists for 2008 are:

Citizens for Community Values, A Way Out Program, Memphis, Tenn.
Fresno Rescue Mission, The Academy, Fresno, Calif.
Guardian Angels Homes, Faith in Action, Grand Rapids, Mich.
Lighthouse Ministries, One Stop Care, Lakeland, Fla.
Panama City Rescue Mission, Residential Recovery Program, Panama City, Fla.
Promise of Hope, Inc., Recovery Program, Dudley, Ga.
Redwood Gospel Mission, New Life Recovery, Santa Rosa, Calif.
Restoration Ministries, Inc., Harvey House School of Ministry, Harvey, Ill.
South Side Mission, South Side Mission External Ministries, Peoria, Ill.
Union Mission Ministries, New Life Center Recovery Program, Virginia Beach, Va.

The winner of the $10,000 grand prize will be announced in early August. All finalists will be visited by WORLD magazine journalists and profiled in a special issue on August 15. Congratulations to the 2008 finalists!

Blog author: jspalink
posted by on Tuesday, April 15, 2008

The 2008 Samaritan Award opens today! If you know of a great charity or non-profit organization that directly serves members of a vulnerable population and receives little to no government funding, please encourage them to apply. The grand prize is $10,000 and there are several smaller awards for runners-up.

From the Samaritan Award website:

This $10,000 grand prize is awarded once a year to an exceptional and privately funded nonprofit that fosters deep personal change in the individuals they serve. A comprehensive application makes a program eligible for the Award and enters it in the Samaritan Guide.

The Samaritan Guide encourages effective charity within the United States by providing information on nonprofits that are supported primarily by private donations. Every charity that applies for the Samaritan Award is included in the Samaritan Guide.

Apply Now for the Samaritan Award!

Blog author: jballor
posted by on Tuesday, August 28, 2007

When the sign for one of those payday lending stores went up on the corner a block away from my house, I have to say I was less than enthusiastic.

The standard response in a market economy to “market failure” is for a nonprofit to fill the gap in services or meet the need. Today’s NYT reports on efforts in the short-term loan industry to meet that need. As it stands in the market system, “Payday loan stores, which barely existed 15 years ago, now outnumber most fast-food franchises. Typically a customer borrows a few hundred dollars in exchange for a check, postdated to the next payday, made out in the amount of the principal plus a fee of $15 to $22 per $100 borrowed.” 22 dollars every two weeks works out to about 572 percent annual interest.

The troubling part of this is that those who are most likely to need these kinds of loans are the poor, people who are hit the hardest by higher rates of interest. It’s also clear that they are making some very poor fiscal decisions.

Nonprofit groups are in the early stages of setting up programs to help ameliorate the situation. GoodMoney, a joint venture of Goodwill Industries and Prospera Credit Union, charges about half of what for profit lenders charge. That still works out to over 200 percent interest annually, but “Of the $9.90 that GoodMoney charges per $100 borrowed, nearly half goes to writing off bad loans, Mr. Eiden said, and the rest to database service and administrative costs.” In the case of Ms. Truckey, profiled in the NYT piece, because of GoodMoney, “A few dollars from each payment go into a savings account, the first she has had in years.”

Programs like GoodMoney are still in their infancy and it’s clear that charging some level of interest might be a necessary part of encouraging responsibility and promoting independence on the part of the borrower. And market levels of interest approaching 600 percent per annum seem a bit like throwing someone in debtors prison if they can’t pay back a loan: there’s simply no way out of the mounting debt.

Now whether or not the amount that GoodMoney is charging isn’t precisely clear (there are no entries for GoodMoney at either GuideStar or Charity Navigator, and GoodMoney’s website doesn’t seem to disclose a breakdown of the programs expenses), but the enterprise itself is an interesting exercise in meeting the needs coming out of a pretty clear instance of market failure.

In his Townhall.com column, which also appears over at Human Events Online, Acton senior fellow Marvin Olasky mentions the work of the Acton Institute’s Samaritan Award in defense of “compassionate conservatism”:

Those who think compassionate conservatism is dead should come to Samaritan Award programs in Richmond or Fairfield, California; Memphis, Nashville or Knoxville, Tennessee; Camden, N.J., or Chester, Penn.; Columbus, Ohio, or Hastings, Neb. or Marquette, Mich.

Why go there? Because those are the towns and cities that are home to this year’s Samaritan Award honorees:

These programs provide challenging, personal and spiritual help to jobless men, homeless women, feckless teens and fatherless children. Space doesn’t permit me to show their merits here, but World magazine profiled the 10, plus five others on Sept. 2. And these programs are just the iceberg’s tip. Acton has more than 900 groups in its Samaritan Guide, and thousands more are little-known.

What is conservative about all this? Olasky writes,

Few of the groups receive government money. They don’t spend their time and scant funds applying for federal grants or attending workshops on how to apply for grants. They are hands-on, and they use the hands of many volunteers. Most are purely local, but some that began locally have now expanded to other cities. Diverse organizational forms are developing as well-run small groups pass on to others the secrets of their success, and perhaps replicate themselves elsewhere.

