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.

Blog author: rnothstine
Tuesday, March 24, 2009

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
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
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 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
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