For more information, check out the Samaritan Award website.

Blog author: jballor
posted by on Thursday, August 3, 2006

This story makes me think of an old joke. Stafford, TX has a population of 19,227 people and 51 churches. The city council is making noise about preventing any more churches from opening up because, as tax-exempt organizations, they are threatening the viability of the local government.

My initial reaction: In one sense this is nothing new. Ever since the days of the Holy Roman Empire, church estates have been free from the taxes of civil government, and as monastic and ecclesiastical property holdings grew larger, the civil magistrate grew more and more covetous…after all, there is no tax exemption from the tithe.

I do, by the way, support the idea that the church should be free from paying taxes to the civil government, and not simply because the government deems churches to be of positive social value. The Church and the State are different institutions with different orders of authority. You might say that the State has no authority or right to tax the Church.

And this might even true even if churches want to make political statements (although I have my own view about the prudence of doing so). In this sense, churches perhaps aren’t like other nonprofits, and so perhaps these IRS warnings are based on a misplaced view of the authority civil government.

But I digress. Living in West Michigan, which I believe has to have one of the largest proportions of church space per capita in the country, this hits home. You’ve probably all heard it in some form or another:

A man was shipwrecked and he was able to find his way to an island. He lived there alone for 10 years.

Finally a ship came to his rescue. His rescuers saw three huts that he had constructed and they were puzzled by that. They asked him if he were alone on the island and he answered that he was.

Then, “What was this hut used for?” they asked.

“I live there.” he replied.

“What was the second hut used for?” they asked.

“Oh, that’s where I go to church.” was his answer.

“And the third?” they queried.

“Hmmph! That’s where I used to go to church.”

HT: WorldMagBlog

At least, the title of this post is typical of the mantra against the practices of drug pharmaceutical companies, according to Peter W. Huber’s “Of Pills and Profits: In Defense of Big Pharma,” in Commentary magazine (HT: Arts & Letters Daily).

Huber, a senior fellow of the Manhattan Institute, summarizes in brief the anti-drug company argument, and then goes on to examine what truth there is in such claims. He says of the difference between creating and administering drugs, “Getting drug policy right depends mainly on getting that difference straight—the difference, that is, between ministering to the sick and making medicines—and grasping its implications from the start. Big Pharma’s critics do not even try.”

He goes on:

Pricing is indeed the key. Whether the first pill typically costs $100 million or $1 billion to develop, replicating it costs less—a thousand times less, or perhaps a million times less. This slope—precipice, really—is far steeper than most of the other hills and valleys of economic life. It complicates things immeasurably. It also largely explains the gulf between the industry’s perception of reality and that of the critics.

Huber gives some explanation of the function of the price mechanism in pharmaceutical markets, and says, “Economists have established—as rigorously as things ever get established by the dismal science—that there is no efficient price, no ‘right’ price. Any scheme is, from one perspective or another, inefficient, unreasonable, or worse.” He argues that the high prices for boutique drugs like Viagra in the developed world help fund the provision of desperately needed drugs in the developing world. This is the situation created by so-called “price discrimination”.

The situation he says, is similar to that of airline travel: “Business travelers get soaked, college students fly almost for free, and the jumble of prices in between drives most people nuts. But the planes are packed full, and that drives the average price of a ticket way down. The rich fly, and the much less rich fly, too.” There is, I would think, a similar model at play in the work of plastic surgeons who charge Hollywood millionaires huge sums to do face lifts and tummy tucks, and then use a portion of the money they make doing that to do pro bono work for burn victims and deformed children.

The complexity of the pricing situation is what critiques of drug companies tend to ignore. Concludes Huber, “This kind of behavior is not aberrant or anomalous—it is an inevitable and essential part of groping toward the right price where there is no right at the end of the tunnel. Somehow or other, the average price of the pill has to end up high enough to pay off the up-front cost.”

If Huber’s analysis is correct, it is interesting to see how a nonprofit drug company, like the one profiled in today’s New York Times article, “A Small Charity Takes Lead in Fighting a Disease,” fits into the picture. The NYT article itself exemplifies many of the criticisms against pharmaceuticals that Huber summarizes.

Huber points to the vagaries of government regulation and private insurance, which greatly affect the drug market. One explanation for the situation that a nonprofit drug company like OneWorld Health attempts to address is that “big drug companies shun some drugs and embrace others because, collectively, the FDA, doctors, patients, insurers, and juries push costs higher, and prices lower, on some categories of drugs and not on others, to the point where some make economic sense and some do not.”

Indeed, OneWorld Health is working with a drug for black fever that, according to the NYT, administered “a series of cheap injections was identified decades ago but then died in the research pipeline because there was no profit in it.” There is, effectively, a partnership at play between for profit and nonprofit drug companies. OneWorld Health didn’t develop the drug in the first place, but on that point is dependent on the work of for profits.

Huber says:

Universities and small biotechs license their innovations to Big Pharma because they lack the capital, scale, and expertise required for mass manufacturing, because they wouldn’t know how to sell the same drug five times in succession (to the FDA, doctors, patients, insurers, and juries), and because a vast and swampy system separates pharmaceutical innovation from the treatment of real patients at prices that will cover cost and earn a profit. The little guys just don’t have what it takes to finish the job.

But OneWorld Health, in the case of the drug mentioned above (paromomycin), “has conducted the medical trials needed to prove that the drug is safe and effective. Now it is on the verge of getting final approval from the Indian government. A course of treatment with the drug is expected to cost just $10, and experts say it could virtually eliminate the disease. If approval is granted as expected this fall, it will be the first time a charity has succeeded in ushering a drug to market.”

Huber concludes that in the future “we will fare better, much better, if we streamline regulation, curb litigation, and unleash prices to make vaccines as alluring to Big Pharma as Viagra and Vaniqa.” But in the meantime, it may be that efforts like OneWorld Health can help at least some of those who fall through the cracks. Says Dr. Ahvie Herskowitz, one of the backers of OneWorld Health, “We fill a gap pharma companies cannot because they have to make a profit.”

And on the biggest obstacle to getting vaccines and drugs like paromomycin to those who need it, for profit and nonprofit drug companies seem to agree: “The government will be the biggest challenge,” says Dr. C. P. Thakur, a former Indian health minister who oversaw a OneWorld Health trial of paromomycin.

Blog author: kwoods
posted by on Wednesday, February 15, 2006

The February 11 issue of WORLD Magazine includes a culture feature, “Giving their names back.” Profiled in the article is Citizens for Community Values (CCV), a nonprofit in Memphis that does a victim assistance program called “A Way Out.” It’s a reclamation program of sorts, literally reclaiming women ensnarled in the sex trade industry, and giving them back their lives, reclamation evidenced by names.

The very nature of the sex industry, be it topless dancing, stripping or prostitution, requires anonymity–no names. And having no name reflects the ultimate devaluation of the human person. One of the women in this program said, “I felt like I was just a joke that God had accidentally made.”

Imago Dei may seem an odd term in this context, but in fact, it is the very core value of “A Way Out”: The reality of the imago Dei, being created in the image of God, having inherent worth, value and dignity. And the excellent way in which just two staff people, George Kuykendall and Carol Wiley empower women with so many problems and issues, oftentimes beaten, drug addicted, dumped naked on a busy street is the reason that the program was selected as a 2005 Acton Institute Samaritan Award Winnner.

While well-meaning Christian leaders protest public funding cuts for poverty and social programs, getting themselves arrested for blocking the entrance to the House office building, other effective compassion workers like George and Carol aren’t focused on whether the ultimate issue is fraud in government programs or tax cuts. Since “A Way Out” doesn’t depend on public funds, George and Carol just keep patiently returning again and again to help the hookers and strippers near the Memphis airport. They just keep connecting them to mentors who help them leave the sex trade, find good work, save money, learn how to live.

Each person has dignity, has value expressed in a name, and effective compassion programs, even very tiny ones in Memphis, are reclaiming those names, one woman at a time. This is the translation of imago Dei that matters.

To find nonprofits that embody the principles of effective compassion near you, visit the Samaritan Guide.

I was reminded recently that Jesus repeatedly underscored the high value of seemingly very small things. The signficant results of small mustard seeds and lost coins made his parable points well but, as a mom, the story of one lost sheep made me quickly leap to the incalculable value of one lost person. On a planet of billions, many of whom live and die with scarcely any notice, Jesus says God notices … and cares. And He calls us to care.

Acton’s 2005 Samaritan Award Winner Profiles (PDF), now available online, demonstrate that large or small, effective compassion greatly values even one lost or needy person. As helpful as “best practices” from such charity programs can be, each evidences more important best principles.

Principles transcend practices, because practices are simply activities, albeit some times ones linked to impressive results. But could they be as effective in Memphis as they are in Seattle as they are in tiny Seminole, Oklahoma? That is why Acton’s Samaritan Award entry survey is based on Marvin Olasky’s 7 Principles of Effective Compassion. The manner in which an effective charity may encourage reconnecting a homeless person to family and community may look very different among programs in those three cities — quite different in demographics and culture. But any homeless program in any of those cities should operationalize this “affiliation” principle.

Dr. Olasky asks: “Does the program work through families, neighbors, and religious or community organizations, or does it supersede them?” For example, studies show that many homeless alcoholics have families, but they do not want to be with them. When homeless shelters provide food, clothing, and housing without asking hard questions, aren’t they subsidizing disaffiliation and enabling addiction? Instead of giving aid directly to homeless men, why not work on reuniting them with brothers, sisters, parents, wives, or children?

The 2005 Samaritan Award Winners represent a wide variety of social services and budgets. Some programs serve a large number of ‘lost sheep’ and some serve only a few. Yet each has demonstrated a sharp understanding and commitment to effective compassion principles. An extensive report of each may also be found at Acton’s online Samaritan Guide.

We commend them to you.